Shimamoto Takashi

Asked if the outperformance this year was mainly due to China pull-ins, creating a risk of underperformance next year. Also questioned if advanced logic was flat year-over-year.

Answer

The outperformance was due to both China pull-ins and being prepared for strong demand in advanced logic and HBM. The company expects to meet market expectations next year. Regarding advanced logic, major customers continue to invest, and Tokyo Electron's growth is also strongly driven by memory products like HBM and DDR5 where they are winning PORs.

Asked for an outlook on the 2025 WFE market, including investment plans of major customers by application and the forecast for China.

Answer

In 2025, DRAM investment is expected to be strong, and 3D NAND investment could nearly double. Advanced logic for AI servers, PCs, and smartphones is also expected to increase. Investment in China is projected to decrease as the initial investment cycle for emerging chipmakers concludes and investment from other regions in advanced nodes recovers. The proportion of sales from China is expected to normalize closer to the 25-30% range in the future.

Asked about the sustainability of strong demand from the Chinese market, the potential impact of export controls, and whether there was evidence of customers placing orders ahead of schedule due to fear of new regulations.

Answer

The executive responded that the company will follow government decisions on export controls. Investment in mature nodes in China is expected to remain at a similar level to last year, but China's overall proportion of sales is expected to decline below 40% as leading-edge investments grow elsewhere. There was a sense that some orders were placed ahead of schedule last year, with Japanese vendors receiving them about a quarter after US/European vendors.

Asked about the specific contribution of High Bandwidth Memory (HBM) to the forecasted 30-40% growth in DRAM for 2024, and how HBM impacts the front-end process beyond just bonding.

Answer

The company noted a significant increase in inquiries for bonding related to HBM, which contributes to WFE growth. For the front-end, HBM and standard DRAM use the same process, and the allocation is determined by the customer, so a specific impact could not be detailed, but overall wafer growth is positive.

Shimamoto Takashi of Okasan Securities requested a breakdown of the SoC TAM estimate, asking for the AI-specific portion for CY'24 and CY'25. Alternatively, he asked for the market split between 'computing/communications' and 'automotive/industrial/consumer' applications.

Answer

Executive Makoto Nakahara responded that it is difficult to isolate the AI-only portion of the TAM. For the alternative breakdown, he provided a ballpark market estimate of a 70-30 split, with 70% for computing and communications. He expects this split to remain similar in 2025, though the computing segment will likely show a higher growth rate.

Shimamoto Takashi requested a breakdown of the SoC TAM estimate for calendar years 2024 and 2025, asking for either the AI-specific portion or the split between computing/communications and automotive/industrial/consumer applications.

Answer

Makoto Nakahara, an executive, stated that it is difficult to isolate the AI portion of the TAM. He provided an approximate split for the broader categories, estimating that computing and communications represent about 70% of the market, with the remaining 30% from other applications. An executive confirmed this 70-30 split is expected to remain similar for both 2024 and 2025, though the computing/communications segment will have a higher growth rate due to its larger base.

Asked for clarification on the primary reason for the large upward revision to the SoC tester forecast, specifically what had changed in the last three months and what was misjudged in the original forecast. Also asked if this revision was anticipated during the recent MTP3 briefing.

Answer

The company confirmed they were 'caught off guard' by the unpredictability of test times for new, highly complex devices, which turned out to be much longer than expected. This became apparent only in the last month as customers began ramping production and was the biggest factor in the revision. Regarding the MTP3, they noted that while the year is off to a good start, there is still not full confidence or visibility into the business trajectory for FY25 and FY26.

Shimamoto Takashi of Okasan Securities sought more detail on the upward revision for SoC testers, asking if longer-than-expected test times were the primary factor. He also questioned if this stronger outlook was already considered in the Mid-Term Management Plan (MTP3) briefing held a month prior.

Answer

Executive Douglas Lefever confirmed that both Advantest and its customers were surprised by the unpredictable test times of new complex devices. Makoto Nakahara specified that a rapid production ramp-up in the last month was the main driver. An executive clarified that while it's a good start for the MTP3, the outlook for FY25 and FY26 remains uncertain, so the three-year plan itself has not been revised.

Inquired about the visibility and probability of the SoC tester market recovery in H2 2024, the risk of further delays, and the recent trend in tester utilization rates.

Answer

The H2 2024 recovery forecast is based on monitoring customer tester utilization rates, which are improving but have not yet peaked. While the recovery is expected, its exact timing has some uncertainty due to weakness in automotive/industrial segments. Utilization bottomed out in the spring and is now on an upward trend but will take a while to reach its peak.

Shimamoto Takashi from Okasan Securities requested a breakdown of the SoC TAM estimate for CY '24 and '25, asking to either isolate the AI portion or provide the split between 'computing/communications' and 'automotive/industrial/consumer'.

Answer

Executive Makoto Nakahara stated it is difficult to isolate the AI-specific TAM. However, he provided an approximate 70-30 split for the SoC TAM, with 70% from computing/communications and 30% from automotive/industrial/consumer. He indicated this split would remain similar for both CY '24 and '25, but the computing/communications segment would see a higher growth rate due to its larger base.