Q4 FY2018 Earnings Release Conference Q&A
The WFE market overall is entering a phase of further growth. Through conversations with our customers, we hear that there may be a little adjustment in investment, but this will be short-term lasting about one quarter, not over the long-term. We also have a positive view on the memory segment for CY2019. We will speak about the detailed outlook during the briefing on our medium-term management plan, which will take place in May.
We decided to construct the new production buildings having taken into account a comprehensive range of factors such as boosting market share and market growth, etc. We plan to announce the outlook for specific market size during the briefing on the medium-term management plan in May, but the fact that we decided to build the new production buildings does give some indication.
We believe there will be on-going investment in new lines and new equipment.
The standards we use to recognize sales are based on completed installations, unlike other companies that base sales on shipments made; therefore factors such as differences in the timing of sales accounting make it difficult to draw simple comparisons. However, we believe that our performance will not be outdone by that of our competitors thanks to steady growth in DRAM, which showed particularly strong results last year.
We forecast an increase in sales due to several factors such as the supplementation of shortfalls in production capacity and investment in several future generations of logic chips. We expect this will also be the case next year.
We will increase our share in the memory segment this year with the acquisition of 3D NAND slit processes in etch, the acquisition of 3D NAND processes in batch cleaning, and the acquisition of a new process in single wafer cleaning.
In terms of market environment, this year DRAM will be the growth driver, but there has not been a great deal of change in market share between our DRAM products and the other products. Therefore, the percentage of total sales accounted for by each type of equipment will not change a great deal from the percentages in FY2018.
There are no changes to previous forecasts mentioned. While there may be some discrepancies in schedule due to customers' start-up situations, the investment plans themselves have not changed.
A major contribution was due to the fact that applications acquired in DRAM were converted into sales as a result of customers’ investment in mass production. In 3D NAND slit processing, our newly acquired second customer is starting to invest as of this year, so we can expect this to contribute to next year's market share.
We have not identified any loss in market share to our competitors in terms of the cleaning processes acquired by TEL. And while we expect our competitors to be actively making approaches to customers, we will continue to consider ourselves to be the challenger when doing business and refuse to rest on our laurels.
Although there are still some technical issues with EUV, we have great hopes for it. We believe that technological innovation will increase demand not just for high-performance coater/developers but for all TEL's equipment, which will increase our business opportunities. We hope to see EUV spread as early as possible.
We do not publish profit margin forecasts by segment, but sales volumes have been expanding and there are no major changes in product mix, so you can expect to see profit margins continue as they have been.
The WFE market is embarking on a growth phase that is one step up, and we expect that SPE will have various opportunities for growth moving forward. Our top priority for cash on hand is to use it for growth investments, and we are hoping to consider various possibilities such as M&A and the acquisition of/collaboration in technology. Our policies for shareholder returns and share buybacks remain unchanged, and we will look at executing share buybacks in a flexible manner.
Until FY2017 there was no such position as CFO at TEL. In FY2018 the position of CFO was newly introduced; however, we have revised this to what is now the best organizational structure, having considered short-, medium- and long-term growth while taking account of TEL’s corporate culture. Our Corporate Strategic Planning Dept. and Accounting Dept. work closely together under the CEO, forming a single think-tank and a system that can make management decisions. Moreover, we still have close communications with Mr. Hori since his resignation and he will continue to play an active part in improving our corporate value. There is still the potential for us to reinstate the position of CFO in the future to respond flexibly to changes.
WFE (Wafer fab equipment): The semiconductor production process is divided into front-end production, in which circuits are formed on wafers and inspected, and back-end production, in which wafers are cut into chips, assembled and inspected again. Wafer fab equipment refers to the production equipment used in front-end production and in wafer-level packaging production
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