Mikio Hirakawa

In a follow-up, Mikio Hirakawa of BofA Securities asked for the internal evaluation of Q2 results versus forecast and inquired about the second-half profitability assumptions for GlobalLogic given rising personnel costs.

Answer

Executive Tomomi Kato confirmed that Q2 results for the three core sectors were better than forecast on revenue and adjusted EBITA, with orders also trending positively. Regarding GlobalLogic, he acknowledged that rising manpower costs are a pressure but stated that improved cost controls and new orders from the tech and telecom sectors provide confidence in achieving the second-half forecast.

Inquired about the R&D expense strategy, asking if the company targets a specific R&D-to-sales ratio and which areas the increased budget is focused on. Followed up with a question clarifying the competitive landscape for cryogenic etching against Lam Research, specifically for advanced NAND nodes.

Answer

The executive stated there is no fixed cap on the R&D-to-sales ratio; the company invests to maximize growth. The increased R&D focuses on areas like cryogenic/conductor etching, ALD, advanced packaging, and EUV-related technologies. On the follow-up, it was confirmed that the company sees a significant opportunity for its cryogenic etching in the >400 layer NAND node, where customer decisions are still pending and evaluations are ongoing.

Questioned the proportion of mature node investment within the logic/foundry segment for the current and next fiscal years.

Answer

The company estimates that mature node investment accounts for about 40% of logic/foundry in fiscal 2024. For fiscal 2025, the absolute investment amount is expected to remain similar, but its proportion may decline slightly as investment in leading-edge devices increases.

Asked about the reasons for the projected drop in Q4 SoC tester sales and sought clarification on the delayed recovery timeline for the overall SoC tester market.

Answer

The Q4 SoC tester sales decline is attributed to weakness in the smartphone sector, which typically drives demand in that period. The overall market recovery has been pushed out further because demand for automotive, consumer, and smartphone-related testers is slowing down more than previously expected.

Inquired about the company's market share in the HBM tester business, the potential impact of HBM growth on overall gross margin, and whether the inclusion of front-end wafer testing for HBM would negatively affect profitability.

Answer

The company stated they are in a 'very good position' in the HBM market and expect large growth. They anticipate improved margins from this business, despite wafer test margins typically being lower than final test, due to margin improvement actions and the increasing test requirements for larger HBM stacks. They expect a substantial improvement in profitability from current levels.