Mikio Hirakawa

Mikio Hirakawa asked about the progress of Sony's midterm business plan, the certainty, risks, and upside for achieving its operating profit growth targets, especially given market concerns about memory prices. He also sought clarification on the I&SS segment's outlook regarding image sensor ASP rise and volume expansion for the next year.

Answer

Corporate Executive Officer and CFO Lin Tao affirmed smooth progress on the midterm plan, acknowledging memory price concerns but emphasizing strong momentum and profitability management. She expressed a positive outlook for segments like gaming and Sony Pictures due to strong software lineups. Senior VP of Corporate Planning and Control Naoya Horii added that I&SS is in a good position for next year with ASP and volume momentum, but noted the passive nature of the semiconductor business requires close customer contact to understand market impacts.

Mikio Hirakawa of BofA Securities asked for the reasons behind the strong 7% year-over-year growth in PlayStation's Monthly Active Users (MAU). He also questioned if the Q1 music streaming growth rate signaled a slowdown or was affected by one-time factors.

Answer

Executive Hiroki Totoki attributed the MAU growth to the expanding PS5 installed base and strong contributions from franchise software. Executive Naomi Matsuoka clarified that music streaming growth is on track, with the Q1 rate reflecting the lapping of prior-year price hikes and a dip in ad-supported revenue, not a fundamental slowdown.

Mikio Hirakawa of BofA Securities asked about reports from the supply chain suggesting a change in semiconductor testing time. He questioned if this had impacted Advantest's revenues or its calendar year 2025 SoC tester demand forecast.

Answer

Executive Douglas Lefever clarified the question and stated that the company has not seen any impact from changing test times. He affirmed that they continue to see test content increase and are preparing for additional increases with next-generation devices.

Mikio Hirakawa asked if reported changes in testing time within the supply chain have impacted the company's revenue for the current fiscal year or its demand forecast for SoC testers in calendar year 2025.

Answer

Executive Douglas Lefever clarified that the question pertained to test content changes, not supply chain procurement. He stated that the company has not seen any changes that would negatively impact its forecasts and, in fact, continues to see test content increase, preparing for additional increases with next-generation devices.

Mikio Hirakawa of BofA Securities questioned the full-year SoC tester forecast, noting that the Q1 revenue run-rate appeared higher than the annualized forecast. He asked about potential upside and downside risks and requested an update on the demand for smartphone application processors (APUs).

Answer

Makoto Nakahara from sales expressed high confidence in the forecast, citing strong tailwinds from longer test times, expanding assembly capacity, and high utilization, seeing minimal downside risk. An executive added that while smartphone APU demand is smaller than GenAI, utilization is rising, and new demand is emerging from APUs that feature on-device AI capabilities.

Mikio Hirakawa from Bank of America asked if reported changes in testing time within the supply chain had impacted Advantest's revenue forecast for the fiscal year ending March 2025 or its CY 2025 SoC tester demand outlook.

Answer

Executive Douglas Lefever clarified that the company has not observed any changes in testing time that would negatively affect its outlook. He emphasized that they continue to see test content increasing and are actively preparing for further increases driven by next-generation devices.

Mikio Hirakawa of BofA Securities asked for an assessment of Hitachi Energy's strengths and challenges compared to past experiences at Siemens, and questioned the risk of market oversupply from competitors also investing heavily in grid capacity.

Answer

Hitachi Energy CEO Andreas Schierenbeck cited a motivated team and digital collaboration potential within Hitachi as key strengths, with managing high growth being the primary challenge. He downplayed the risk of oversupply, highlighting significant barriers to entry for new competitors, such as the long lead times for specialized equipment and the two-year training required for skilled labor like transformer winders.

Mikio Hirakawa of Bank of America asked Hitachi Energy's CEO about the company's strengths and challenges compared to his past experience at Siemens. He also questioned the risk of market oversupply from competitors investing in grid capacity and later followed up on Q2 performance versus internal forecasts and the profitability outlook for GlobalLogic.

Answer

CEO Andreas Schierenbeck highlighted Hitachi Energy's collaborative potential within Hitachi as a key strength and managing high growth as the main challenge. He downplayed oversupply risk, citing high barriers to entry like specialized equipment and labor. Executive Tomomi Kato confirmed Q2 results were above forecast and acknowledged that while GlobalLogic's margin improved, rising personnel costs are a pressure factored into future guidance.

Mikio Hirakawa inquired about the drivers behind the strong performance of the Digital Systems & Services (DSS) segment, asking why it is outperforming the market and if this trend will continue. He also asked how the Building Systems unit within Connective Industries (CI) achieved such a high profit margin despite the unfavorable real estate market in China.

Answer

Executive Tomomi Kato explained that the domestic IT market is experiencing strong demand for mission-critical system replacement and modernization, a trend expected to continue until 2030. He attributed Hitachi's outperformance to its strengths in building highly reliable systems and its unique domain knowledge in both IT and OT. Regarding Building Systems, Kato stated that Q3 profit growth was driven by the service business and cost reductions in China, as well as strong performance in Japan. However, he cautioned that new construction orders in China are decreasing, and future growth will depend on services and renewals.

Requested more details on the nature of investment in China, asking whether it is primarily for capacity expansion or for technology advancement and shrinking nodes.

Answer

Investment in China is focused on mature nodes for industrial applications. The initial investment cycle for many emerging chipmakers has been completed, so the overall investment amount and proportion from China are expected to decline. It is difficult to define a single trend due to the diverse objectives of many different customers. Investment in power electronics for EVs is one area that will see revisions. The company is also sensing a positive impact from government subsidies in China based on inquiries.