Thank you very much for joining Advantest Corporation's financial briefing despite your busy schedule.
[Non-English content].
I would like to introduce today's speakers。
[Non-English content].
From the left side of the slide on the screen, Mr. Douglas Lefever, Group CEO, Mr. Koichi Tsukui, Group COO, Mr. Sanjeev Mohan, CCRO, and Ms. Hisako Takada, CFO.
[Non-English content].
I'm Semba from the IR department, serving as the moderator of today's session.
[Non-English content].
Before we begin, we would like to remind you that today's briefing contains forward-looking statements, all of which are subject to risks and uncertainties that may cause actual results to differ from those forward-looking statements.
[Non-English content].
Please note that today's financial briefing is being recorded for the purpose of accurate record-keeping and distribution on our corporate website.
[Non-English content].
Now, Douglas will present the summary. Doug, please go ahead.
Okay. Thank you, Semba [Non-English content]. Hi, everybody, this is Doug. Thank you everyone for joining us today。
[Non-English content].
Let me begin with a brief summary。
[Non-English content].
The AI related semiconductor market is experiencing a period of high growth that could now be described as a mega cycle, surpassing what is generally considered a super cycle, with demand expanding not only for GPUs, but also for custom ASICs, CPUs, and high performance memory.
[Non-English content].
Structural growth in the tester market is driven by increasing semiconductor unit volumes along with increasing test content and test insertion with each new generation.
[Non-English content].
In our second quarter of our fiscal 2026, we delivered record quarterly sales and profits.
[Non-English content].
Now, let me first briefly talk about the tester market.
[Non-English content].
For 2026, we are maintaining the tester market size forecast ranges we announced in July.
[Non-English content].
We expect the SoC tester market to reach approximately $11.5 billion , near the upper end of our forecast range, driven by increasing volumes and growing complexity of AI-related high performance semiconductors.
[Non-English content].
We expect the memory market to be around the midpoint of our forecast range of $2.5 billion- $3 billion as we expect solid investment to continue across a broad range of memory applications.
[Non-English content].
The increasing complexity of high performance semiconductors continues to drive test demand, and we expect favorable conditions for the tester market to continue into 2027. Barring geopolitical risk and macroeconomic factors, we expect supply constraints in semiconductors and advanced packaging to continue into 2027, with end customer demand continuing to exceed supply.
[Non-English content].
In light of the first half results and the outlook for the second half of the fiscal year, we are raising our full year fiscal year forecast.
[Non-English content].
The second half operating margin is expected to exceed 50%, about 3 percentage points above the July forecast. The FY 2026 operating margin forecast has also been raised to 51.9%. While factoring in the impact of higher component costs, particularly for memory semiconductors, stronger SoC tester sales and an improved product mix compared with the July forecast are expected to drive the increase in the operating margin.
[Non-English content].
To meet robust tester demand, we are further accelerating the expansion of our production capacity.
[Non-English content].
For SoC testers, we have already achieved an annual production capacity of more than 5,000 systems. Furthermore, we aim to reach our annual production capacity target of 10,000 systems well ahead of the original schedule.
[Non-English content].
For memory testers, we are also accelerating the production ramp-up in line with the SoC testers.
[Non-English content].
These efforts are supported by close collaboration with suppliers and a hybrid manufacturing model combining outsourced production and in-house production. By optimizing the combination of production capacity from our EMS partners and our advanced manufacturing technologies, we are enhancing flexibility in responding to demand while mitigating supply risks.
[Non-English content].
In addition, through cross-functional collaboration across the organization, we are further strengthening our supply capabilities while maintaining high-quality standards.
[Non-English content].
Going forward, we will continue to enhance the resilience of our supply chain, enabling us to flexibly respond to fluctuations in demand and reliably meet robust demand.
[Non-English content].
Coming up on November 12th, we will host an IR Fireside Chat on our supply chain strategy. During the session, we will provide a more detailed discussion on our initiatives and efforts in this area. We look forward to welcoming your participation.
[Non-English content].
Lastly, with respect to capital allocation, we will continue to prioritize growth investments while pursuing shareholder returns in line with our policy of achieving a cumulative total return ratio of 50% or more over the three-year period of our third mid-term management plan.
[Non-English content].
Our board of directors has authorized an increase in the interim dividend and a new share repurchase program.
[Non-English content].
That concludes my summary.