1Q FY2016 Earnings Release Conference Q&A
There should be a gradual increase. While adjustments in logic devices may continue, we expect investment in next-generation, cutting-edge logic devices. For 3D NAND, we expect investment to rise in the second half of the year.
This is mainly due to the reduction in expenses related to the business combination with Applied Materials.
We incorporated the investment slowdown and the reuse of equipment mainly in logic and foundry into the revision.
While sales forecasts are conservative to a certain degree, we still recognize that this is a good opportunity to increase market share. There are many efforts ongoing and we would like judgments to be made based on the results.
It is based on an assumption of 36~37%.
In the Medium term Management Plan, we announced a financial model based on market sizes of $30 billion and $37 billion. Traditionally, our operating income margin tends to decline more significantly than U.S. competitors when the market shrinks. In the Medium term Management Plan, we provided a range to the assumed market size as we work towards reinforcing structures to allow us to earn even more profits when the market grows. Although this is not a market forecast, the main scenario in the plan assumes an investment of more than $37 billion in 2019~2020. Considering the future IoT (Internet of Things) era, we can expect blooming investment not just in the conventional smartphone market, but also in servers for data centers. We therefore do not think investment will continue the downward trend.
While it is only recently that SPE manufacturers have assumed a WFE market with a size of between $30 billion to $37 billion, there have been cases where the silicon cycle fluctuated beyond this range. A range of $30 billion to $37 billion is appropriate, given the assumption of plans to reinforce the profit structures. It is probably not easy to think about the IoT using what we have as common knowledge now. It will fundamentally change the methods of communication. Applications will branch out and data volumes will grow explosively.
We expect earnest investment in the mass production of 10nm logic and 3D NAND, and the market size of CY2016 may be greater than that of CY2015.
Even though the cycle has become longer, there is also a growing trend in the capital investment per generation, and therefore the trend is not necessarily downward. In addition, while there is a global trend to reuse equipment, with the expansion in earnings from field solutions businesses, the trend is positive.
It is clear that China is making a national effort to enter the semiconductor industry. It is not simply increasing production capability, but has started paying attention to technology development as well, and will therefore likely become an important base.
The above content is a summary of question and answers session.