July 7, 2016 Medium-term Management Plan Briefing Q&A

What is your opinion regarding EUV (Extreme Ultra-Violet) and multiple patterning?

It has been claimed that EUV will be introduced for mass production from 2017 or 2018. Even if EUV is commercialized, as miniaturization will advance due to the combination of EUV and multiple patterning, the etching and deposition processes will not greatly decrease.

In regard to patterning, I understand that knowledge of deposition and etching is required in the development of ALD*1/ALE*2, which achieve control at the atomic level, but when will the advantage of this emerge?

We are assuming that the results of technology that is now being introduced will emerge at the 7nm to 5nm generation nodes. It is important to be able to control processes where deposition and etching occur simultaneously, and we believe that TEL has an advantage, as it has knowledge of both deposition and etching.

I hear that some of ASM International’s patents for ALD will soon expire. Is it possible that the competitive environment will change as a result of this expiration?

We do not think that market share will change much. ASMI possesses many ALD patents and peripheral technologies, but there are many alternative technologies. We are in a good cooperative relationship with ASMI.

You have continued to say for some time that you will increase your market share for etching systems, but what will change from what you have done so far? What should we focus on?

What you should focus on is the market share in the HARC process*3 for DRAM and 3D NAND, where TEL’s strengths lie, and market share in the patterning process for logic and DRAM. As we have already obtained some development PORs*4, we think that results will be seen from next year.

In CY2015, TEL's market share for etching systems was 19%, but what was its market share for each process?

Our share for all HARC processes, including three 3D NAND processes and the DRAM capacitor process is around 40%, and for interconnect/contact processes it is around 80%. In regard to the patterning process, conductor etching and oxide etching are mixed together, and we believe our share is around 15%. Going forward, we will focus on the HARC process and the patterning process.

What is the size of the market for etching processes specific to 3D NAND?

If we assume that multi-level contact is 100, we believe that slit is around 100, channel is around 120, and contact pad (staircase) is around 120.

The number of layers for 3D NAND will increase to 48, 64 and 96. However, why do you believe the equipment market for HARC processes will grow in 2016 and then not grow much from 2017 onward?

We think the four processes specific to 3D NAND will grow, and we will focus on growing market share for the three processes of multi-level contact, channel and slit.

When 3D NAND becomes 64 layers, I believe there is a plan to create a two-deck with 32 layers. What kind of trend will there be? Will a single deck lead to greater added value for etching systems?

For NAND, cost is important. Thus, even if a two-deck is used and the number of processes doubles, there will be no benefit. We believe we will be able to differentiate ourselves by proposing solutions that combine processes and by using one deck instead of two-deck.

In the case of HARC process etching, which is one of TEL's strengths, up to what level of aspect ratio will you be able to handle?

It is claimed at present that the limit is generally an aspect ratio of around 40, and we are engaged in development based on a target of 100.

ASML has announced it will acquire Hermes Microvision, Inc. (HMI). What is your opinion on this? Also, has there been any change in TEL’s strategy regarding mask etching?

As reported in the news release by ASML, it seems that they aim to establish, together with HMI, a method to detect defects at an early stage and provide feedback to exposure systems.

What is TEL's share of etching systems for OLED panels? Compared with the growth in the equipment market for OLED panels, isn’t TEL's FY2020 sales target of ¥60 billion rather low?

As dry etching systems are used in the TFT array process*5 for both LCD panels and OLED panels, it is difficult to calculate the share for OLED panels only. Our share for all etching processes for FPD manufacturing is around 65%. We have higher share related to large substrates than for small and medium-size substrates, but we will expand our share for small and medium-size substrates by introducing PICPTM*6 etching systems.

Panel makers are planning large-scale OLED investment, but it seems from your orders for FPD production equipment that you are not receiving the benefit of that.

Market share varies by region and customer. In particular, South Korean FPD equipment makers tend to have high market share among South Korean customers, so we are assuming that our share will not grow much this fiscal year. However, as we have significantly raised the performance of our PICPTM etching systems compared to previous systems, South Korean customers are also considering adopting them and we are hoping for growth here.

Can inkjet printing systems for OLED panels handle several substrate sizes? As regards organic materials, which is superior – high polymer or low polymer? What degree of resolution can be handled?

We are conducting design to suit the customer’s substrate size. In regard to organic materials, customers are at the stage of evaluating both high polymer and low polymer in terms of color, life, structure and cost. We are targeting mainly OLED TVs, and with regard to resolution, in the case of 55-inch 4K TVs, 80ppi (pixel per inch) should be sufficient. In the future, we will aim for a resolution of 130ppi, which will be necessary for 65-inch 8K TVs.

In regard to OLED panels, there is a problem in that power consumption increases because the films for organic materials become thick. Will you be able to resolve this with inkjet printing systems?

We should be able to resolve this sufficiently by reducing overall film thickness by painting RGB separately with inkjet printing systems.

Will there be business opportunities for your inkjet printing systems until the Tokyo Olympics (2020)?

There is great potential. We will promote business in an integrated way with customers and material makers to establish the inkjet process for OLED TVs.

ALD (Atomic Layer Deposition): An atomic level film deposition technique

ALE (Atomic Layer Etch): An atomic level etching technique

HARC (High Aspect Ratio Contact) process: Advanced processing technology required for deep hole etching

POR (Process of Record): Certification of the adoption of equipment in customers' semiconductor production processes

TFT Array process: Substrate formation process that realizes display images

PICP: Plasma source for producing extremely uniform high-density plasma on substrate

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