FY2017 (ended March 2017) Earnings Release Conference Q&A
We expect the WFE* market to grow to more than $40B in the future. We sense that customers are more positive in their investment plans than before. In addition to strong demand for 3D NAND, there are many other investment plans such as those for logic in Europe and the United States. We expect customers to continue investing into the latter half of FY2018.
The number of customers has decreased compared to 2000 and the fundamentals of the industry are changing. In addition, the linkage between investment and the final-product market has been strengthened, and we believe investment is at an appropriate scale.
We view the introduction of EUV positively, as it promotes technological innovation throughout the industry. Processing techniques will become more difficult as miniaturization progresses, increasingly exposing our strength in synergizing diverse product categories. Customers can obtain better device performance and cost benefits by introducing EUV, with the profits feeding into subsequent investments. We think this will ultimately help the WFE market expand.
Product competitiveness. As miniaturization continues, manufacturing equipment will require new performance features and we will be able to provide even higher value-added to our customers.
In the SPE market, etching and film deposition equipment for 3D NAND and multiple patterning are accounting for more of the product mix. We think it will be important to improve our competitiveness especially in these areas. Differentiating our technology will increase our market share and lead to greater profitability.
We forecast that FS sales in FY2018 will be greater than in the previous year (208 billion yen). We expect the FS business to continue expanding due to aggressive customer investment in miniaturization and high factory utilization rates. High FS profit margins will help boost overall company profitability.
Although we still have spare production capacity, we expect further growth in production efficiency through the building of new logistics facilities and other means, taking into account rising demand over the next few years.
Our policy is to maintain a flexible approach to share buybacks. As for cash-on-hand, we may need more than 250 billion yen as sales grow.
WFE (Wafer Fab Equipment): The semiconductor production process can be divided into two sequential sub-processes: front-end (wafer fabrication) and back-end (assembly and test) production. WFE is used in the front-end production process. Front-end production equipment includes equipment for wafer level packaging.
This is a summary of questions and answers.