Earnings Call: Q4 2020

Apr 24, 2020

Thank you very much ladies and gentlemen for attending the Financial Briefing Conference Call of Adventist Corporation for fiscal 2019 ended March 31 2020. Attenting this conference call are Yoshiyaki Yoshida represent director, president, and CEO at Tsushi Fujita, Managing Executive Officer, CFO Kimiya Takamoto, Managing Executive Officer, Executive Vice President of Sales Group. And, yes, we will be Hashi, Managing Executive Officer and Executive Vice President of the Corporate Relations Group. Today, CFO, Fujita, will first brief on the financial results for fiscal 2019 followed by the presentation by CEO Yoshida on fiscal 2020 outlook and the Midstream Business Plan Progress Report. We will then take questions. The whole conference call is scheduled for 1 hour. The presentation material is available from TDNet and our company website. Before we start a cautionary statement, this presentation contains forward looking statements that are based on Adventists, current expectations, estimates, and projections. Forward looking statements are subject to known and unknown risks uncertainties, and other factors that may cause Adventists' actual results to be materially different from those expressed or implied. I now give the floor to CFO, Fujita. Good evening. This is Fujita speaking. To go over the financial results for fiscal 2019. Please turn to page 4. Fiscal 2019 performance highlights. Strong gesture demand for a high end SoCs such as 5 g devices continued through fiscal 2019. In response to growing demand for a higher performance at semiconductors and enhanced reliability assurance. Memory tester demand also recovered from the second half. Advent tests system level test business classified as a new business saw steady order growth. Despite prolonged inventory adjustments in the memory and automotive related sectors, since the second half of calendar year 2018, Adventist achieved record high orders for the 2nd year in a row. Business activities have been restricted due to the spread of COVID 19, but internal and external efforts enable a company to exceed the sales estimates announced in January. The 2nd year of our midterm management plan, and we exceeded the targets set forth in the plan for a 2nd consecutive year. Next page. Fiscal 2019 summary of results. Orders were up 4.6% year on year, at 287,800,000,000 yen. Sales were down 2.3% at 275,900,000,000 yen. Operating income was down 9.2 percent at 58,700,000,000 yen, and net income was down 6.1 at 53,500,000,000 yen. Backlog increased by 16,100,000,000 yen to 91,000,000,000 yen due to growth in orders. The year end dividend is $41 per share, the same amount as the interim dividend An increase of 7 yen from the forecast announced in January. The annual dividend is 82 yen. ROE not shown in the graph was 24.9%. Next page. Fiscal 2019 orders by segments and region. Annual orders by business and region were as shown here. Test your orders decreased year on year, mainly due to a decline in display related orders, but stayed at a healthy level. In addition, due to growth in system level test, orders overall increased. Next page. Annual sales results by segment and region. Our regional mix as shown on the right changed slightly. Sales in Taiwan due to softening demand in the display and memory markets. On the other hand, sales continue to grow in China where the semiconductor industry is ramping up. Next page. Fiscal 2019 4th quarter summary of results. 3 months ago, we expected the 4th quarter order to be about the same as the end of third quarter, but due to memory related and system level test growth, and the addition of Eisai Inc, which Adventist acquired at the end of January to consolidate it results. We achieved record high quarterly orders. As a result of recording deferred tax assets in in anticipation of tax reduction effect on future tax expenses, net income is higher than income before tax. Next page? Fiscal 2019 fourth quarter orders by segments. In the semiconductor and component test systems, Sales were 52,200,000,000, up 10.1 percent quarter on quarter. As for breakdown, please refer to the graph on the right. SOC test orders in yellow were 32,900,000,000 yen, flat quarter on quarter. Orders for mobile and HPC or high performance computing devices were strong. Regarding memory testers in green, In addition to solid DRAM related orders, flash memory investment grew farther resulting in orders of 19,300,000,000. In mechatronics systems, orders grew by 31 point percent quarter on quarter to 12,600,000,000 yen. This result correlated with memory tester orders in excess of estimates. In services, support and others, orders increased by 63.3 percent quarter on quarter to 26,000,000,000 yen. In addition to strong system level test related orders, maintenance contract orders also grew. Next page is about FY 2019 Q4 sales by segment. Semiconductor and component test systems was down 8.8 percent quarter on quarter to 45,000,000,000 yen, and the breakdown SOC tester sales in yellow came in on plan. Memory tester sales in green exceeded expectations set 3 months ago due to stronger customer inquiries for servers. Machatronics systems was flat quarter on quarter to be 10,200,000,000 yen. As for services, support, and others, Eisai's business results began to be added to consolidated results in Q4 in this segment. Besides business of high end IC sockets was strong in HPC related applications. Next is about FY 2019 Q4 orders and sales by region. China and Yellow became the largest source of both orders from memory customers, mobile related orders also increased. In America's and others, high end SOC orders increased in the US and Southeast Asia. In Japan, orders for flash memory testers increased. As for sales by region, mobile related sales decreased in Taiwan, but increased in China. Next page shows 4q sales, gross profit, and operating income. Gross margin was 53.8%. While the sales of Isai, which we acquired in January are progressing, we recognized amortization of intangible assets related to orders inherited from the company's prior ownership. Excluding this impact, we were able to maintain gross margin above the 55 percent mark. SG and A was 25,100,000,000 yen. Operating income was 11,600,000,000 yen. Operating margin was 17%. Full year operating income in FY 2019 was 58,700,000,000 down 9.2% year on year. SG and A expenses increased due to securing additional human resources for R and D and support as foundation for future growth. Please note that operating income in FY18 included a one time profit of approximately 3,500,000,000 yen due to the sale of fixed assets and the transition of a part of our pension system to a defined contribution pension plan On a so called core operating margin basis, which exclude one time profits and losses, operating margin would be 21.3% in FY 2019, which is about the same level as 21.6% in FY 2018. Next page explains R And D expenses, CapEx, and depreciation and amortization in Q4. And the expenses were 9,900,000,000 yen and R and D to sales ratio was 14.5%. CapEx was 4,600,000,000 yen. Capital investment aimed at improving R And D And Production Efficiency was concentrated at the end of the fiscal year. Depreciation and amortization was 4,200,000,000 yen. This is due to applying the new IFRS lease accounting standard from FY19 as well as temporary increase of amortization of intangible assets due to recent M and A. As for cash flow, free cash flow in Q4 was minus 20,700,000,000 yen, due to the acquisition of Eisai, investment cash flow expenditures increased in Q4 and free cash flow became negative. Next slide shows balance sheet as of the end of March 2020. Total assets were 350 5,800,000,000 yen. Cash and cash equivalents were 127,700,000,000 yen, up 7,800,000,000 yen from the end of the previous fiscal year. Equity attributable to owners of the parent was 230 1,500,000,000 yen. The ratio of equity attributable to owners over the parent was 65.1 percent, down 0.1 points from the end of the previous fiscal year. The business environment is entering a period of increased uncertainty, but as this balance sheet demonstrates advances continues to maintain financial stability. That is all for the explanation of financial results. This is Yoshida speaking. I will go over the fiscal 2020 outlook and report on the progress of the midterm business plan. Please turn to page 16. First, I look at our situation from the mid to long term perspective. 2 years ago, in April 2018, The company formulated a 10 year mid to long term management policy and a 3 year mid term management plan. Both starting in fiscal 2018, which layout where we want to be in the mid to long term and how we should get there. The company is driving S 1 to achieve the goals of the plan. Fiscal 2020 marks the 3rd and the final year of this midterm management plan. Please turn to page 17. Progress report of year 2 in the Mitra Management plan. Let me summarize the progress of our Metro Management plan to date. Over the past 2 years due to the expansion of the tester market and the company's market share gains, results have exceeded the target value of all KPIs under our base scenario. On the right, you can see the average for the 2 year period. Given that these targets were set as high hurdles at the time of formulating the plan, this indicates that we have made good progress in the last 2 years. We would have liked to raise our goals even higher for fiscal year 2020. But because the scale and the duration of the effect of the COVID 19 pandemic on the global economy are extremely unclear, We are keeping the initial target values of our metro management plan unchanged, and we'll aim to meet or exceed these targets. Please turn to page 18. Our Grand Design And Metro Management Plan set forth the aim of increasing our market share by 1 in calendar year 2017 to 46% in 10 years. In calendar year 2019, we were able to increase our share by one point over calendar year 2018. When our share had expanded significantly. Amid growing investment in semiconductor development and volume June for 5 g. We have effectively met customer needs for SOC testers to further increase our market share. As a general rule, our market share fluctuates markedly in step with investment trends of major customers. But we have made notable gains in the last 2 years. The memory tester market has slowed down. And our customer mix led to deterioration year on year. As a result, our market share in this sector has fallen in fiscal 2019, but still commanded a majority share. Although the outlook for calendar year 2020 and beyond is uncertain, we expect the high performance semiconductor tester market for a 5 g and high performance computing to continue to grow based on mid to long term technology roadmaps. Please turn to page 19. Initiatives for mid to long term growth. In fiscal year 2019, the 2nd year of our Midtrum plan, we also made efforts targeted at mid to long term growth. We continue to actively add human resources to strengthen the foundation of high end SoC test business, which stands out among our core businesses for high growth expectations. We also worked to further deepen engagement with customers and maintain and expand our market share. As part of our mid to long term growth strategy, we expanded our SOC system level test business and reinforced our test peripherals business. A review of the Adventist way clearly defines our core values and clarified the vectors for the company's growth. We believe that the Adventist way gives our global operations the strength needed to minimize the adverse impact on product installation and customer support from COVID 19 related restrictions on movement. As for fiscal year 2020, although the outlook is certain at present, feedback from customers supports our confidence in the unchanged market trends driving our limit to long term growth. Such as semiconductor performance gains and an increased emphasis on the importance of testing. Not only COVID 19, but other risk factors such as trade friction and natural disasters are increasing. In fiscal year 2020, we will of course respond flexibly to these environmental changes, but also continue to invest in long term growth. We will promote measures to strengthen engagement with important customers and increase market share in sectors such as 5 g millimeter wave range semiconductors and high end memory, which hold create future promise. Promise. Please turn to page 20. I would like to report on the current status of our system level test business. Which has been referred to several times during this briefing. Adventist has combined resources gained through M and As in the recent years with basic technologies accumulated organically to provide efficient functional test solutions for modules and systems that incorporate all kinds of memory and SOC semi conductors. The concept of system level test is now attracting attention from semiconductor manufacturers due to improvements in the performance of high end semiconductors, greater circuit integration, and an increased emphasis on reliability assurance. Similar solutions already exist in house at customers and are available from measurement device, measurement instrument manufacturers. But our portfolio is differentiated by our wide ranging know how and superior performance. Please turn to page 21. Usually, this is where we will be describing the outlook for the tester market for the new calendar year. Let me describe our current view for calendar year 2020. Although the calendar year 2019 Tester market declined year on year, 5 g related test demand was strong. And test demand for DRAM and NAND flash for data centers regained its growth trajectory. We believe that the structural which are driving increased demand for testers remain unchanged. Test the demand rely it to 5 gs smartphones and data centers, which require high end semiconductors, is firm. And we expect it will continue at a certain level through the first half of this year, CY 20. However, the COVID 19 pandemic has increased uncertainty about future demand in a wide range of industries such as automotive, industrial display and mobile related tester demand. And we are currently reviewing our market forecast for CY 20. Next page summarizes managing the impact of COVID 19 at Adventist. This is an organized view of the risk of COVID 19 poses to our business. 1st and foremost, There is a risk that Adventist business may suffer from infections among employees, suppliers, and all customers. Although different restrictions have been imposed in each country, a production system is severely restricted At the moment, due to travel bans and lockdowns, a support capabilities have also declined due to the inability of our engineers to move freely. Supply change around the world are also fragmented, and we have begun to encounter procurement problems. Problems on the supply side are leading indicators for us, but it is clear that the rapid deterioration of the global economy will eventually affect the semiconductor market and the semiconductor manufacturing equipment market. That said, it is still hard to predict how much impact it will have on demand. Regarding Adventist's response to these issues. 1st, from the perspective of business continuity and employee health, we have implemented bans on business chips since January and have now switched to remote work globally. We need to continue this policy for the time being to protect the health of our stakeholders. Regarding the impact of restrictions on movement, some countries are constrained in terms of production. But we do not anticipate it will be a major obstacle because other countries are compensating for these declines. We understand each country supports operations of semiconductor business and plans, which are considered as essential business. Regarding customer support, we do not see major problems occurring as we have enhanced our local support capabilities. Thus, immediate largest risk is material procurement until the previous quarter We were able to avoid major problems, but in the current quarter, we have started to face problems in procuring some parts We are working hard to address these problems now. Regarding the impact on the demand side, There is no telling how deep and long the impact of the pandemic will be, leaving us no choice, but to monitor the situation carefully, and respond flexibly. We are tentatively exchanging detailed information with our customers on the situation. In the post coronavirus period, we believe global supply chains will be reviewed and rebuilt. We are aware that this may pose both opportunities and threats to the development of our business. Advantage will closely watch the signs of change in parallel with a careful review of our BCP. How coronavirus would change the world can be threats as well as opportunities for us. Please turn to page 23 for the forecast of FY20. Today, let me explain the forecast for Q1 only. So far, no major changes have been seen in semiconductor capital investment trends from the previous quarter, but it is not possible to predict at present how the Semiconductor And Semiconductor Manufacturing equipment markets will change in line with future changes in the global economy. Therefore, it is difficult to forecast our business results for the full year FY 20. Under these circumstances, we are presenting only q 1 earnings for us this time. In Q1, we expect orders of 62,000,000,000 yen. Sales of 70,000,000,000, operating income of 13,000,000,000 yen. Income before tax of 13,000,000,000 yen and net income of 10,500,000,000 yen. The forecast uses exchange rate assumptions of 105 yen to the dollar, and 120 yen to the euro. Although the impact of the COVID 19 pandemic is factored in As much as possible, we expect the situation will change drastically during the period. So this forecast for Q1 should be considered for reference only. I mean, actual results of Q1 could be above or below the forecast. By segment, sales of SoC and mechatronics are expected to decrease slightly quarter on quarter. While memory and services, support, and others are on a growth trajectory. At the January briefing, we wanted to aim a record sales year, but given the uncertainty in the global economy at present, we consider that flexible response to changes in the external environment must be our top priority in FY20. Please turn to the last page, page 24 for summary. The COVID 19 pandemic has raised many concerns. But as Q4 orders show, our major customers, large semiconductor manufacturers, have not changed their stance on continuing investment. Our customer's financial condition is relatively strong and it seems they continue their investment to secure their competitive advantage for the post pandemic period. However, it is clear that the deterioration of the global economy will cause changes in semiconductor related markets in this fiscal year, we will set a priority on carefully monitoring and responding flexibly to changes in our business environment. Despite these circumstances, we believe that mid to long term semiconductor evolution trends remain unchanged. And we will continue to implement our mid to long term management policy by combining internal organic efforts with resources acquired through M And A. Test demand for high end devices in sectors such as 5 g, HPC, and memory will continue to grow. We will secure a leading position in these arenas and maintain and improve our current market share. That is all for my presentation. Thank you. We will now take questions. 1st, Mister Watakti from Nomura Securities. Good evening. I hope you can hear me. My first question, DiscCO Corporation. It is briefing earlier today mentioned peeking out of customer inquiries and attracting attention. Are you sensing signs of orders and inquiries peeking out as well? Of course, as mister Yoshida said, They are various uncertainties for the future outlook, but are you currently sensing a peaking out? That's my first question. So is your question about possible peeking out? Yes. In terms of orders and inquiries. In the fourth quarter, the amount of orders for system level test was very large So it may seem rather large overall, but in the SLT business, the amount per order tends to fluctuate significantly. So in the first quarter, we expect a certain level of moderation. But in terms of semiconductor tester ATE itself, We do not anticipate a major downturn. So in that sense, we do not expect a peaking out during the first quarter. That is not our view. I see. Thank you. My next question is on new products for SLT. You have been promoting this for some time. And I personally had expected that 10,000,000,000 yen would be reached quickly, but now it seems we are way off. So what is your view on the scale of this particular business? And, there are other aspects as mentioned in previous briefings such as market share increase coming from upgrading of burn in testers, CMOS imaging sensors, testers and perhaps with work at home, LCD monitors are sitting well. And so display driver IC testers must be doing well well. So could you comment on the current situation? Thank you for your question. This is Mihashi from the corporate relations group. You asked about the scale of the SLT business. As was mentioned earlier briefly, it started from the module to using the motherboard related to PCs in the past. And as has been mentioned for sometime recently, with the increased complexity of semiconductors from the viewpoint of reliability assurance them, it is growing str strongly. For this term, we saw a strong increase in orders for SLT. In that sense, we believe that customers with similar processes and similar products will expand the use horizontally. And there is a great growth potential. It is against this backdrop that we executed acquisitions in the SLT business. As for the scale of the business, SLT is typically application based system testing. So there is seasonality. So it is a bit difficult to talk about the scale while keeping in mind the seasonality factor. But we are expecting on a full year basis, maybe 20 to 30% growth going forward with successful progress on the part of the customers. I see. Can you also comment on CMOS and burn in testers and display driver IC testers? As for CMOS Testers, given growth related to multi lens smartphones and increasing number of pixel counts, and the expansion of applications in automotive and other areas. The combination of reliability assurance requirements and the pixel count growth and the number of units produced is driving the market growth. Amid such development, Advantest is steadily and solidly growing the CMOS Tester business. And going forward, the smartphones and automotive related market warrants a close attention and caution. But basically, we believe that with the advancement and growth of technology, the CIS business will grow. This is Sakamoto speaking. 1st, regarding the burn in, the market that we target is the high end memory burn in segment. The market size in 20172018 grew to 100 to 200,000,000 US dollars, then drop to below 100,000,000 in 2019. But we are promoting the DRAM burn in and core test solutions to expand the support. So should the NAND market recovery prove solid? Then we believe 2020 will be better than 2019. Regarding the LCD driver in 2018, backed by shift to TDDI's and COF, we saw a threefold increase in orders related to LCD drivers. Partly due to the reaction to that in 2019 orders declined. We were acting a recovery in 2020, but currently due to the COVID 19 pandemic, customers are reviewing and revisiting their respective investment plans. Watching how things evolve going forward regarding COVID 19 impacts. Thank you. That's very helpful. The next questioner is Mister Yoshida of CLSA Securities Japan. Thank you, Yoshida, from CLSA. My first question is on orders. The actual orders for SOC for the fourth quarter. I think your previous outlook expected SoC tester orders to decline quarter on quarter. But in reality, it grew slightly. Can you give us the background? And was it that some orders shifted from the first quarter and came in early. Can you also comment on the first quarter orders product by product in particular for test Saka Muuto from sales speaking. Your first question on SOC tester orders. True. Compared to the forecast, for the fourth quarter, the actual was 1,000,000,000 lower. This was particularly due to the impact of COVID 19 and some customers decided to postpone investment to the first quarter. And as was mentioned earlier, especially related to LCD drivers, that was one factor for the results that we saw. And your second question is about the first quarter by product by product. Correct? Sorry. Before that, did you say SSC tester sure was lower in the fourth quarter. Were you talking about sales? No. I was talking about orders. I see. How much did you say? Sales were 1,000,000,000 higher than the forecast. So sales were 1,000,000,000 higher but orders were 1,000,000,000 lower. Is that what you said? Yes. I see. Thank you. What about orders for the first quarter? 1st quarter orders. Quarter on quarter, we expect SoC testers and memory testers to both decline. And as for mechatronics, with a decline in memory tester related orders, we expect a decline in the DI or the device interface products. I see. My next question is on Eisai. A large amount of orders were recorded in the 4th quarter. And you also mentioned seasonality. So going forward, forward, should we expect a concentration in the fourth quarter, is that the type of seasonality we should expect? And how would the sales be recorded? How would the fourth quarter orders be booked as sales? Thank you for your question. Let me check if I got your question right. Are you asking about Eisai or the system level testing business? Sorry. I meant system level testing business. I see. Regarding seasonality, there definitely is seasonal factors. As mentioned earlier, it is related to the delivery of the final applications. That type of seasonality is in the SLT business. As you are aware, the timing of smartphone launches is slightly different for different vendors, be it US, European, or Korean vendors. And accordingly, the demand for the testing business goes up. And that is the seasonality. So when is the peak season? Actually, it is governed by the launch for or the launch of the final products. So you can't say specifically when it's not fixed but the seasonality is definitely there. As for the orders received in the last fourth quarter, Sales will be booked during the first half of this fiscal year. I see sales booked in the first half of fiscal year. Thank you. That's all from me. The next questioner is Mister Hirokawa from Merrill Lynch Japan Securities. Thank you, Hirokawa from Merrill Lynch Japan. I have a couple of questions related to system level testing. Can you elaborate on the scale and breakdown. In the 4th quarter, orders for services, support, and others totaled 26 1,000,000,000 yen. How much of that came from system level testing? And for fiscal year ended March 20 20 on a full year basis, what was the total amount of sales and orders? And in terms of area, you mentioned storage versus automotive versus HPC. In what areas do you see emerging needs? Can you elaborate on those factors? Thank you for your question. 1st, the scale, About 60% of the orders for our services, support, and others came from SLT. In the fourth quarter. And on a full year basis, approximately 30%. Thank you. I understand you started with SSD testers. I'd like to know which areas were strong in FY 2019? And which areas are you going to focus on in this FY 2020? If you have anything you can share with us. At this moment, we are seeing strong performance of SLT for SOC high end application as well as SLT for SSD. Thank you. My second question is about the same slide. And it says, isai contributed to system level test? I assume IC sockets are not used for system level test only. Still, you describe it as a differentiator. Can you elaborate more on this? Thank you for your question. It says SLP on the slide. But as high end sockets for high end applications are esign strength, we consider they are applicable not only to SLP, but also to ATE. Having said that, The volume of SLT related application business is large as of now. This is why we currently mention SOP in the presentation. Okay. I understood. Let me clarify one more point. Am I correct in understanding is I accounts for about $100,000,000 in sales? Yes. The sales of Eisai for fiscal year 2018 were $100,000,000. And going forward will grow its sales father by expanding its customer base or applications after the acquisition. Thank you. That is all from me. Next, Mister Nakanomeo from Jefferies. This is Nakanomeo from Jefferies. Can you hear me? Yes. We can hear you. Thank you. My first question is also about system level test. I'm asking a little detailed question, but does this 26,000,000,000 yen for the orders of services, support, and others include backlog of isai as a result of its consolidation. I mean, isn't this a case that includes not only orders you received in the 3 months of q 4, but also includes a size back log for alignment of a backlog account and this increased the orders in Q4. Its backlog we inherited is course included in the item of backlog, but that is not recognized as new orders. So 26,000,000,000 yen is actual orders received. Only orders I received in February March after the acquisition were posted as new orders received. Then you said 60% of these orders is for SLP. I know all of them did not come from isai. But anyway, you saw strong orders in January, March quarter, in real terms. Earlier, ESI sales was plane is about $100,000,000. But according to the current business flow, we assume much higher sales and orders are achieved by them. Okay. Assume it would be difficult to predict this now due to the impact by coronavirus and other issues, but without these issues, what do you expect for the level of gross profit with acquisition of Eisai and 1 system level test business is ramped up. I know it is difficult to make an accurate focus now but do you have any idea about it? We assume gross margin is fairly good for both SLT Business of Astronics we acquired last year, and SLT Business of Esai we acquired this year, which are comparable to the average gross margin of our tester business. For q 4 of the profit of isai was not included at all, but from q 1 of FY2020, It will start contributing in profit, and we do not expect profit margin will decline by this inclusion. Thank you. I understood. My second question is about your supply chain in Malaysia. Movement restrictions still continues. Can you explain the current status of operations in Malaysia? Are you able to operate with priority under such circumstance? In Malaysia, But there is a company producing V 93,000, a SOC main platform and a consignment contract. Also, we have our own production subsidiary in Penang, which is not so large, but engaged in production of device interface units, and its operation had been suspended temporarily due to the restriction placed by Malaysian Government. But some conductor related businesses are basically considered as essential in Malaysia, and they were permitted to resume operations if not 100% of ordinary operations. Therefore, supply or shipment of V 93,000 did not suffer the impact at all until Q4. For Q1, we have already prepared backup production system in Germany to compensate the production decline in Malaysia, which would be around a 50 to 70% of ordinary production level. As long as we can secure materials, we do not think the production will be strained in q 1. We assume the risk factor is that we cannot secure perfect procurement for materials yet. The operations and the plant have not become a measure issue so far. Thank you. Thank you. Next is Mr. Yoshikawa, Morgan Stanley MUFG. Hello. I'm Yoshikawa from Morgan Stanley. My first question is about segment income. Services support and others were in the red in Q4. And assume this is due to the amortization of intangible assets related to acquisition of Isai. Can you tell me how much the segment income was affected by the amortization related to this point. Depreciation and amortization increased in Q4 And what is your outlook for this item in Q1? Another related question in the balance sheet goodwill and intangible assets were recorded as 51,000,000,000 yen, that's over the end of March. Can you provide a breakdown of this number between goodwill and intangible assets? Like to know if the accounting for the acquisition has completed. This is Fujita. Your first question was about the amortization cost related to ESI's business included in the segment services, support, and others. I cannot disclose specific figures here, but to help your guests I can say that the amortization we posted in Q4 was more than the amount which could have turned this deficit of the services, support, and others to the Black. I'm sorry. I couldn't hear your second question well. Can you repeat it? Depreciation and amortization in Q4 was slightly more than 4,000,000,000 yen. What is your outlook for it q1 onwards. Suppose that would be at a normal level. Do you mean it will be back to the level of a little over 2,000,000,000 yen or so? This is Yoshida. I think this topic substantially overlaps with the first question, but the reason of large depreciation and amortization in Q4 is as you guess. It is considered as a temporary factor so you can assume it will go back much to the previous level. Okay, I'm clear. But please understand it will not exactly be the same as in the past considering some increase in capital investment. I understood. Here's my second question. Last year, you explained testing time got longer. Due to introduction of 5 g devices. Can you explain about how testing time is changing now for the advanced devices. If you have any idea, you can share with us. I am Mihashi. That is a little difficult question to answer because we cannot disclose the test time data of our customers. For your reference, high end products for HPC, CPU, Processes, etcetera, account for 70% of total SoC sales. SoC sales grew year on year in the fiscal year under review. And this growth is from those high end products, and sales of the high end products grew 25 percent year on year, and I hope this indicates something for you. I know I am not answering your question directly. Do you think this can be a help? Okay. I understood. Thank you. Thank you. Thank you for your questions. We have received some more questions, but we have run out of scheduled time. So I'd like to call an end to Q And A This is the end of the conference call. Thank you for your participation.