2Q FY2015 Earnings Release Conference Q&A | Investor Relations

What is the order guidance for the October to December quarter, including the trends by individual applications?

We expect orders for SPE to remain at generally the same level as in the July to September quarter. There will not be any major changes in trends by individual application, with memory accounting for about 40% and logic/foundries accounting for about 60%. We also expect orders for FPD to remain at generally the same level as in the July to September quarter.

Orders in the October to December quarter are expected to be at the same level as in the July to September quarter; when do you believe that orders will increase?

We believe that orders will increase starting in the January to March quarter of 2015. It appears that active investment will be made in foundry and memory customers.

Why did operating income turn upward in the first half even though sales were generally as expected?

Sales of SPE were 4.2 billion yen higher than expected and R&D expenses were lower than anticipated as a result of reviews of materials expenses of individual development themes and a decline in depreciation expenses in conjunction with a delay in the timing of fixed asset acquisition.

Why is the projection for operating income in the second half lower than the previously announced figure?

We newly expect 6.0 billion yen in business combination related expenses in the second half that were not initially anticipated.

Why will operating income in the second half improve compared to results in the first half?

In addition to an increase in SPE sales and a reduction in fixed expenses resulting from higher plant operating rates, the FPD business will be profitable and losses in the PVE business will be smaller.

Why is the FPD business operating in the black even though sales in the second half will be lower than in the first half?

We are continuing to make efforts to cut costs including conducting production in China. Also, the product competitiveness of ICP (inductively coupled plasma) etch systems is contributing to an improvement in profit rates.

What measures are you implementing with the aim of achieving an operating income margin of at least 25% in the medium term?

The primary measure is raising margins by introducing highly competitive products. We are also reducing fixed costs through measures such as consolidating development sites.

The WFE market is expected to grow by 10% in 2015; what is the outlook for developments in emerging market countries such as China and India?

Investment in a number of new plants for both memory and logic devices is expected and there is a strong willingness to invest in SPE. In China and India, development of semiconductor infrastructure and moves to start manufacturing are active, but we believe that their contributions to the equipment market will begin in 2016 or later.

The United States has adopted a strict stance on tax inversion, and some companies have even abandoned business combinations. Will this have any impact on TEL's business combination?

We have evaluated the recent announcement of expected U.S. Treasury department regulations with our advisors, and we believe that we can effectively implement our intended tax structure.

Reviews of the business combination are ongoing by various countries; have any countries set review deadlines?

It varies by country, so we are not able to give a general response.