3Q FY2016 Earnings Release Conference Q&A

Foundry and 3D NAND orders increased. Orders being brought forward from January was the main reason for this.

DRAM and 3D NAND orders increased beyond our expectations. Logic orders also increased compared to the July to September quarter.

We expect them to end up in line with our financial estimates.

As 3D NAND capex will definitely increase, we believe this will compensate for a decline in DRAM capex. Furthermore, investment in logic and foundry was constrained in CY2015, but we expect it to recover in CY2016, and so the WFE market could also increase compared to last year.

We believe it will account for more than 70% and it should tend to rise from 2017 onward as well.

Besides patterning, a proposal that goes beyond the boundaries of equipment groups has been requested, and so we will strengthen cross-sectional functions.

In future technology innovation, we will put priority on fields that customers consider to be challenges. The importance of joint development with customers is increasing, and we will ascertain the impediment factors for the technological innovation of the generation after the next and subsequent generation and allocate all our resources there. So far, we have developed as many as 150 elemental technologies. We will carefully examine their order of priority and accelerate development plans by focusing on strategic products. Our aim is to realize both the provision of solutions to customers and the enhancement of development efficiency.

As we are currently in the process of preparing our budgets, we would prefer to comment on this once we announce our full-year business results in April. It can take a long time for the acquisition of POR* to lead to sales, but we have obtained POR and believe there is no pessimistic news.

The expectation that 3D NAND investment will grow is one of the reasons why we believe there will be no negative factors in our earnings for FY2017.

At present, we see 250 billion yen as appropriate.

We will not rule out the possibility but we will examine it prudently. We intend to be a company that creates value that can address wide-ranging technological needs. Therefore, first of all we will manage the ability to share assets based on technological know-how within TEL. We cannot rule out the possibility of M&A as one of the methods when proposing greater-than-expected solutions to customers’ issues. We should think positively about what is required to achieve the Medium term Management Plan, and not limit our considerations to Japanese manufacturers.

In relation to the synergies between the two companies, we believe that we have our own strategies that are competitive enough. Moreover, we will be able to consider partnerships in all directions, as necessary, including other testing and inspection equipment manufacturers.