This briefing will be represented by Koji Kawashima, the Representative Director and President. Shinji Miyazaki, Head of Corporate Planning. Yasuhito Hirose, Manager of Corporate Planning. These three speakers are representing our company, and I am Kitaoka from IR Group of Corporate Planning. I will be moderating this session. Thank you for your support as always. Our President, Kawashima, will take approximately 20 minutes to present on our earnings, and then we will have approximately 40 minutes for Q&A. We will be sharing the materials on screen, but the materials are also available on our website for your reference. We will be ending this session at 11:00 A.M. or so Japan time. For internal record-keeping purposes, we will be recording this session. Now, I will turn it over to Kawashima. Kawashima-san, floor is yours.
Good morning, everyone. This is Kawashima, the Representative Director and President of IBIDEN. I would like to brief you on the first half of the fiscal year 2026, and the forecast for the second half and for the full year, and the market environment, and the shareholder return situation as well. I would like to end my explanation in 20 minutes or so. Please turn to the next page. First and foremost, the first half results of the fiscal year 2026. Revenue came in at JPY 262.5 billion, and operating profit, JPY 60.1 billion, and OP margin was 22.9%. Both numbers for the first half hit the record high in our history. The big driver for the revenue and operating profit is, of course, the electronic segment. The pricing and AI demand being especially strong drove the revenue and operating profit growth. Other business, which is ceramics, compared to the original disclosure, we had upside.
That is because DPF and part of our products. We had larger volume of orders for part of the parts, and revenue and operating profit of ceramics also had upside. For other businesses, strong performance has been continuing, almost in line with our plan. Net profit came in at JPY 38.6 billion, 14.7% profit margin, 75% up year-on-year. Next is the forecast for the second half. Revenue, we are forecasting JPY 302.5 billion, and operating profit, JPY 72.9 billion, 24.1% OP margin. For the second half, this is also the record high figures. The big drivers, of course, are continuous strong demand for AI applications and CPU and switch. Those other products included, the product mix is improving. These are the big drivers, and we are expecting higher revenue and higher operating profit because of these drivers. OP margin, close to 30% OP margin for electronics is expected.
Ceramics, while automotive area is sluggish still, so we are expecting tough environment, so JPY 2.1 billion OP. For other businesses, we are expecting strong performance in line with our original assumption. Net profit, JPY 50.4 billion, that is 16.7% net profit margin. Based on this, full year forecast, JPY 565 billion revenue and JPY 133 billion in operating profit. For the full year, this is also the record high level that we are expecting. Operating margin of 23% is now expected. Especially the electronics business, it will be slightly shy of 30%, but we are expecting the OP margin of electronics to come close to 30%, and net profit margin, 15.9% and JPY 89 billion is expected. This is the mid-year forecast. For the mid-year, we have partially revised.
This is FY 2027 revenue, JPY 650 billion compared to the previous disclosure. We maintained the disclosure, but operating profit, because of the ASP selling price and product mix expectations, based on this, we are raising that to JPY 165 billion. That is 25.4% OP margin. For electronics, we are expecting OP margin to exceed 30%. For the FY 2030, after this, I will be elaborating more on the CapEx. At this point in time, JPY 1 trillion revenue and JPY 300 billion operating profit, and we have maintained these numbers for the mid-year up to 2030. Next page, please. These are the CapEx related. In FY 2026, JPY 210 billion, and that is Ono's Cell 8 investment. Also for Gama, Cell 6 investment has also begun. Including this, we are expecting JPY 210 billion.
In FY 2027, Gama investment will be full-fledged, and acceptance will be recognized, and Ono's investment for the remaining half space will begin. In total, we are expecting JPY 350 billion CapEx for FY 2027. Malaysian plant core capacity increase is also included in this JPY 350 billion. For FY 2028, we are expecting the CapEx to exceed JPY 400 billion, although it is not written here. For the depreciation, as you can see on the right-hand side, JPY 81 billion this year, and EBITDA 47.6%. This is the EBITDA margin. Depreciation and operating profit, we are adding this, so this will go up to close to 50%. For FY 2027, depreciation of JPY 90 billion is expected. More than that, the revenue would grow, so the depreciation ratio will go down slightly, and EBITDA margin will go up to 48%.
In 2030, we believe that EBITDA margin is going to come close to 60% or so. Next is the market environment and business outlook. First, the electronics-related. These are the market expectation and outlook, and left-hand side shows the AI GPU and ASIC-related. Right-hand side shows the CPU-related. AI growth is especially strong, so the GPU and ASIC altogether are expected to grow steadily. The CAGR of 20% growth is something that we are expecting.
One change we've been starting to see is application for AI. From learning to inference and agentic AI, that is the transition we are seeing. The number of CPUs per system is likely to grow. In light of that, looking at the right, CPU growth going forward is expected to increase. Especially in green, we have newly added AI application CPUs, which are expected to grow substantially in the future. Because of this, overall CPU volume is likely to grow. That is our expectation. For AI application CPU, we expect a CAGR of 20% or more, which is boosting overall volume. Please turn the page. Based off what I've explained, for our capacity and the market, and how we expect capacity to develop going forward is shown on this slide.
Looking at the left-hand side in the box, from 2026 through calendar year 2030, the changes are shown in the box. For ASICs and GPU, the market is likely to increase by 1.8 x, and CPUs by 1.3 x. On top of that, there are some changes to the product itself. The number of layers are increasing, as well as the sizes are expanding. So, on an area basis, SAP capacity is going to increase. For GPU and ASICs, SAP demand is likely to grow by 5.4 x and 2.5 x for CPU, capacity-wise. That is converted into a graph below. You could see substantial growth for AI and ASIC, as well as general-purpose servers. A large part of this growth is supported by the increase of AI servers. Our capacity expansion plan is shown on the right-hand side.
For this fiscal year, 2026, in Japan, when I say domestic, PC capacity is now allocated to predominantly the Philippines. So, the capacity in Japan is being allocated for high added value packages. Our plan for 2030 is to double our capacity compared to now, when you benchmark against 2026. We actually really need 4x- 5x more capacity, but we are currently running at maximum capacity expansions. Even so, we will only be able to ramp up to double of where we are right now. So, we expect that supply is going to continue to be tight. We newly made an announcement around Cell 6, or the Gama plant, and additional investments. Looking at the picture on the left, Gama, or Cell 6, a little bit over than half is for EMIB-T. The capacity is currently being ramped up.
For the remaining half, or less than half, will be also utilized to expand capacity for EMIB. That is our intent this time around. We have concluded our talks with our customers, and based off that, we have decided to make this announcement. We will be making an investment of JPY 151 billion to fill up the remaining close to half of the space for Cell 6 with EMIB-T. So, we are striving for full production. For the JPY 150 billion investments, operations are likely to start in phases accordingly from 2029. That is our plan. Underneath this picture, there is Cell 7, the prospective site that you can see in the picture at the bottom. For the right-hand side picture, next to Cell 8, you could see the site for tentatively Cell 9. Regarding these sites for new factory opportunities, including the customer, we are currently under consideration.
We are not at a stage to make official announcements, but during this fiscal year, we would like to make an official announcement around how we are going to utilize the land. For Ono, on the right-hand side, in February, we announced JPY 500 billion of an investment plan in February, and we already spent approximately JPY 280 billion. So, we are currently continuing on with our investments to fill up Cell 8. There is part of the floor that is still left, but regarding its utilization of the remaining space or the floor, as well as Cell 7 and Cell 9, and the use of it, is something we would like to make an announcement or communicate on during this fiscal year at a later date. Next is technological advancements.
The packaging is becoming increasingly complex. Currently, inside the core, in order to strengthen the power source, there are some products that are becoming embedded. Some products are becoming multicore to enhance its rigidity, and are also laminating core materials together to make one single core. Using glass as a core are expected to emerge going forward. Regarding the development around these products, we are working together with the customer and making things move forward. In order to enter mass production, we think it is going to take a little bit more time, but in the future, power strengthening as well as enhancing rigidity, we believe these materials will be effective. Using optical electrical conversion, we expect some packaging to emerge using this technology too. We are still in the research phase, but we continue to engage in research. Next is about the ceramics market.
The powertrain market is shown on the left-hand side. The blue line, EV, battery-driven EV market is shown above the dark blue line, and underneath the dark blue line has some kind of internal combustion engine. Although moderate, the ICE market is expected to shrink, and instead, battery EVs are likely to grow. This view has not changed. However, this move is moderate. However, our new product, NEV, although moderate, we have started mass production, and going forward, we expect to increase production. For the DPF and ceramic holding materials, AFP for ICE models, the market is going to continue, so capturing the opportunities there, we would like to continue with the business to generate profit.
At the same time, the product development utilizing the technology is something that we are continuously working on. On the right-hand side, the nuclear power generation market is described. The fourth ceramic product called FGM, this material is going to be adopted for the nuclear power generation. Considering the increasing number of data centers in the future, nuclear power is going to be necessary to power those data centers. For supplying the materials for nuclear power generation, because of this market growth expectation, in order to capture the opportunities there, we are currently working on development. For FY 2030 and beyond, we believe that this is going to be another big pillar of our business.
Please turn to the next page. R&D-related activities. Left-hand side shows the R&D expenses, approximately 6%-7% of revenue, and every year, we are going to spend. This year as well, JPY 37 billion is allocated to R&D. There are currently three areas where we are proceeding with development. First is the NEV field, and this is separate from the already mass-produced NEV, but this is for battery EV safety materials. These are going to be necessary increasingly, so as a project, we are working with customers for China market. The middle, the specialized substrate field, leveraging our technologies, we are working on small motors and power IC ceramic substrates. These are something that we are developing. Together with customers, we are aiming to commercialize this. The bottom, new field, these are bio-related and life energy-related and GX-related businesses.
We have built a new R&D facility, and centering on this facility, we would like to continue with the R&D efforts. These are in the research and development stage, so including the judgment of the commercial viability and commercialization, we are proceeding with these research activities. Lastly, shareholder returns. In this month, as of October 1st, we implemented a 1:2 stock split. After the stock split, these are the dividend forecast. The interim dividend, we are increasing by JPY 2.5 to JPY 10, and on a full-year basis, we are expecting JPY 20 dividend. We will continue with the progressive dividend policy, and this JPY 20 should be maintained. We will continue to follow progressive dividend policy up until 2030, and dividend payout ratio is slightly shy of 14% in FY 2026. That was a brief overview of our business. Thank you.
Now, we would like to move on to the Q&A session. In order to help deepen your understanding, we would like to prioritize the questions from the sell-side analysts who can represent the interest of the institutional investors. Those analysts who have questions, please use the raise hand button at the bottom of the screen. Once called, please state the company name and your name and ask your questions. In order to make sure we take as many questions as possible, we would like to limit the number of questions to two per turn. As necessary, we will follow up with the following IR meetings, so please ask questions centering on the business strategy and market outlook. For the institutional investors, we would like to follow up with your questions as much as the time allows. Please, also utilize the Q&A box, although the chat function is disabled.
Takayama-san from Goldman Sachs Securities, please go ahead with your questions.
Thank you for this opportunity. Thank you. Two questions. My first question is regarding the capacity and recovery of investment. This JPY 150 billion additional investment, at what point in time this will start making meaningful contributions to the profit and revenue? In 2026, the OP margin of the electronics is 30%, and the return profile of this JPY 150 billion investment. Behind this investment, why this is not for EMIB-T, agentic AI? I understand the ordinary SAP, but is it because of the delay of the EMIB-T or your competitors are capturing those opportunities? So, I would like to ask why you are investing for other than EMIB-T, and are you still expecting a strong growth of the EMIB-T?
Cell 7 and Cell 9, in terms of their capacity, once you made decisions within this fiscal year, what size of investment should we expect and the payback period of that investment? If you can share your views on those, that would be appreciated. Thank you very much.
First, regarding JPY 150 billion investment and the ramp-up period and the impact and the operating margin coming from those investments. The ramp-up period is late 2029. Last quarter of FY 2029 will be the ramp-up timing. That is the timing where we are expecting that this would have a meaningful impact on our revenue. So, in FY 2029, the impact will be limited, but in FY 2030, the Cell 6 additional investments would start making a meaningful contribution to our revenue and profit.
But as we showed you, JPY 1 trillion revenue and JPY 300 billion operating profit in FY 2030 doesn't factor in this additional investment. So, there could be an upside to those figures we presented for FY 2030. And operating margin, we have the same thinking around that. So, same as other products, we are expecting the OP margin to exceed 30%, and those are the products that we would like to provide to the market. And the second question, the background of this investment, why this is not for EMIB-T? After all, these are the capacity enhancement for the customer's sake. So, the customer, when they request for particular products, those are the products that we are manufacturing. And this includes my expectation, but EMIB-T demand and CPU demand, both demands are quite strong.
Especially for the CPU side, our customers, they have quite strong products in that area, so we have to avoid a situation where we cannot provide the products to the customer. The customer will be in trouble if that happens. So, the remaining half of Cell 6, I believe that they prioritize the CPU. This is not that the EMIB-T demand is declining. EMIB-T demand is outpacing our capacity, outweighing our capacity. So, for the future, we may be engaging in a discussion to increase the capacity for EMIB-T as well. Cell 7 and Cell 9, for both of these cells, at this point in time, we are currently negotiating, not negotiating, but discussing with the customers, and the possibility of these and the timeline and the size of the capacity enhancement. We are discussing these things with the customers.
We cannot disclose the details of those conversations we are having today, but basically for Cell 7 and Cell 9, the next building, Cell 6 and Cell 8, we are expecting the size to be equal to those Cell 6 and Cell 8. But the land area is slightly smaller, so the floor area may be slightly smaller for Cell 7 and Cell 9, but both cells are manufacturing the high-end products. So the investment amount and the products to be manufactured and the profit margin of those products manufactured, we are considering to set some sort of an internal guideline for those.
Just to confirm, the investment of JPY 150 billion, your expectation for the revenue. So at minimum, you're expecting JPY 150 billion revenue based on this investment, at least.
Yes, and that is what we assume based on one turnover.
For your midterm plan, You raised the 2027 fiscal year numbers here, but for this fiscal year, electronics was JPY 39 billion in OP, but for next fiscal year, it only has been revised upwards by JPY 11 billion, and sales of JPY 468 billion hasn't changed either. So can you talk about the assumptions? Because I think people think that this fiscal year's beat can go entirely onto your expectations.
For the way you look, fiscal 2030, can't you just add on what you're seeing as an upside for this fiscal year onto your expectations? Cell 9 probably wouldn't make it, but Gama's JPY 150 billion, the remaining half portion, may be contributing by some extent. Is that a fair way to understand your plans?
For fiscal 2027, as well as for fiscal 2030, going forward, pricing pressure may kick in. That is what we assume. In a sense, we may be a little bit conservative in our expectations. The conditions of this fiscal year, we do not necessarily believe it is going to impact the future years as it is this year. That is the reason why it may look like the magnitude of increase is smaller than 2026. For 2030, we have not changed our expectations, but in fiscal 2030, the upside that one can expect is, as you rightly said, the additional portion of Cell 6. That is all for now.
I talked about this earlier a little, but for Cell 8, there is a little space available still that remains. Depending on how we utilize it, there may be a chance that that can contribute as well. That is yet to be decided. Putting that all together, mainly it is going to be the additional investments of Cell 6 that will be contributing. For Cell 7 and Cell9, even if we are going to invest, the impact is going to be after 2030, without question. That is our view for now.
Let me confirm one more time. For this fiscal year, if the strength continues, the price effect can be the same as this year for next fiscal year, right? That is a possibility, do not you think?
Yes. Of course, that is likely.
Another thing, for capacity in fiscal 2030, and your assumptions for what is going to contribute more of, in the midterm plan, it may not be included in the JPY 300 billion, but for the capacity expansion that you mentioned on page 12, compared to the beginning of year slide, the starting point is a little bit different, so it's hard to compare, but it looks like it's been increasing. Is that included?
No, it hasn't been included. No, it's not included.
The capacity expansion plan is higher than before. Is that because of reviews that you've conducted? Are we going to be seeing more output, or has nothing changed?
Well, one reason is, before, we were comparing the entire SAP area sizes, even for PCs. We deemed that that may be misleading, so this time around, as you can see at the top right, we just look at high-end capacity now to calculate the indexes, and that may have been creating the gaps.
Okay. I would like to follow up with you on a separate occasion on that. Thank you very much. That concludes my question.
Thank you for your question. Next is Naito-san from Citigroup.
Hello. I am Naito from Citigroup. Thank you for taking my question. I also have two questions. First, regarding the competitive landscape. Has there been any changes, if any, for Intel CPU, GPU, and AI GPUs, or whatever the case may be? Competitors have been expanding their capacity as well. For Japanese competitors, they have been acquiring new factories so that they can ramp up their capacity and production. In this regard, for new capacity expansions, is there a risk that that may cause anything negative? Regarding market share developments, are you expecting any changes, especially next fiscal year when EMIB-T starts to contribute?
Do you have the confidence that you will be able to maintain your high share? Thank you very much.
Regarding the competitive landscape, first, regarding AI-related customers, for high-end or advanced, us as well as the other company in Taiwan has been supporting our customers mainly. This time around, there was announcement in Berlin where another company from South Korea has come into the picture. I think a big change is that now it is three parties that will be in the competitive landscape. According to our analysis, the capacity that each company has, even if you add all of them together, compared to the overall demand, we are far below the market demand. Therefore, having the third company enter the market is pretty natural, I believe.
To that end, the market share we can acquire as well as our positioning, we believe will be unchanged, especially for AI customers. For the CPU side of things, CPU customers, three or four suppliers are competing. Shinko has acquired a JDI factory recently, and we expect them to expand capacity as well. Each company has been putting a lot of focus on expanding their capacity respectively. However, for this segment as well, even if you add up the total capacity of all suppliers, we have not yet caught up with overall demand at all. We will be able to use our capacity at full capacity, and we do not think there is going to be any market share or positioning changes dramatically.
Just to add a question. My follow-up question is, from that perspective, when you think about next fiscal year and onwards, you have a conservative approach in assuming price erosion, but I think that is too conservative. Are there any other risks that might lead to price erosion for AI GPU by having the South Koreans enter this space? Is there going to be more pricing pressure due to more pricing power on the customer side? Is that happening?
Well, yes, that is a tough question. At this moment, as a market, the focus is not price, but capacity. That is a big factor. The supplier, I believe, will continue to have a better position. For next fiscal year, capacity will continue to be the most important key point. Therefore, we believe we will continue to have a strong position. On the other hand, are the current prices going to be maintained forever? Are the current conditions going to last forever? I think placing that kind of assumption is too optimistic. That is why we are trying to be a little bit conservative when we assume our unit prices.
Understood. Thank you. Next is thinking around the profit margin. What you are showing here with this table, you are looking to further improve the profit margin, especially for electronics, you are expecting the margin to exceed 30%. High-value added products, multi-core or component-embedded substrates and glass core coming out. Considering all of this, the margin is going to expand further. This is the phase where you are also expecting higher depreciation, and you also talked about the pricing as well. For FY 2030, you are expecting the profit margin to exceed 30% and then further expand after 2030. Is that your view?
To your point, we are shifting towards higher value-added products. We, as well, on our side, we would like to focus on supporting those high value-added products. So, the product mix and pricing as well, considering two factors, we believe that the margin will continue to expand. Around 2030, we are expecting the 35% operating profit margin for the electronics, and I believe that this trend is going to continue at least to 2030.
Understood. Thank you. That is all from myself. Thank you.
Thank you.
Thank you. Next, Morgan Stanley, Sato-san, please go ahead.
This is Sato from Morgan Stanley. Thank you for your presentation. I also have two questions. First, page 12 of the slide. SAP total demand and your capacity expansion plan. Compared to the SAP demand, your capacity expansion is not catching up. Would that lead to share loss? That is the point I would like to confirm. In addition to that, Cell6 and Cell8, the vacant lands next to those, in case you build the new buildings, what is the lead time up to the mass production? The deadline of making a decision to build the new buildings, would that be the end of this fiscal year, or would you have to accelerate the timing of the investment decision?
Shinko has acquired JDI's plant. By acquiring an existing plant, could you shorten the lead time? Do you also have that as an option?
U nderstood. Thank you. F irst, what is going to happen to our market share? For sure, the market is growing fivefold, and we are growing twofold. If we just look at those, you may think that we will lose share. Our competitors, in a similar manner, for instance, they cannot expand their capacity threefold or fourfold all of a sudden. In that regard, we are not expecting our market share to go down.
W hen we build new plants and the lead time up to mass production, it is quite difficult to answer that question. First thing is that the people who would support this building, that is where we have the highest risk. Physically, those two plants, even if they are built at the same time while supporting the existing plants and ramping up the production at the new plants, it is going to be impossible. In that regard, we are aiming for phased ramp-up. We are ramping up the existing plants first, and then we will shift some of the human resources from the existing plants to the new plants. Unless we take that approach, we cannot smoothly ramp up the production. We have to consider all of these factors.
So at a high level, Cell 7, Cell 9, in order for them to ramp up, even if we make the decision right now, it is going to take about four years at least. That is my view. H aving said that, while you mentioned the Shinko topic, but for sure, in our case, we considered acquiring an existing plant to introduce new equipment, but we still need engineers and human resources to support the completion of that. If we acquire the existing plant, we have to also make sure that we have the right environment and right building layout. So it may take longer than we expect. When we actually considered acquiring an existing plant, we had those challenges, and we gave that up.
From our perspectives, w hether we should acquire an existing plant or build a new plant, there may not be a huge difference.
So building a new plant or acquiring an existing plant, you are still in the process of considering those two options?
Well, right now, for acquiring the existing plants, we are not actually considering a specific property.
Understood. My second question is regarding EMIB-T. There are two competitors. Am I right to say that you have two competitors in this space? Where do you see the biggest bottleneck? Starting the second half of next year, the mass production is expected to start. Is that right? In FY 2030, of the revenue we are expecting in this year, EMIB-T contribution ratio of the JPY 800 billion, how much should come from EMIB-T, in your view?
Y our first question regarding the bottleneck and where we see difficulty in EMIB-T. The structure illustration is available in the market. I am sure you know this. EMIB-T itself, underneath the flip chip, there is an electrical connection. In terms of the structure, it is almost the same as the EMIB, but creating the interconnects on the backside is where we see the difficulty. Overcoming this challenge is our utmost challenge. I believe it is the same for other companies as well. At this point in time, there is no change to the EMIB-T ramp-up timing, so we are working accordingly, and we believe that the timeline will be kept.
And for 2030 and the portion coming from EMIB-T?
Currently, our projection for EMIB-T is about 10%, a little bit over 10% out of total in 2030. Oh, excuse me.
You invest about JPY 220 billion, then you could see when is sales going to reach the amount of CapEx you made?
Well, around 2031 or 2032, presumably. 2031, 2032. Although that's a rough image.
Thank you. And there's two competitors, right?
Yes. Yes, that's correct.
Thank you.
Thank you for your question. Next person is Hirata-san from UBS.
This is Hirata from UBS. Thank you very much for the presentation today. I also have two questions, the first one being about your midterm plan. For 2030, you haven't changed your expectations. Is there a reason why you haven't changed it? Of course, there was a comment made earlier about conservatism, but are there any reasons why or concerns that kept you from increasing the targets? Is it because of price? Is it because of people or materials that are bottlenecks? And also, the midterm plan leading up to 2030, regarding your price assumptions, how different is it from the current price levels? What is the gap like?
The reason why we haven't changed our expectations for 2030, for one, is because for the midterm plan, the remainder of Cell 6 and the remaining space in Cell 8, and considerations for new factories, the details are still uncertain. This time around, we have been able to confirm the half of Cell 6 this time around, but for the rest, our plans are still uncertain. Therefore, for 2030, we would like to clarify the uncertain elements during this fiscal year so that we can update it.
So, there is a possibility that with the contribution of Cell 6, the target can be increased up. So, including all of these factors, we would like to provide an update, and that is the reason why we decided to keep it as is this time around. Regarding price trends, for this year, we are definitely in a good position. Going forward, I do believe we will be able to maintain a good position, but we also regard that it's important to apply some conservatism. So, from 2027 through 2030, we are assuming relatively conservative ASPs compared to where we are right now. So, it's not as if something bad has emerged.
That is right. And second question is about EMIB-T. You have commented that things are proceeding in line with plan. Can you talk about yields or compared to your competition, where do you stand? And also, demand is outweighing supply, so during the midterm plan period, is there a chance that there may be a reallocation of capacity so that you can increase EMIB-T capacity? Is there a chance of doing that, or is it physically hard to do?
Regarding the ramp-up of EMIB-T and how yields are developing, unfortunately, we are not able to set forth the actual yields. But to be honest, yields are pretty challenging. Our competitor, I have been hearing that they have far higher yields that exceed 50%. But in a sense, I'm skeptical because it's really challenging and difficult. So, although things will ramp up in line with plan, but there are still some outstanding issues around yield.
Secondly, regarding the relationship between EMIB-T and EMIB, part of this includes my personal expectations, but our customer, I think, is struggling on their side as well on this. Demand for EMIB-T is strong. However, CPU demand, that is another business they have, is also strong. I think they have a struggle with respect to how to prioritize. It is not just IBIDEN, ourselves, but on an industry-wide basis. Regarding allocation of where to increase EMIB-T or EMIB is something that they are probably considering on their side. As you said, they might request that they would like to reallocate the capacity for EMIB for EMIB-T purposes. In order to switch over from EMIB to EMIB-T, you will need a bonder, such as die bonders, and also for lamination, you will need those equipment for when you transition to EMIB-T.
For the rest, you will be able to use common equipment in order to switch to EMIB-T. Although it will take time, if we do receive those requests, we would like to do so.
For the struggles in EMIB-T yields, is that general as a comment? That is not as if you are behind plan or behind competition, right?
Our yields, we believe that our yields are about the same as our Japanese peers, but we are not sure about our Taiwanese competitor. I doubt that they are higher than us. I do not think they are. They probably have not caught up with us.
Thank you very much.
Akizuki-san from Nomura Securities is next.
This is Akizuki from Nomura. Thank you. First, regarding the capacity expansion, there are two things I would like to ask. Next fiscal year, the depreciation forecast is JPY 90 billion. This year, JPY 200 billion will be invested, and next year, you are going to invest more. The depreciation increase that you are expecting in next year is not growing as expected, and there may be some recorded under construction, under progress. Now that you do not have enough capacity, you are making significant investments. There is a lead time before these capacities will go online. These are the temporary numbers because you cannot guarantee the progress. Also, when it comes to equipment for laminators and lasers, the lead time of those equipment are becoming longer and longer, and the bonders as well is seeing a longer lead time.
I am sure that these long delivery time of equipment have been the bottleneck. How would you like to address these challenges?
First, regarding the depreciation growth in FY 2027 is rather milder. Sure, the investment side, Cell 6 and Cell 8, we are making aggressive investments in those cells. When it comes to the timing when they will go online, partially, they will go online in 2027, and majority of that will be online in 2028. In that regard, in FY 2027, there is some difficulty. In terms of the equipment, to your point, the lasers and laminators and the plating equipment, various types of equipment are seeing longer lead time. In that regard, while communicating closely with the suppliers, we are working hard so that we can procure those at an early timing.
At this point in time, based on our plans, we believe that we will be able to procure those equipment in line with our plan. But in the future, as I mentioned earlier, if Cell 7 or Cell 9, if we are to establish those new cells, the long equipment lead time could be a risk. We have not been able to analyze that in detail, but as far as we talk to the manufacturers and vendors, there could be a challenge going forward.
The demand is outweighing the supply, and the situation could last to 2030. I believe that is what you commented earlier. In other words, from customers' point of view, customers will continue to see short supply of what they need to 2030. That is not acceptable to customers. They may be able to wait for one year or two years, but they may not be able to accommodate a situation where they will have difficulty procuring what they need for four years. I am sure that customers will take measures to address their concerns. In terms of the possible scenarios that we could think of, if the tight supply situation continues, what sort of changes would you expect in the market? If those changes realize, what are the actions are you going to take?
I am sorry, this is a rather abstract question.
Can you share your views on the risks?
To be honest, this is the point that we are pondering right now. Whatever analysis we do, it suggests that the capacity is not enough. The information that we receive from customers and combining that with other information. The capacity will be in short. The customers will not be able to tolerate that. What happens then is we cannot predict perfectly. The question is whether there are alternative technologies that the customers can adopt. At this point in time, there are no such alternative technologies, and the only way is to control the demand if that is the situation. Of course, the alternative technologies could emerge all of a sudden that may change the situation dramatically. But looking at the currently available technologies, there is no technology that can support the large chiplet.
I am sorry, I am not answering your question, but I would like to ask your views, Akizuki-san, on that risk. Advancing the time of PLP is one possibility here, but the PLP is not progressing well, so there is no alternative technology available. That is a realistic situation, I would say. I am sorry.
Thank you very much for your answer.
I am sorry, my answer was not clear, but thank you.
T hank you.
T hank you very much for all the questions. Now it is time, so we would like to end the Q&A session. N ow we would like to end the earnings call for the first half of fiscal year 2026. After the briefing session screen is closed, the questionnaire will pop up. In order to further improve our IR activities, your feedback will be greatly appreciated. Once again, thank you very much for your participation today. Thank you.