Earnings Call: Q4 2020

Apr 30, 2020

It is time for us to start Tokyo Electron Financial Announcement of the year ending in March 2020. Thank you very much for joining us despite your very busy schedule today. I am Yatsouda of IR department acting as a moderator in today's session. Now I'd like to introduce attendees on our side. Mr. Tito Tsunayashi, Representative Director and Chairman of the Board. I am Tsunayishi. For more than 20 years, I have been attending the financial announcement, but this is my first experience to make presentation through online service. So we are very happy to talk with the Global Investors and analysts. Through this online service. Really appreciate your cooperation. Thank you very much. Next, Mr. Toshiaki Kawai, Representative Director, President and CEO. I am Kawai. So this time, under such circumstances, we are very happy to have all of you in our financial announcement, I really appreciate your cooperation for today's session. Next, Mr. Yoshika Zulu Nokawa, Corporate Director Executive Vice President And General Manager of Finance Division. I am Nuno Kawa. Thank you very much for joining us today. Really appreciate your support today. Prior to the presentation, I'd like to explain the flow of today's meeting. Briefly. First of all, Mr. Nunokawa and Mr. Kawayo make a presentation. After that, up to until 6:30, we're going to entertain questions from you, please send your questions to the question box on our website. Please make it sure to put down your name, company name together with your questions. We are not able to answer the questions if your name company name are not given. Because the time limitation, I'd like you to limit the question to one And this is the meeting for the institutional investors and analysts. So really appreciate if you understand. We only answer the questions from the institutional investors and analysts only just like before. If we receive English questions, questions in English, we want to be able to translate into Japanese and our attendee will answer the questions in Japanese. For presentations and question and answer session will be translated simultaneously. And you can see English translation online. And after what, we are going to upload today's session, both in Japanese and English, I hope you can enjoy it. So first of all, Nuno Kawa will make a presentation. About our consolidated financial summary. Good afternoon. I am Nuno Kawa of Finance Division. I'd like to present the consolidated financial summary of the fiscal year ending in March 2020. This is the business highlights of the year ending in March 2020. The net sales declined due to the impacts of the SBE and FTP capital investments. And accordingly, the gross profit margin dropped by 1.1 points from 41.2% to 40.1%. Our company, however, kept investing for the future growth. Meanwhile, As a result of our effort to build up resilience against lower sales, we succeeded in maintaining high profitability as the operating income was jpy 237,200,000,000, the operating margin was 21.0 percent the net income attributable to owners of parent was JPY 185,200,000,000 and ROE was JPY 21 point 8%. Now this slide shows the highlights of the shareholder return policies implemented in the year ending in March 2020. In the last fiscal year, in addition to the payout ratio of 50%, we conducted the share buyback of 1,000,000,000. Out of which, 8,000,000 shares were canceled. This represents 4.84 percent of the issued share before the cancellation. We will maintain the appropriate balance sheet management so as to enhance the shareholder value. In the future as well. This shows the financial summary. As I said before, despite 11.8% decline due to the adjustment in the SPE and FPD markets. The consolidated net sales was JPY 17,200,000,000 more than the financial estimate. We announced on October 31, 2019, achieving 1,127,200,000,000. By segment, The SPE net sales decreased by 9.1%, while the FPD net sales decreased by 40 point percent. The decline rate of FPD net sales turned to be relatively high. Compared with our financial estimates, the actual net sales of SPE exceeded our financial estimates. While that of FPG was below the estimates. This is because of high proportion of Chinese PD panel manufacturers. And accordingly, the COVID-nineteen impact was more serious in the FPD market. It should be noted, however, that since our sales recognition standard is based on the completion of setup and testing, the timing of sales recognition of the delivered equipment was slightly shifted, which resulted in the sales decline. The sales which was not recognized in the year ending in March 2020 were not canceled, but are planned to be recognized in this fiscal year. As I said in the beginning, high profitability was maintained and the operating income and the net income attributable to owners of parent exceeded our financial estimates. Despite the decline of the net sales on year on year basis, we increased the investment for the future growth, including R&D expenses and capital expenditures. Now this shows the financial summary on the quarterly basis. The net sales in the 4th quarter was 1,000,000,000, increasing by 9.5% from the 3rd quarter. Accordingly, the gross profit margin increased by 0.4 points, achieving 40.2%. Despite the growth of the net sales, the operating margin was 21.7 percent declined by 0.2 points because of the impact Next I'd like to talk about the segment information. In the FSPE segment, the sales was 1,000,000,000,000. The segment income was 1,000,000,000, and the segment profit margin was 25.5%. For the FPD segment, as I said before, due to the impact of the COVID 19 in China. The sales was 1,000,000,000, feeding to achieve our financial estimates. But as our resilience against the lower sales had been enhanced, the sales profit margin was high at 16.0 percent. We succeeded in maintaining the profitability in the FPD segment as well. For the composition of the net sales, the SPA proportion was increased to 94% while FPD accounted for 6%. This shows the new equipment sales by application in SPE Division. In the logic and foundry, from the second half of Carinjaia 2019, the demand for advanced processors for data centers and 5G smartphones started growing. Which resulted in significant increase of capital investment to process tools for leading edge device nodes. Namely our core competency areas. As a result, our sales to the logic and foundry customers increased considerably. In memory, after the several years of continuing capital investment to enhance production capacity, the capital investment underwent adjustment in team, as a result, our sales to the memory customers decreased on the year on year basis. This slide shows the new equipment sales presented in the previous slide. By product instead of by application. As shown in the previous slide, In the year ending in March 2020, the investment to the leading edge device nodes in logic and foundry increased significantly. And accordingly, proportion of the sales in LogicFoundry increased. On the other hand, the investment for non volatile memory decreased. As a result, the sales proportion of quota developer for the lithography process was raised since more quarters and developers are used in logic device production and foundry than in non fragile memory production. Meanwhile, the sales proportion of our etching system decreased. This is because investment for the mature technology nodes using the power semiconductor devices and discretes increased. Where our etching systems are not used so much. The market share will be presented by Mr. Kawai later. In his presentation. This shows the field solution sales. The new equipment sales dropped in the fiscal year ending in March 2020 due to the adjustment in the market, but the field solution sales increased by 5.7% on a year on year basis. Achieving JPY 304.8000000000. Although the investment to enhance production capacity and underwent adjustment, our installed base show the solid growth. In addition, the demand for semiconductor devices remains strong and the utilization of our customers factories didn't changed so much. As a result, the sales of parts and field service was strong. Despite the drop of the investment to new equipment, our customers in increase their investment to used equipment and modifications, which enable them to make the effective use of their assets. This is the balance sheet. 1st, assets in the fiscal year ending in March 2020, the cash and cash equivalents kept declining due to the share buyback conducted from the first quarter to 3rd quarter. In the fourth quarter, however, the cash and cash equivalents increased to 1,000,000,000. The inventories was 1,000,000,000, thanks to the recent active inquiries the level of inventories was kept relatively high in the 4th quarter as well as in 3rd quarter. Next, liabilities and net assets. Due to the share buyback, the net assets declined from the 1st quarter to 3rd quarters. But as we secured the incomes in the 4th quarter, the net asset turned out to be 1,000,000,000. The equity ratio was 64.1 percent. This slide shows inventory turnover and accounts receivable turnover. The inventory turnover increased because we strategically adapt the inventories in order to prepare for the prospective market recovery from the first half to the second half of the year. Increase of the accounts receivable turnover is attributed mainly to the customer mix, but it is expected to decline through the improvement of the times of payment. My last slide shows the cash flow From the first to 3rd quarters, the negative cash flow from financing activities was significant in the amount due to the share buyback. But in the fourth quarter, we didn't pay dividend and cash flow from financing activities shrank to minus JPY 400,000,000. Thank you very much for your client attention. Now Mr. Kawai, our CEO, will present the business environment. Mr. Kawai, please. I would like to talk about business environment. Let me start with business highlights of the year ending in March 2020. The result exceeded our financial estimates, achieving the targets for both the net sales and fee income. The SPE business progressed as planned and we won multiple PORs in the focus areas. In the FPD business, we received increasing number of orders for Erios Inkjet Printing System used to manufacture OLED panels and its evaluation proceeded toward adoption by our customers. The fuel solution business remained strong and its sales increased on a year on year basis. We maintained active RNG and capital investments, although the SPE and FPD market were in adjustment in the ending in March 2020. Both R and D and capital investment increased on the year on year basis. Next, I'd like to look back the business environment in calendar year 2019. In the WFE market last year, the investment for memory devices underwent adjustments while the investment for logic foundry grew more than expected. The total amount of investment in the WFE market exceeded the forecast. Result in a limited year on year decline of 8%. By application, The investment in LogicFoundry increased by about 50% on year on year basis due to the accelerated investment for leading edge technology nodes. For non volatile memory, investment decreased by about 45 percent on the year on year basis. Due to the recovery of investment for Memory starting from the end of the year, however, the full year investment exceeded expectation. For DRAM, the investment drop by around 40% on a year on year basis. At the year end, however, DRAM price bottomed out and signs of recovery started to come into view. In the FPD production equipment market, the investment dropped by 25% on the year on year basis. From the second half of the year, however, investment for all that panel started to increase and accordingly, the market came back on the costs for recovery. Now this shows Calendaya 2019 SPE manufacturer ranking announced by VSI BLSI Research. Our company was ranked 3rd. This shows current year 2019 market share by product. There were some increases or decreases in our market share by product. This is primarily attributed to the investment mix of our customers. Our market share by product was well in line with our business plan. Next I'd like to talk about our current effort to address COVID-nineteen. Let me start with our manufacturing operations and procurement of parts. Manufacturing sites have introduced the maximum measures to prevent the COVID 19 infection by combining shift work system traffic line segregation and teleworking, which these measures implemented, manufacturing operation and procurement parts are conducted as planned. For the equipment shipment and parts delivery to our customers, At present, there is no big impact on the equipment shipment and parts delivery to the customers. We maintain the stable delivery of parts to our customers by appropriately controlling inventories at overseas subsidiaries. Equipment installation and customer support at our customer sites are handled by our local and employees and there is no impact at present as of now. Other measures taken by our sites The teleworking is now implemented. Essentially, at all sites of Tel Group, include including our Casaka head office. We are prepared to keep addressing COVID-nineteen, flexibly, so as to cope with changing situations effectively. This shows financial estimates of this fiscal year ending in March 2021. Along with the growing data traffic, there is a strong demand at present for semiconductor devices used in the data centers and 5G smartphones. Driven by such demand increase, in the WFE market, the investment for logic foundry remains strong and the investment for memory has started to recover. As a result, the inquiries for SPE remain strong. It's necessary to pay close attention to the impact of COVID nineteen but at present, there is no major change in the investment plan of our customers. We plan to disclose our financial estimate at the right timing, taking account of COVID 19 impacts on the macro economy. This shows our plan for R and D expenses and capital expenditures in this fiscal year. We expect to spend about JPY 135,000,000,000 for R and D. The capital expenditure of about 1,000,000,000 are expected this fiscal year. Both R and D expenses and capital expenditures are planned to be increased on year on year basis, where we'll Can you active RNG and capital investment to prepare ourselves for further growth of WFE market? This is about our dividend forecast. In the year ending in March 2020, the full year dividend per share was 588, which was higher than our forecast. We are planning to disclose the fiscal year 2021 dividend forecast at the same time as the announcement of our financial estimates. Next, I'd like to talk about the midterm management plan. In the IR meeting for the midterm management plan held in May 2019, we presented the financial model to be achieved within 5 years from 2019, there have been no changes in this financial model, and we are progressing steadily toward the achievement of the model. Since 2015, we have held the IR meeting for the midterm management plan every year But for this year, we have decided not to hold the meeting because of the COVID nineteen impact. My last slide shows the market outlook and our corporate value. In the WFE market, the investment for logicfoundry remains strong and the investment for memory has started to recover. It's necessary to closely monitor the impact of COVID 19, but we expect that strong demand for wafer fabrication equipment will continue. On top of that, teleworking, online learning and remote diagnosis are actively introduced in addition to IoT, AI, and 5G, all of which accelerate the transition to the data driven society. The SPE and the FPD production equipment will remain essential in the future. And therefore, the midterm and long term market growth is expected. Our company is determined to enhance our corporate value and contribute to the development of the society with full of dreams by delivering best products and best service through integration of our innovative diverse technologies. You very much for your kind attention. This concludes my presentation. Now we'd like to entertain questions after until 6:30. So please make sure to put your name and name of the company. Just before the question, let me read the first question. The first question is from Mr. Muriyama of JP Morgan Securities. I have a question on sales growth ratio by equipment for this fiscal year. For example, compared with the consolidated sales, How do you view the sales growth ratio by equipment? I also want to understand the background. Quarter Development sales is expected to increase because of the increase of EUV, lithography investment. For itching, the sales of itching should be driven by the memory investment. Therefore, even net logic investment slows down a little bit. I think that itching sales is strong. What about the film, deposition, cleaning or promo sales? If you have any idea, could you share that with us, please? Mr. Kawai, Could you answer this question, please? And I'm Kawai. Please let me answer to your question. In my presentation, I talked about the trend of the market. At present, there have been no major changes in our customer's investment plan. High demand is expected. In the previous financial announcement meeting, the one of the competitor talked about 2 digit growth of the WFE market. And I said I didn't find any things strange. And since that time, there have been no changes in our customer's investment plan so far. Of course, we need to closely monitor the trend or illustration of COVID-nineteen, but as far as this fiscal year is concerned, logic investment is strong and also memory investment is expected to grow as well. Therefore, The memory investment is expected to grow together with the very strong investment of Logic. So itching for each product, quota developer are also expected to increase. For memory investment, if memory investment is increased, our film deposition system sales might be increased as well. In the previous meeting, the pro market share was changed a little bit because of the investment mix But when memory investment increases, we can see some positive impact on our proVA market share as well. Thank you very much for your question. Mr. Mudi, Emma, thank you very much for your question. Now next question is from Mr. Badaki of Nomura Securities. So in the usual recession, OSAT 1st reduced their investment followed by foundry. But in this case, both OSAT and foundry, altogether, haven't changed or reduced their investment. Do you think about the reason for why for that? Again, I would like to answer to that question. Kauai will answer the question. In principle, IoT, AI, and 5G, all those applications expected to grow drastically in the future that I said earlier, as I said earlier, but communication present, just like the food and health care, telecommunication is expected to become very essential infrastructure. And that infrastructure is supported by semiconductors. In reality, when you look at IP traffic, From January to March, when you look at the global IP traffic, if my memory serves, the global IP traffic was almost double from January to March. Therefore, 5G Smartphones and data centers So in every case, there is a very strong demand for the semiconductor devices. That's how I feel right now. This is how I can answer to the question from Mr. Wadaki. Next question is from Mr. Shibano of Citigroup Global Market Japan. I understand the COVID impact on your production is very much limited. But in the future, when your competitors' production supply or installation of equipment are limited. And are there any cases that those delay have impact on your sales recognition? For example, are there any cases that you delivered products you are not able to recognize sales. It is true that the competitors made announcement of some impacts on their production. But our customers are present are trying very hard to meet the original plan in order to meet the very strong demand for semiconductors. They try to achieve the regional plan So quite often, our customers are talking with their key suppliers, including tail and probably with our competitors. In the United States, the SPE manufacturers are designated as the essential business Therefore, probably I think the competitors will catch up. Within the 1 quarter, there might be some impact However, I don't think there should be big impact in the industry. Mr. Shibano, thank you very much for your question. The next question is from Mr. Mr. Mark Lee of Sanford Seabackstein, The question is the U. S. Department of Commerce announced you export control action on April 27, which includes semiconductor equipment. I heard that there will be 60 day grace period before this becomes effective. How will the announcement of DLC affect your ability to ship to Chinese customers? We will be accountable for insuring your equipment won't be used by, say, SMIC or YMTC for meter reuse and seek approval first if you are not sure Does this announcement expand the list of the equipment that is subject to this control? Mr. Kawai, please answer to this question. Yes. This announcement was made on April 27, Just because of time difference, this is quite newsful as So at present, we are now studying the details about this particular announcement. Therefore, we are currently analyzing the current situations. And we are not able to make any comment on each individual customer. I hope you understand that. But our company's philosophy is to provide leading edge technologies and services And then we'd like to make good contribution to the society so that it will have the good bright future. So we need to have the word leading Technology Innovation. And this is where we want to focus on. Mr. Lee, thank you very much for your question. The similar questions are coming from Mr. Hiroawa of Melini Lynch Japan Securities as well. Next question is from Mr. Shibamoto of Oka san Securities. How does the suspension of the operation of factories of applied materials and land research on new operation. Mr. Kawai could you answer your question? The question, please. For this, I'm not in a position to make any comments on the operation of our competitors' factories. I think they are going to address this issue properly and appropriately. Next question is from Mr. Segira of Daiwa Securities. So you said that memory investment or recovering. Between NAND and DRAM, do you think which comes first? Recently, the investment for server and data center are getting more active. Accordingly, do you think any possibility of the pulling forward of the DRAM investment. Could you give us some comments in comparison with this situation 3 months before? Between NAND and DRAM, which comes first, that is your question. I think none comes fast in recovery. Therefore, there is strong investment in NAND expected for the future. But as I said in my presentation earlier, also for DRAM signs of recovery, are coming into view, at present, our customers are focusing their efforts on how they can implement the original plan. So these are the area our customers are working very hard right now. And after that, for DRAM, there might be some addition or they may pull forward the investment on DRAM. That's what we can expect. This is how I can answer to your question as of today. Mr. Suguirra, thank you very much for your question. Next question is from Mr. Mikeawa of Credit Suisse Securities, Japan. You said that Telugu acquired PORs as planned. When it comes to WFE market for 4 devices, DRAM, non volatile memory, foundry and logic. How much are you going to outperform the growth of WFE market? Could you give us some quantitative information about 3 years from 2020 to 2022? How would you outperform the very healthy market? For itching, dysography process, in particular, the truck for EUV desography and proven share is expected to grow, along with the increase of memory investments, the film deposition, again, especially for budget process, we can expect the solid increase of the sales Therefore, I think we can outperform the market growth very well. However, the future travel restriction, our engineers front line customer sites may be impacted slightly when they carry out the startup at the customer sites. There is the possibility of some delay because of the travel restrictions. And other factors. So there might be some delay. I mean, those circumstances, I'm afraid I cannot release any specific figures or numbers today. In particular, our sales recognition is based on the completion of setup and testing, and that might have some impacts on our business outcome. Next question is from Mr. Hanaya, SMB SINICAL Securities. The leading competitors fail to achieve their financial estimate in the short term period. However, your company successfully exceeded your financial estimate. How do you understand the reason why? Do you expect that you are suffering from similar tentative impacts a little bit later than your competitors. Similarly, I understand the field solution sales is increasing. In the longer term because of the increase of the installed base. But in the fourth quarter, I've got the impression that field solutions sales was very strong. Are there any change in the trend among the customers? And if any, do you think that trend continue in the future? Yes, it is true that FPD sales was impacted by the lockdown of Wuhan to some extent. On the other hand, when it SPE division, our local and expert engineers are working very hard And we are making flexible use of the resources in order to complete the startup as planned. And some of the startup planned early this fiscal year are put forward were put forward. For example, by doing those activities, we are very happy to say that we have achieved our financial estimates in every item with high accuracy. And when it comes to the trend among our customers, I don't think there is anything special happens in our customers' activities. Our customers are concentrating their efforts to realize or achieve the original plan. And we are having very close communication with customers so that we can support our customers to achieve their targets. Thank you very much, Mr. Hanaya for your question. So next, we have a question from Damian Son of Macquarie Capital securities, what growth can we expect this year in field solutions? Would it be stronger than last year? What was your year end installed base? The Field Solutions business is proceeding as planned, as I said earlier in my presentation. Also, the top line declined the field solution sales increased on year on year basis. When it comes to the number of equipment installed, you can see steady increase. Now installed base exceed 70,000. The more detail figure for installed base is higher than 72,000 as of today. Thank you very much. Mr. Dong, thank you very much for your question. Next question is from Mr. Nakanomeo of Jefferies, Japan. You said that there is no major changes in the investment plan among the customers. But when the global economy continue to slow down, there might be some drop in the demand for the consumer products. What is your image? How much downturn or how long downtown will force your customers to change their investment plans. I know it is difficult for you to make a prediction, but please give us your gut's feeling. It's a wonderful question. I think the points you talked about are the area that we are going to watch very carefully. And we are currently analyzing the impacts on the macro economy. And at this moment, we are not able to give you any logical explanation that's the reason why we are replaying from making announcement of the financial estimates this time. We are now studying and watching the area that you mentioned in your question. Thank you very much, Mr. Nakano Mill, for your question. Next, we have a question from Mr. Hasegawa of Mitsubishi UFJ Morgan Stanley. The question is about outlook of the inquiries. How do you view the momentum of the inquiries and delivery timing of new equipment from the second half of this year through next year. Could you let us know your opinion by device, please? From the second half of twenty twenty to twenty twenty one, Of course, we need to closely monitor the impacts of COVID 19. But when I look at map, we think investment are expected to grow furthermore as overall trend. Logic investment, and memory investment are expected to grow altogether. That's how I view the future. So Logic, investment is strong and investment for NAND is now increasing followed by DRAM Investment. So overall trend from the second half of this year through next year, I think there is a ground growing trend in the market. Mr. Hassigawa, thank you very much for your question. Next question is from Mr. Ayuba of Nomura Asset Management. This time, you are introducing gas chemical etching system in your new building. Could you let us know about current level of inquiries and future outlook of gas chemical hedging system? For example, Korea Samsung 3 nanometer gate all around Taiwan TSMC FinFET. Which one of them? Do you think you have more opportunities for business? The gas chemical etching system The Certus is the name of the product of ours, and this Certus has been designed to take care of our customers' devices. And the switching system is used for the critical layer. And this is a kind of typical product to create served available market. Therefore, in the future, we can expect increasing applications of this product. Actually, both memory and logic processes such as has been adapted, But I'm not able to give you any specific information for each individual customer. Nextiva, thank you very much for your question. Next question is from Mr. Yoshida of Shigail S. A. Securities, Japan. This time, you didn't release your financial estimates. What sort of risks do you expect at this moment? That only the risk of the delay in startup or are there any other risks, if any, are there on the memory side or a logic side? You do have the very strong plan for the capital investment and R and D expenses. But what sort of assumption do you have for the WFE market in 2021 when you set up a kind of plan for development. The delay of startup is just limited. And we didn't make any announcement or financial estimate. That is mainly because of the reasons Other than Semiconductor Business. Actually, COVID 19 may trigger some issues beyond our expectation. We need to closely analyzed that shows up potential unexpected impacts. We are now studying it. The COVID-nineteen impact on macroeconomy is the major reason why we didn't announce our financial estimates. It's necessary for us to scrutinize the impacts of COVID 19 on macroeconomy. Memory logic and others as well as the day of startup are just minor factors, a major reason for not making announcement is macroeconomy. As I said earlier in my answer, as far as our company is concerned, we are seeking to have the world leading technology innovation ability, higher storage capacity, higher speed, higher liability and lower power consumptions are required in the future. Therefore, we need to have solid financial basis and we must continue investment for the further growth, which is really important. We have almost finalized the plan for investment. We have announced JPY 135,000,000,000 for RNG investment. Thank you very much, Mr. Yoshida, for your question. So there are no more new questions. You can ask the second question if you have any. Next question is from Mr. Shivano of Citigroup Global Market Japan. This time you didn't disclose your financial estimate. On the other hand, you have announced about 12% increase of R And D investment. Do you assume the positive trend or increasing trend of the demand for equipment when you look at the longer span like by the end of March 2022 or by the end of calendar year 2021, even if there are some drops in sales in short term periods through the second half of this fiscal year. Are there any tangible or intangible factors to make you have some positive outlook in the 2020 or 2021? Yes, we have positive outlook. And there are some supporting factors to give us positive outlook for the future. So we are going to implement activities to achieve our midterm management plan by investing JPY 400,000,000,000 for R and D in 3 years starting from fiscal year 2020. And we do have some positive signs behind this decision that we made. Mr. Shibano, thank you very much for your question. Next question comes from Mr. Jose Gawa of Mitsubishi Morgan Stanley. How much sales were not recognized at the end of March 2020 because of the impact of COVID-nineteen And when will they be recognized? What kind of counter measures do you take against travel district and restriction on face to face business meetings. Actually, some of the flat panel display sales were not recognized at the end of March 2020 because of that, in the FPD business, we failed to achieve the financial estimates. This is how I would like you to understand the values. When it comes to travel restriction and restriction of the face to face business meetings, in principle, we are utilizing the our expert and local engineers on sites. That's what we are doing right now. However, when it comes to the COVID 19 impact we need to be prepared for the 2nd and third waves, potential second and third waves. For that issue, we may need to adjust expert employees or we may need to introduce remote support by using cameras so that we can enhance the remote support. So in principle, we are going to enhance the local resources. At the same time, the customer plan to increase the investment toward the future. Therefore, we need to increase the number of the expat employees in local sites. Mr. Hasekawa, thank you very much for your question. Next question comes from Mr. Isino of Tokyo Research Center. The Every SPE manufacturer is now enjoying high level of orders. And some of your competitors are concerned about the shortage of the pot supply. How about your company? Yes. Obviously, the demand for SP is very strong. And also, we have some concern about the impact of COVID 19. So it is necessary for us to manage the parts supply for our process tools we need to have a good supply chain management. However, as of today, as far as our company is concerned, we don't have any major problem of the delay of this PE delivery because of the shortage of parts supply. Mr. Xuno, thank you very much for your question. Earlier, we have a question from Mr. Hasegawa of Mitsubishi. Morgan Stanley. And we received the same question from Mr. Hasegawa of Mitsubishi, UFG Morgan Stanley. Next question. Again, we have a question from Mr. Pasei Gawa of Mitsubishi Fizae, Morgan Stanley Securities. I have a question on PL. Segment income adjustments increased in particular in the 4th quarter. Similarly, SG and A expenses increased in the 4th quarter. Could you let us know the reasons, please? Mr. Nunaoka, please. Thank you very much for your question. Nunaoka would like to answer to your question. The increase of SG And A expenses and segment income adjustment in the 4th quarter is attributed to the slight increase of the R and D expenses in the 4th quarter compared with the 1 in the 3rd quarter. Thank you very much. Mr. Hasegua, thank you very much for your question. One more question we received. You said that the orders for inkjet printing system for OLED increased, but could you let us know the outlook of overall FPD business in this fiscal year? We can expect the increase of sales of the inkjet printing system for OLED, for this fiscal year. However, 1st of all, it is necessary for us to accelerate the startup activities in Wuhan. And for this purpose, we are assigning engineers of Tokyo Electron Shanghai to Wuhan. To catch up with the schedule for the startup in Wuhan. This is what we need to do first. Driven by the increase of OLED investments, we can expect the increase of FPD sales in this fiscal year. But we are not able to disclose any specific numbers. Maybe we can have some more time for the last question. Now we have a question from Mr. Mikeawa of Credit Suisse. Securities. You said earlier, the non investment are now recovering. However, the euro non sales in the 4th quarter fail to achieve your estimate by JPY 10,000,000,000. Maybe this is because of the delay in setup and testing in China. On the other hand, you said earlier, in order for the NAND investment, to achieve full recovery, it is necessary that only Samsung and China local manufacturer, but also other nonmanufacturers start down the investments. Have they started non divestment yet? So when you say JPY 10,000,000,000, that is a value of the fiscal year, right? In China, because of the lockdown in some of the cities in China, our setup activities have been impacted. But at the same time, Logic customers asked us to pull forward start up and we meet this request by adjusting our resources. Chinese market is gradually coming back to normal, and our local resources can do their job right now because of the imminent lift of the lockdown. Therefore, we are working towards the recovery. We are now preparing our startup plan in detail. And there have been no major changes in our customers' investment plan at all. Thank you very much. Thank you very much, Mr. Micah, for your question. So now this concludes today's session. Thank you very much for joining us today despite a very tight schedule. Thank you very much.