Thank you for joining Advantest FY 2022 financial briefing despite your busy schedule. Let us introduce Advantest attendees. Representative Director, President and Group CEO, Yoshida. Director, Senior Executive Director, CFO and COO, EVP Corporate Administration Group, Fujita. Senior Executive Officer, CCRO, EVP Sales Group, Sakamoto. Senior Executive Officer, Co-CSO, EVP Corporate Planning and Stakeholder Relations Group, Mihashi. I will facilitate this session. I'm Kobayashi from the Investor Relations. Today, Fujita will present the financial results for FY 2022, followed by Yoshida presenting second Mid-Term Management Plan progress report and FY 2023 outlook. After that, we'd like to take questions from you. This time, after questions from institutional investors and analysts, we will take questions from the press members for 50 minutes from 5:00 P.M. Closing time will be 5:15 P.M.
Today's presentation materials are uploaded on the TDnet and on our website. Please download them if you are participating via telephone line. Let us make some advanced notice before we begin the presentation. In the briefings we will present may include forward-looking statements based on our current forecast. They may all entail risks and uncertainties. Please understand that actual results may be different from our outlook. Now let Fujita offer you an explanation.
Please open the slide to page 4. From my side, I would like to explain the financial results for fiscal year 2022. Fiscal year 2022 was a turbulent year. Amid the end of the semiconductor demand spike triggered by COVID, global macroeconomic weakness, and the semiconductor market slowdown, the favorable business environment in the first half turned sharply downward in the second half. Nevertheless, Advantest achieved record high sales, operating income, and net income. We expanded our market share by reinforcing our product portfolio and strengthening our global sales and support network. In addition, we strategically executed parts procurement, production, and shipments in order to meet customer delivery requests, even in the middle of demand fluctuation. The key to our strong earnings was operational flexibility. Substantial yen depreciation in comparison to the previous fiscal year also boosted our business performance.
ROE also reached a record high of 39.3%. I would like to express my gratitude to all of our business partners, employees, and other stakeholders for their continued support in this uncertain business environment. Please turn to page 5. Here is the summary of results. Fiscal year 2022 results are as shown in this slide. Sales, JPY 560.2 billion. Operating income, JPY 167.7 billion. Net income, JPY 130.4 billion. As I mentioned earlier, sales, operating income, and net income reached record highs and all increased significantly year-over-year. Sales exceeded our full year forecast announced in January by about JPY 10 billion due to faster than expected progress in deliveries to customers.
However, both operating income and operating margin slightly undershot our full year forecast due to the recording of inventory valuation losses in the fourth quarter for some system level test and other products, and a less favorable product mix. Net income was roughly in line with our forecast. Combining our year-end dividend forecast of 70 JPY and the interim dividend of 65 JPY, our annual dividend forecast is 135 JPY. Our total shareholder return ratio, including buyback and dividend, is 58%. Please turn to next slide. This is the sales by segment and region. Even though the semiconductor market slowed down and production volume decreased, higher semiconductor performance drove an increase in test volume, which compensated for the said decrease in demand.
Sales of SoC testers were driven by testers for advanced smartphone application processors, as well as for high performance computing and AI-related devices. In addition, sales increased in the automotive and industrial sectors, which are seeing strong demand. Sales of memory testers also increased year-over-year as customers continued to invest in high performance memory semiconductor test capacity throughout the fiscal year, despite the decline in memory semiconductor prices. As the breakdown by region shows, sales expanded in all regions. Taiwan continues to be our largest sales destination, as it was in previous fiscal year. Please turn to page seven. This is the Q4's result summary. In the Q4 of fiscal year 2022, we achieved record high sales. Gross margin declined quarter-over-quarter due to the recording of inventory valuation losses for some SLT and other products, as well as a less favorable product mix.
Each item will be explained in detail on the following pages. Please turn to page 8. This is the sales by segment for the fourth quarter. First, in Semiconductor and Component Test Systems business, the result was JPY 110.8 billion, which is an up by 12.4% quarter-on-quarter. SoC tester sales were JPY 86.9 billion, an increase of JPY 6.9 billion year-on-year. While sales for high-end SoCs were sluggish, sales for analog semiconductors increased. Memory tester sales were JPY 23.9 billion, an increase of JPY 5.3 billion year-on-year. Product deliveries for both DRAM and non-volatile memory increased. In Mechatronics Systems business, the result was JPY 17.6 billion, up by 23.9% quarter-on-quarter.
Sales of SEM metrology products increased amid wider adoption of EUV lithography technology by semiconductor manufacturers. In services, support and others, the result was JPY 19 billion, down by 24.6% quarter-on-quarter. In our SLT business, which currently has concentrated sales exposure to a limited number of customers, sales contracted significantly due to a decline in consumer related demand. Page 9, please. This is the breakdown of sales by region. In Taiwan, sales of both SoC testers and memory testers increased. In other regions, delivery of testers for automotive and industrial devices progressed mainly in Southeast Asia. In South Korea, due to sluggish consumer demand, smartphone related sales decreased. Please turn to page 10. Gross margin was 53.4%.
Gross margin declined significantly quarter-on-quarter, primarily because of the recording of inventory valuation losses of approximately JPY 3 billion on memory and storage SLT products. In addition, high-end SoCs occupied a less prominent place in this quarter's product mix, resulting in a less favorable sales mix, which caused gross margin to decline quarter-on-quarter. SG&A including all other income and expenses was JPY 40.1 billion. Operating income was JPY 38.6 billion. Operating margin was 26.2%. Please turn to the next page. As for R&D expenses, in the fourth quarter, R&D expenses were JPY 16.2 billion. CapEx was JPY 8.2 billion, and depreciation was JPY 6.1 billion. In fiscal year 2022, R&D expenses were JPY 60.1 billion. CapEx was JPY 25 billion, and depreciation was JPY 21.4 billion.
This was a year in which we made further investments in R&D targeting at medium to long term growth. As for cash flow, free cash flow was JPY 17 billion in the fourth quarter and JPY 43.5 billion in full year. Please turn to page 12. This is balance sheet. Total assets was JPY 600.2 billion. Cash and cash equivalents, JPY 85.5 billion. Inventories, JPY 169.1 billion. Goodwill and intangible assets, JPY 95.8 billion. Equity attributable to owners of the parent, JPY 368.7 billion, with a ratio of 61.4%. In fiscal year 2022, due to difficulty procuring parts and materials, Advantest held more inventories in order to enhance our ability to meet customer demands from a mid to long term perspective.
We will strive to refine our inventory management for optimal responsiveness to the changing market conditions. This concludes my explanation on the financial results. Thank you for your attention.
Thank you very much. From my side, I will explain the Second Mid-Term Business Plan progress report and FY 2023 outlook. Please turn to page 14. This is the results of the second year of Second Mid-Term Management Plan. This slide shows the financial progress of our Second Mid-Term Management Plan to date. In July 2022, we revised our MTP2 targets based on our FY 2021 results and FY 2022 outlook. The right side of the slide shows our cumulative results over the 2 years of the MTP2 periods so far compared with the revised targets highlighted within the red dashed line. Amidst growing recessionary risks, our business environment is becoming increasingly uncertain. In terms of progress in the second year of MTP2, we achieved record high results continuing on from the previous year.
In addition to capturing a higher test demand for smartphone, HPC, and high performance memory devices where we have a competitive advantage, we steadily pursued a strategy of expanding our customer base in the automotive, industrial and consumer sectors, which paid off along with our product strategy in the form of higher sales to these sectors. Unfortunately, the semiconductor industry as a whole is currently facing headwinds. Since the volatility is inevitable in this industry, we set our MTP2 targets as three-year averages. Although market conditions are likely to be less favorable in FY23, the final year of the plan, we will strive to achieve our targets. Please turn to page 15. This is our MTP2 progress report so far.
In 2018, we formulated our Grand Design, a 10-year plan to define our goals for the next decade. Since then we have been working to achieve it. As part of our Grand Design, our Second Mid-Term Management Plan, or MTP2, is a three-year initiative to solidify the foundation for Advantest's further growth in the context of strong growth expectations for the semiconductor market. This slide summarizes our progress in implementing our MTP2 strategies over the past two years. As semiconductors become more complex, we have pursued R&D and carried out M&A in future growth areas with a view to technological trends. In FY 2022, we launched the i-NTEC Cell, an innovative new memory test cell, and acquired CREA, a major Italian test equipment manufacturer which specializes in power semiconductors.
In addition, we further enhanced our responsiveness to customer needs with ongoing sales, support hiring, and have made progress in securing the needed human capital in anticipation of future business expansion. In order to seek operational excellence, we launched global business operation initiatives and commenced activities to promote a business process reform. With regards to governance, in order to reinforce the global headquarters management system, we introduced the CxO system to clarify management accountability. Furthermore, in January this year, we appointed a Group CEO, a Group COO, and a Group Co-COO, and shifted to a system with three representative directors. We feel that our growth foundation has become broader and more resilient while maintaining industry-best customer satisfaction. Please turn to page 16. This is a semiconductor test market and a market share report.
The calendar year 22 semiconductor test market is estimated to have been worth about $5.2 billion, a year-on-year growth rate of about a -6%, with the SoC test market accounting for about $4 billion of the total, and the memory tester market coming in at about $1.2 billion, despite lower demand for semiconductors for cornerstone consumer electronics products. Technology evolution in high performance semiconductors drove a demand for testers, which we believe compensated for the overall market contraction to some extent. We estimate that our calendar year 22 market share was about 57%, an increase of about 10 percentage points year-on-year.
We believe that we have won the number one market share for the second year in a row, including a roughly 58% share of the SoC tester market and about 53% of the memory tester market. In calendar year 2022, despite the market contraction, we expanded our sales by capturing the growing test demand for high-performance semiconductors, such as HPC and AI devices, and gained market share. Please turn to page 17. This is 2023 semiconductor market outlook. Uncertainty about the future of our business environment is increasing due to factors such as the increasing risk of global recession due to soaring inflation and interest rate hikes, concerns about expanding geopolitical risks, and the potential for profound exchange rate fluctuations exist. With the global economic slowdown impacting the final demand, the semiconductor market is seeing production adjustments in response to surplus inventories.
We estimate that it will likely take 6 to 9 months for demand for semiconductors used in smartphones and other cornerstone consumer electronics to revive. Under these circumstances, the semiconductor tester market is expected to shrink in calendar year 2023 for a second straight year. We estimate the calendar year 2023 SoC tester market will be worse at between $3.4 billion and $3.8 billion, a year-on-year decline. While demand for testers for automotive and industrial devices is expected to remain firm, consumer electronics-related tester demand is expected to go on declining in the first half of the year.
In the calendar year memory tester market, we expect strategic investments in high-end memory to continue. It is estimated that the overall size of the memory tester market will decrease year-on-year to $900 million-$1.1 billion due to the deterioration of memory semiconductor demand. In the long term, we expect an increase in semiconductor demand from new applications, including electric vehicles and ChatGPT, which will contribute to the expansion of the semiconductor tester market. Please turn to page 18. This is FY 2023 forecast. Due to the slowdown in the tester market, our FY 23 forecast calls for sales of JPY 480 billion, operating income of JPY 105 billion, income before income taxes of JPY 103.5 billion, and net income of JPY 78 billion.
Customers are expected to continue their inventory and production adjustments for the time being. We foresee sales declining in the first half, but they should gradually improve in the second half. Our full year gross margin is expected to be around 55%. We forecast a decline from the previous fiscal year, primarily due to changes in our product mix. Our operating margin is expected to decline to 21.9% as we continue to invest in R&D and CapEx to respond to new projects and applications that will ramp up in calendar year 2024 and beyond. This forecast assumes exchange rates of $1 to JPY 130 and EUR 1 to JPY 140.
Our latest forecast for the impact of exchange rate fluctuations on FY 2023 operating income is +JPY 1.1 billion per JPY 1 of JPY depreciation versus the US dollar and -JPY 0.3 billion per JPY 1 of JPY depreciation versus the EUR. Regarding the tightening of restrictions on the export of semiconductor production equipment to China by the United States and its allies, the direct impact on our FY 2023 earnings is currently expected to be minor, but we will continue to closely monitor the situation. Please turn to page 19. This is FY 2023 outlook by segment. This is FY 2023 semiconductor and component tester systems outlook. Our full year FY 2023 SoC tester sales forecast is JPY 265 billion. Tester investment is likely to slow down across a wide range of applications.
Due to the global economic downturn, we expect a drop in demand for advanced process products, such as devices for smartphones and data centers, as well as for mature process products used in automotive and industrial applications. Our full year FY23 memory tester sales forecast is JPY 70 billion. Although customers will continue to make some technology buys in anticipation of long-term high-end memory demand growth, memory tester sales are expected to decline due to worsening memory semiconductor market conditions. Please turn to page 20. This is FY23 mechatronics and services support and other business outlook. Our full year FY23 mechatronics system sales forecast is JPY 45 billion. Sales of our device interface products and test handlers are expected to decline in step with the slowdown in test reinvestment.
Sales of SEM metrology products are expected to stay flat year-on-year due to wider customer adoption of EUV lithography and increased demand for mature process photo masks. Our full year FY23 services support and other sales forecast is JPY 100 billion, a year-on-year increase. We expect stronger demand for maintenance services due to the steady growth of our installed base. In our System Level Test business, we expect sales to remain flat year-on-year, including sales postponed into FY23 due to the impact of the decline in consumer related demand in FY22. Please turn to page 21. This will be the final page. This is our key measures for FY 2023. Currently, the semiconductor market is in the midst of an adjustment that began in the second half of calendar year 2022.
We expect it will be a little longer before the market bottoms out. It should pick up again going into calendar year 2024. FY 2023, the final year of MTP2, will be a year in which we strive to achieve our MTP2 targets and prepare for a new wave of demand by building a stronger and more resilient management foundation. We have key measures. We will strive to create added customer value through the development of leading-edge test technologies, including a further expansion of our test solutions for future growth markets such as AI and power semiconductors, and reinforcement of our data analytics business foundation. We will continue to make necessary growth investment in new projects targeting future business expansion.
In addition, we will seek operational excellence by, among other things, refining our supply chain management for better responsiveness to demand fluctuations and actively utilizing DX to improve company-wide productivity. Finally, we held our first sustainability briefing at the end of last month. The briefing explained our belief that betterment of our human capital is one of the keys to improving our corporate value. To that end, we have launched a mid to long term project to support the sustainable growth of Advantest by introducing ESG initiatives, including investment in our human capital by promoting the enhancement of individual employees' skills and the deployment of our global personnel system. That's all for my presentation. Thank you very much.
Now, let us open the floor for questions. From Mitsubishi UFJ Morgan Stanley Securities, Mr. Wataki.
Can you hear me?
Yes, I can hear you.
Thank you. Thank you. Regarding your revenue forecast, there could be certain upside in my view. Based on market conditions, you are conservative for the drop in revenue and mid-tier local manufacturers' investment is gaining momentum. ChatGPT now having a lot of the momentum, everyone looking for business opportunity, and I'd like to know the Advantest view on these developments.
Well, this is Yoshida speaking. First of all, regarding our outlook, you're saying that our outlook is rather conservative, but the most recent condition is rather difficult. For mid to long run, we are confident the market is going to grow. The customers in China, mainly in fabless areas, they are quite active.
However, for the time being, on our operational levels, best case is that, this, revenue forecast. If we are able to maintain our market share, we could achieve more, and we believe that we can maintain our market share. Of course, I'm not going to say there is no possibility for upside. However, we are not still uncertain about the bottom out in our sight. This is our outlook. Regarding ChatGPT-
There are hot discussions in the market, certainly on a customer basis. We are capturing almost all of the major players. Direct impact on our revenue would be in the second half of this year or maybe in fiscal year 2024. We like to prepare ourselves. We like to position this period for preparation. That is my answer.
Can I ask a follow-up question? Regarding this, performance forecast, when did you make this forecast?
Around January to February, we made a tabulation of the numbers, and based on these numbers, we made our budget.
I see. Okay, that is all my questions.
Let us move on to the next question. Yoshida-san from CLSA.
This is Yoshida from CLSA. Can you hear me?
Yes. Please go ahead.
Thank you for this opportunity. In the tester market this year, we are expecting a decline for 2 years in a row. At this point, among the fabless customers, when we look at the roadmap toward fiscal year 2024, how do you foresee the tester market?
Please allow me to explain. Customers' plan for device development is something we understand through our engagement with customers. Toward fiscal year 2024, advanced node, new advanced node, is going to be used by some customers, and we know who they are, and we are involved in those projects. Testers, we need to collect a lot of technological data and engineering testing capacity is going to be needed.
In fiscal year 2024, in various projects with customers, we are currently engaged in preparing so that we can succeed in multiple projects that could contribute to our revenue in 2024. It is true that 2023 is going to be a moderate year, but in 2024, we are expecting to capture a meaningful portion of the TAM. That's all from me.
I have a follow-up question. SLT, system level test business, there is a valuation loss on inventories. Together with memory tester, you explained the amount was JPY 3 billion, but only for SLT alone, how much was it? The revenue forecast for SLT in this fiscal year is flattish, a slight increase. I believe it is steady for testers business. What is the background here?
You mentioned that some of the opportunities were deferred from the previous year, can you please explain your view on the market situation?
Yes. Regarding system level test, valuation loss was recorded for memory-related system level test. The exact amount is something we would like to refrain from disclosing, but more than a half of approximately JPY 3 billion is the answer I can share with you, which is a large amount. Memory-related system level market declined, there is quick switching over to the next generation, meaning that we have to face with our materials on hand becoming obsolete. Regarding system level test, our challenge has been related to not only memory, but SLT system level test, our weakness is that we only have limited number of customers.
With the significant decline of system level test, we once again recognize our high dependence on a limited number of customers. Business stopped there. Some of the opportunities were deferred. We had to postpone some of the opportunities that we thought we will be able to secure. For the deferred opportunities, we believe we will be able to capture them sooner or later. We are expecting them to contribute to revenue in fiscal year 2023. Also, consumables-related system level test business is in the company that we acquired. In that market, once inventory adjustment ends, we can expect the market to recover. There, we will be able to expect revenue that will be equal to the revenue from the previous year.
Is it not the case that the customer, number of customer is decreasing?
We are strategically trying to increase the number of customers, and, there is a sign of new demand. Customers, performance recovery and, by acquiring new customers, we would like to lead toward fiscal year 2024.
Thank you. That's all. Thank you.
Thank you very much. Let's move on to the next question. Goldman Sachs, Nakamura-san, please.
Thank you very much. Thank you. In your previous explanation, the revenue is expected to recover in the second half of the year to some extent. By looking at the current order situation, what sort of a recovery story do you have for the second half of the year? What's your view on this?
Could you repeat your question? Let me clarify your question. The current order situation, looking at that, what sort of a recovery do you expect in the second half of the year? Was that your question?
Yes, that's right.
Okay, thank you very much. In the first half of the year until May, there is a order backlog, and we will continue the shipment. AT, BT, these mobile devices are the key, and when will they recover?
This is something that we are trying to figure out by talking to customers, and we are monitoring the timing very closely. Under this current situation, at this point in time, we have been speaking to customers, but they give varied answers about the recovery timing. Some customers are saying in the second half of the year they have a more production plan. We have some expectations from such customers, but other customers have a test capacity available already. They are still trying to use up all the capacity that they already have. Given these situations, for different customers, the situations vary. Thank you.
Thank you very much. Understood. If that's the case, in the second half of the year, mobile will lead to fluctuation, and server and HPC, what about the trends of these areas?
Regarding HPC, looking at the current customer trends, the order backlog capacity is still being used up by those customers. This situation is going to continue just like the first half of the year. Towards the second half of the year, as was mentioned, generative AI, conversational AI, and HPC AI, these demands could, in 2024, grow to a great deal. In the second half of FY 2023, we believe that these trends will manifest themselves.
Understood. Thank you very much.
Thank you. We'd like to take the next question. Mr. Yasui from UBS. Yasui from UBS, can you hear me?
Yes, I can hear you.
Thank you.
I have also question concerning HPC. Many people paying attention to HPC, so number of the customers and also the I'd like to know whether there are increasing number of the customers for HPC. Whether the potential customers are on the increase or not?
Well. You know some companies, and you can imagine. Please consider that we are already doing business with them. On top of that, for example, in China or in Japan or in Taiwan and South Korea and in Europe, there could be certain possibilities for such players to emerge, but any conspicuous activities cannot be observed. Of course, in China, there are certain customers of our, ours might start coming to this area, but we have not seen that. Customers in the US, we believe that we are quite closely working with them.
Regarding the potential customers in the United States, do you believe that there could be certain phase where they would make the investment, or you are not sure or expecting that to happen in the second half?
Already designing the devices and making prototype, that is our assumption, and we have project on that. As you know, around the world, there are also regulations and rules making. Therefore.
When mass production stage comes in what kind of the manner, including the back-end processes, we have no clear plans.
Well, thank you very much. A follow-up question. My second question is regarding this fiscal year's revenue guidance. The revenue is JPY 80 billion to be reduced, but operating profit will be reduced by JPY 63 billion. Considering the marginal profit, your view is for profit to decrease quite significantly. I'd like to know your views on the growth market, please also enlighten us with the product mix.
Well, gross margin compared to last fiscal year, our plan is to see a little bit of the dip, but considering the product mix, this is not significant change. At the operating income level, this dip appears to be slightly big. Although we are in a down year, but we are not going to spend unnecessary expenses, and we like to control where we can control. As I mentioned, we have a new project, and we like to also making capital investment for production expansion for the future growth. We are also working on Advantest Cloud and the data business, and we like to secure some manpower. We are not intending to work on that. Beyond the 2024 leap forward, such expense requiring investment is likely to continue.
Currently, our phase is where we have to spend expenses. It appears because, especially the revenue is declining, but we are considering this is the investment phase for our future. Operating income and operating margin decline, it's something we have to accept at the moment in order to make progress. I might repeat, but it's not a deterioration with the product mix you are assuming. Well, 57% gross margin will be dropping 55% or so. Therefore, product mix could be less favorable. You could consider that. However, the raw material cost increase, and we are also making effort to raise our prices. In this kind of the manner, we like to aim to exceed 55%. However, our current view is around 55%.
That would be, sort of the point, given our current product mix. Thank you very much.
Thank you. Let us move on to the next question. Next is Hirakawa-san from BofA Securities. Please go ahead.
Thank you. This is Hirakawa from BofA Securities. Thank you. In fiscal year 2023, in the SoC tester market, there is -5% to -6% was your view for the market. What do you have as the factor for this range? -19% is for SoC tester in this fiscal year. What was the basis for your forecast? That is all. Thank you.
Yes, Hirakawa-san. Hello, this is Mihashi speaking. Minus 5% to 15% for SoC's tester market. The reason for this expectation is due to the macroeconomic situation, recovery of a consumer electronic products is the key. There's recovery in the Chinese market, together with a smartphone market recovery. To what degree is that going to recover is the question that we had when we decided this range. -19% is our figure. In terms of market size, where do we see our potential decline in sales? JPY 3.4 billion-JPY 3.8 billion is the range we are explaining. This is below the midline.
That is our expectation for the TAM. We consider this based on our expectation for the TAM at the moment.
Thank you. As a follow-up, I prefer to have company-wide number, but if you divide your sales forecasts, between front-end and back-end, can you give me some hint, what is the breakdown?
Yes. As President Yoshida explained earlier, basically, in the first half, there is less visibility in the market. There is excess capacity as well. There will be more concentration in the second half in our sales forecast.
I think I misunderstood because Sakamoto-san mentioned earlier that in the first half, you will be filling order backlogs. I expected that there is a significant amount of order backlog. In the previous earnings call, I think there was nine months worth of inventory. I expected more risk to be in the second half. Was that wrong? Where is it that I'm wrong?
Perhaps, you do not consider the lead time. 9-12 months was the previous lead time, but currently it has improved to 6-9 months. As a result, Q4 sales grew. In that regard, we are recovering, but due to lead time in the 3rd and 4th quarter, based on the market recovery, there will be more sales growth compared to the 1st half of the year.
Thank you.
Thank you.
Thank you very much. The next question, please. Citigroup, Ashima-san, please.
Well, thank you very much for your explanation. Ashima of Citigroup. In the earlier explanation, in 2024, towards 2024, HPC recovery is expected. This may be the case. Against this backdrop, generative AI could be a promising application. The background to that explanation, does that include the insight of yours when you have communications with customers? You haven't received orders and so on yet, from the second half of 2023 towards 2024, do you already have some inquiries being visible that can lead to such better growth? Is it more of a high level expectations or hopes on the part of the company? That's my first question.
Well, from customers, specifically device tester projects are underway. It's not that we may receive orders. Device is actually being designed and prototypes are being created and so on. That's the current situation.
There are some specific projects that are underway, and we wonder when the timing of a mass production is. That's the about of the timing of mass production. Thank you very much. Did I answer your question?
Yes, you did. I muted myself and couldn't unmute myself, so I apologize. I have a follow-up question. These are about numbers. SoC tester sales outlook from the previous year and this year, I believe that there have been a lot of fluctuations. HPC related portion, if you're trying to separate the HPC, I think it's difficult for you to say a percentage point, but could you say maybe 20%, 40% or 60%? Can you give me some colors, perhaps? Thank you.
This is Sakamoto speaking.
It is difficult to mention numbers in a quantitative manner, but in FY 2022 and 2023, when you make a comparison between the two years, in FY 2023, a lot of SoC applications exist. For example, mobile AP/BP, HPC, AI applications. Overall, time SoC market, if you look at the portion in FY 2023, it accounts for HPC and AI, the largest portion. That's our exercise result. Looking at that, our business segment, we have a strong share in this business segment, so it contributes to our sales. That's our current expectation. Thank you very much.
Thank you very much. We'd like to move to the next question. Mr. Yamamoto from Mizuho Securities.
JPY 480 billion of full year revenue. What is the split between first half and the second half? What would be the driver for recovery or increase in the second half? Hello, Mr. Yamamoto. Regarding the split between first half and the second half, we'd like to, if possible, avoid making clear a split, but roughly speaking, second half would be more than 10% bigger. That is our view. Did you get me? 10% recovery from first half to the second half, what area would be driving this recovery? Which segment? Segment-wise
Mobile recovery is what we are expecting. Concerning FY 2023, our customers, rather than concentration evolving, there would be a functional increase. Whether we could expect a significant recovery, we have not yet to confirm that. Towards the second half, smartphone related de-demand to be recovered. That is our expectation. Conversely speaking, the first half revenue is rather visible. Can I understand in that manner?
Yes. Thank you very much. That's all my question.
Thank you. We are almost reaching the time to finish this Q&A, but next we'd like to move on to questions from the media. Matsuura-san from Nikkei, please go ahead. This is Matsuura from Nikkei.
Thank you for this opportunity. I have a question related to investments. I'm on page 11.
There is investment, JPY 60.1 billion from R&D in the fiscal year that ended. I believe the amount of investment was the largest in your history, and you mentioned a couple of times in your explanation that in fiscal year 2023, it is going to be a difficult year. What is the level of investment that you are looking at, especially in comparison against the previous year? Also, in a difficult year like this, how are you going to be making investments, your targets, your focus areas? Can you please give me more color on that? Thank you.
Yes. Are you talking about CapEx when you say investments, Matsuura-san?
Excuse me. R&D expenses, capital expenditure. I'm talking about both.
On page 18, we have performance forecast for fiscal year 2023, we have put the amount of CapEx and R&D expenses. In terms of the targets and focus area, as for R&D expenses, of course, we need to increase headcounts for R&D. As we have been saying in various development projects, we need to reinforce our structure. That is why we are expecting an increase for R&D expenses. As for CapEx, we have been trying to control this further. Compared to 2022, this is a slight decline, where we are planning to invest is the most simple answer I can give you is in Arizona in the U.S., a factory is currently newly built to manufacture a large number of sockets with robots. This is requiring a large amount of investment.
From the U.S., or the state government, there is a benefit that we can be supported. Therefore, enhancement of capacity there is one area. In Taiwan, we are about to acquire a company named Shin Puu , which manufactures test boards. For Taiwanese customers, U.S. customers, we need to enhance our production capacity. Such investment for growth is expected and included in this JPY 21 billion. Also, for the past 2 years, we have been working on improvement of office environment, but that is going to moderate in this fiscal year. We will be selective of opportunities to make investments. That is all from my side. Thank you. I apologize for not noticing these numbers on this page.
There is a slight decline in CapEx, and this is not because of a difficult performance or the market condition, but this is just due to adjustments.
Yes. Understood. Thank you.
Thank you very much. Let's move on to the next question. Nikkan Kogyo Shimbun newspaper, Yamada-san, please.
Thank you. About the lead time or delivery time, 6-9 months is the lead time you mentioned. Normally, it's 2-3 months. When can things be normalized? To that end, what sort of measures are you planning newly? If you're planning any new measures, could you please talk about them? Also, difficult procurement situation of semiconductors, is this changing? Because of the inventories are increasing, could you please talk about the background as to why? Thank you.
Regarding the lead time, 2-3 months lead time was a thing of a few years ago. Over the past three years or so, lead time has been expanding because of the tighter semiconductor market. The market has improved, because of the lead time has been expanding little by little, our parts procurement suppliers provide a volume that we require.
They cannot provide the volume we need. It's not just us, but also automotive industry has suffered from this. Lead time has been expanding as a result. I believe that the peak was last autumn through winter. The semiconductor market peak or bottom, when you look back, you will know for the first time. In advance or at the beginning, you cannot really understand or foresee when the peak or bottom is. When you look back, you finally understand when the peak was and when the bottom was. I believe, though, maybe the peak was last summer through autumn, looking back. Once the peak is over, the supplier started supplying things more smoothly than before.
There are some delayed parts and so on. In that sense, because of the improvement on the part of suppliers, our lead time has been improving or shortening as well. We have a long lead time parts. We tried placing orders well ahead of when they were needed. Because of an expansion of supplier supply capacity, our inventory level has been increasing as well. Of course, we don't want to see our inventory keep increasing. We need to control. I believe that the current level is a peak level. That's our hopes. Going back to 2 to 3 months lead time is something that cannot happen in the immediate future, in my view. That is because in the past, companies and so on suffered to a great deal.
They didn't have enough inventories, as a result, they couldn't ship products out, they started holding high level of inventories. Having said that, the suppliers increased their capacity, that's not the case actually. Once the up cycle starts happening again, there will be a supply shortage once again in the future, because we cannot always avoid such a situation. How to control demand and supply is something that we try to keep working on this year. In the immediate future or foreseeable future, are you talking about FY 2023 and 2024? Normalization won't happen in those two years. FY 2023. Well, I said lead time should be somewhere between 6 to 9 months. If this continues and in FY 2024, if there is another upcycle of the market, the lead time will expand once again.
We are concerned about this.
Yes, that's right. Okay, one more question. Maybe the market will may get some momentum going forward because of ChatGPT and so on. Such generative AI is gaining much attention. Are you also paying attention and you are selling testers to GPU players and so on, I believe. How much upside can you expect because of this? Could you talk about the size of your expectation here? Thank you.
This is Mihashi speaking. Well, ChatGPT is a hot topic today. Because of the growth of ChatGPT, GPU and accelerators, processing capacity, high processing capacity business should grow. We have our customers in this space, so we should be benefited. This can be a touchstone in a way. Having said that, using ChatGPT, you need an environment and consumer electronics.
We'll be using ChatGPT and data centers and high performance data centers. I believe high performance GPUs will be deployed here. If the usage of ChatGPT increases, including the macro economy. We need to see the recovery of consumer electronics as well. If this positive development happens, high performance are trend and data center space can grow. Currently, the GPU and high performance computing areas, we have a certain positioning in this market. Going forward, I believe that this trend is going to benefit us.
When do you expect such a benefit to materialize?
Well, for the time being, it's very uncertain and unclear. In this quarter and the next quarter, we try to get more clarity on this, and we try to communicate our analysis to you. Thank you.
Thank you very much.
Thank you. From Sangyo Times, Gichutusha, Inaba-san, please.
Inaba from Electric Devices Shimbun. In CY 2023, what is the image of the market share of the semiconductors, testers, by SoC and memory tester? Particularly for memory testers, in the DDR5, in five high speed, there are quite the strong presence of the competitors. Could you share the market share image for calendar year 2023?
Well, for market share image for 2023, SoC and memory combined, 55%-60%, and SoC same, 55%-60%, and the memory, 50%-55%. That is our view. For memory high speed, the competition is existing. However, in the DDR side DRAM, we are making advantageous move.
Even though there are competitions, but concerning market share, we are not expecting a significant impact on our market share. Thank you very much.
We have received a lot more questions, but unfortunately, this is time to close today's earnings call for fiscal year 2022 for Advantest. Thank you very much for your attendance.