Q3 FY2019 Earnings Release Conference Q&A
At this point, we believe that 60% of the total WFE market will be for logic and logic foundries and 40% for memory.
The impact of US-China trade friction is beginning to be felt, and Chinese customers are revising their investment plans. Regarding the specific impacts, this is a political topic and therefore we will refrain from commenting on this.
We intend for CY2019 to be a year to firmly strengthen our system to meet future semiconductor demand, leading to the medium- to long-term growth of TEL.
Although investment in WFE is being curtailed in the first half, we expect it to recover in the second half.
We can expect stable investment both in the first half and the second half in logic, where pilot investments are starting for the next generation.
Regarding DRAM, although at this point our forecast is expecting investment only in miniaturization, we expect that demand will recover due to factors such as the commercialization of 5G, the recovery in investment in data centers due to the drop in DRAM prices, and the gradual resolution of shortages in the supply of MPU.
At this point we do not know which one will recover first, since it will depend on the decisions of customers.
We think that bit demand will be growing reliably at about 20% in DRAM and 40% in NAND. With regard to the timing of the recovery of customer investment, factors such as customer strategy and macroeconomic conditions will have an impact, so we intend to keep a close eye on trends through communication with our customers.
As a basic strategy, we are aiming at outperforming the overall WFE market by focusing on areas where we can utilize the technologies that we have, where technological innovation is expected to continue, and in which market expansion can also be anticipated.
As logic and logic foundries customers move towards the 7nm/5nm generations and further miniaturization, co-optimization of continuous processes of etching, deposition, and cleaning is becoming important for improving yields, and the added value of our company, which has these products, is also increasing.
Although the demand for large-sized flat panels is relatively high, there are also impacts from macroeconomic conditions and US-China trade friction, and some investment plans are being revised. We expect the investment plans to become fixed in the second half of the year.
60% of the Q4 scheduled sales of new SPE equipment listed on page 20 of the presentation materials are already being shipped.
The impact on our FY2019 earnings is likely to be limited. We also consider the fact that we have adopted the standard for recording sales not at the time of shipment but rather when the set-up and testing are complete to be one of the factors why the outlook is unchanged. We see sales increasing in Q4 for memory and for logic (in Europe and North America).
The rate of progress for the full-year sales forecasts for the FS business was 77% in the cumulative total for Q1 through Q3. The FS business is performing well, and we do not think that the business will suddenly lose its momentum.
The FS business is growing steadily, primarily in parts sales, and we expect this trend to continue in FY2020 as well.
The financial model for FY2021 is shown in the Medium-term Management Plan, and there are still about two years remaining. We expect there to be medium- to long-term market growth in FY2021 and beyond, and we intend to capture this growth.
With regard to research and development, although we will be selecting projects after careful consideration, the concept of our management team is that we would like to keep a positive stance without missing out on any important developments. The basic strategy concerning growth investment including personnel and scaling up production capacity is expected to remain unchanged in FY2020 as well.
As far as what level of profitability we are aiming for in FY2020, we consider it to be one critical challenge we must address formulating the budget. We will do our best to present a profitability forecast that can meet expectations.
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
TFT array process: The processes of manufacturing the substrates with the electric circuit functions that drive displays
The above content is a summary of question and answers session.