It's time for us to start Tokyo Electron financial announcement for the second quarter of fiscal year ending March 2020. Thank you very much for joining us despite your very busy schedule. I am Yatsuda of IR Department, acting as today's moderator. Before introducing our attendees for today, we'd like to express our deepest sympathies and condolences to the people who were affected by a series of typhoons attacking Japan last month and this month. Our CEO, Kawai, and all our employees sincerely hope for prompt and early recovery. Now, I'd like to introduce the attendees on our side. Tetsuo Tsuneishi, Representative Director, Chairman of the Board. Next, Toshiki Kawai, Representative Director, President and CEO. Next, Yoshikazu Nunokawa, Corporate Director, Executive Vice President and General Manager of Finance Division.
First of all, Mr. Nunokawa, Corporate Director, Executive Vice President and General Manager of Finance Division, will present the second quarter consolidated financial summary.
Good evening. It's getting dark. Thank you very much for joining us, despite your very tight schedule today. I'd like to make a presentation on the second quarter consolidated financial summary. First of all, I'd like to talk about the highlights for the first half of this fiscal year, April through September 2019. The net sale was JPY 508.4 billion, and operating margin was 20.2%. Part of SPE sale was pulled forward, while the Field Solutions business was very strong. The sales in the first half of this year was higher than our expectation. In addition, due to the sales increase in the processes for which we have got new orders, the profit ratio also surpassed our expectation.
Reflecting the results of the first half of this year and the latest information, we have revised the full-year sales forecast. Later on, Mr. Kawai will talk about this issue. We have repurchased 6.35 million shares since May 2019. Total repurchase has amounted to JPY 104.5 billion. This corresponds to 70% of the maximum of JPY 150 billion. On this slide, you can see the financial summary for every six months. As I said earlier, compared with our forecast net sales, because of the pulled-forward sales from the second half of the year and strong Field Solutions business, JPY 508.4 billion, and profit is higher than expectation. Profit margin was 14.2%, and operating margin was 20.2%, achieving JPY 102.4 billion. Now you can see the financial summary on the quarterly basis.
On the quarterly basis, the second quarter net sales was increased by 34.9% from the first quarter, achieving JPY 292.0 billion. The profit margin was 39.3%. Operating margin was 20.5% in the second quarter. This slide shows graphical representation of the information shown on the previous slide. On the right-hand side, you can see second quarter gross profit margin, which is the green color line on the top. As I said earlier, 39.3%. Operating margin was 20.5%. This slide shows the quarterly-based segment information. On the left, you can see SPE. In the middle, you can see FPD sales information. As for SPE, between first quarter and second quarter, the sales was increased by 37.2% from the first quarter to second quarter. FPD in the middle, sales increased by 10.3% from the first quarter to second quarter.
On the right-hand side, you can see composition of net sales between SPE and FPD, and you can see the results on this chart. This shows SPE sales by region. Again, on the quarterly basis. On the right-hand side, you can see the result of the second quarter. Compared with the first quarter results, the second from the top, North America, and toward the bottom, second from the bottom, China, and on the bottom, Southeast Asia. In those regions, sales increased significantly. This shows the quarterly based new equipment sales by application. On the right-hand side, you can see second quarter results. You can see the results from the second full quarter of fiscal 2018.
As you can see over here, left-hand side, over the past two years, I should say, the top portion, blue color portion, and purple color portion, representing memory, specifically DRAM and non-volatile memory are conspicuous, about 60%-70%, while logic sales accounted for 30%-40%. On the right-hand side, you can see two bars on the right-hand side. The proportion between memory logic now become 50%-50%. The proportion has been changed over the past two quarters. Now you can see Field Solutions sales on the quarterly basis. Second quarter of this fiscal year sales was JPY 75.8 billion. Against the full year forecast, our progress level is about 50% in the first half of this year. The sales progress steadily for the Field Solutions business. Now you can see the balance sheet, again, quarterly basis. On the left, assets are shown.
On the top, cash and cash equivalent, JPY 339.9 billion. In the middle, you can see light blue portion, which represent inventories. In the second quarter, JPY 376.3 billion. Just like the first quarter, inventory remained at the high level. On the right-hand side, you can see liabilities and net assets. Net assets was JPY 803.1 billion. As you know, because of the share repurchase, the net asset declined from the first quarter, but still, equity ratio is 68%. Now you can see inventory turnover and accounts receivable turnover on the quarterly basis. The top line, green color, shows the inventory turnovers. The second quarter, as you can see, the high level inventory turnover is maintained from the first quarter because the inventory turnover is calculated based on the past 12 months' sales. All the sales are shown on the bar graph in the blue color.
When you look at these sales over the past 12 months, you can see the reason why the inventory turnover level is rather high. Accounts receivable turnover was 37 days in the second quarter. Now you can see the cash flow on the quarterly basis. As you can see, cash flow from operating activity was JPY 81.7 billion. Cash flow from investing activities was minus JPY 15.8 billion. Cash flow from financing activity was minus JPY 65.4 billion, out of which share repurchase amounted to minus JPY 65.3 billion. Most of the cash flow from financing activities are from share buyback. Free cash flow, the green color line, was JPY 65.8 billion. Thank you very much. This concludes my presentation. Thank you very much for your kind attention.
Next presentation is given by our CEO, Mr. Kawai. He will be talking about business environment and financial estimate revisions. Mr. Kawai, please.
Once again, I am Kawai. Good evening. Thank you very much for joining us despite the late hours. I'd like to talk about business environment and financial estimate revisions. Let me start with the business environment. For both SPE and FPD segments, there have been no major changes in our business outlook since the previous financial meeting announcement. WFE, this year, 2019 investment declined from the previous year by 15%-20%. The logic inventory is expected to be strong. For memory, inventory adjustment are in progress, and we can see the recovery investment next year. That outlook remain unchanged. FPD, very similarly. Though FPD CapEx will decline by 30% on the year-on-year basis, we could expect recovery on the CapEx from the second half of this year as expected.
In particular, throughout next year, small and medium-sized panel investment is expected to recover for OLED, 5G, and mobile applications. The, once again, Calendar Year 2019 WFE market outlook by application is shown over here. As I said earlier, there have been no changes from the previous financial announcement. Logic investment is strong. The CapEx for memory has been suppressed, but you can see some recovery trend next year. Now you can see second quarter business progress. The SPE business strategy is implemented as planned. For three focus areas, namely etching, film deposition, and cleaning, we won the PORs continuously for etching. We won PORs in the IoT and automotive areas in second quarter as well as the first quarter successfully. We can win back the applications from our competitors. For film deposition, for ALD and batch film deposition, we saw some progresses.
For ALD, both of them are for leading-edge logic devices. For ALD, the hard mask formation for the critical patterning process, we won PORs. This is for selective film deposition process. The application for the selective film deposition is expected to increase for leading-edge logic devices. For batch system as well, our batch tool is replacing single wafer processing because of the productivity throughput and footprint. Our batch system replaces the competitor's single processes, and we already won the PORs. For cleaning, bevel cleaning application is increasing. Newly, we won orders from a new Chinese customer. For the future, the Moore's Law continues. On the other hand, the hyper-MAS area, commodity hyper-MAS area and customization area is expected to spread or expand driven by IoT, AI, and 5G. For those areas, 200 millimeter process tools are to be used.
As we reported in the previous meeting, there is a consortium in Florida, United States, we installed 200 millimeter demonstration tools in that consortia, where our environment was established to develop SPE and process technologies for automotive and industry applications, as well as the applications as what I said earlier. For flat panel display production equipment, inkjet printing system for OLED panels for customers' development lines has been released. In many of the light size customers, in the future, all the investment is expected. we won orders for the inkjet. Now I'd like to talk about this fiscal year financial estimates. By reflecting the result of the first half of this year and the latest information, we have revised the full-year financial estimates. As Mr. Nunokawa said earlier, for the first half of this year, part of SPE sales are pulled forward.
For the second half of the year, the financial estimate have been revised by reviewing the latest information. Accordingly, the full-year sales forecast is now JPY 1,110 billion, increased by JPY 10 billion. Operating income is JPY 225 billion, increased by JPY 5 billion, and the net sales attributable to owners of parent is JPY 170 billion, increased by JPY 6 billion. This shows the new equipment sales by application, the actual sales for the first half of this year, and estimate sales for the second half of this year. The sales of the first half of this year increased by JPY 10 billion from our plan because part of sales was pulled forward from the second half of this year. The sales breakdown by application was in line with our plan. The sales estimates for the second half of this year is JPY 440 billion.
The full-year sales estimate increases by JPY 6 billion from our estimates in the first quarter. In the second half of this year, sales for logic and foundry is expected to grow significantly. This shows our R&D expenses and CapEx plan. The R&D expenses are raised by JPY 3 billion from the first quarter financial announcement to become JPY 123 billion. We additionally increased R&D expenses to achieve our midterm business plan and to prove our future growth. For the CapEx and depreciation, there have been no changes from the previous financial announcement. Finally, this shows this year's dividend estimates. The interim dividend is JPY 246 per share, reflecting the share repurchase results in the first half of this year. The year-end dividend is expected to be JPY 290 when the ongoing share buyback is not taken into account.
We are planning to revise this forecast depending on the result of the share repurchase in the second half of this year. Thank you very much for your kind attention. This concludes my presentation.
We'd like to entertain questions from the floor up until 6:30 P.M. I'd like you to limit the number of questions by one for one person, followed by one follow-up question. Prior to your question, please identify yourself by name and affiliation. Today's financial announcement will be uploaded to our website, so please make sure to speak slowly and concisely. Okay. Could you raise your hand if you have any questions, please? The gentleman in the front row, please.
I am Araki from Nomura Securities. Thank you very much for the upward revision of your forecast. It's a very good representation.
I have one question about the memory investment in the second half of this year, and I want to know how accurate it is. During the securities sector, we have some common story. One big company in Korea achieved 20K, might have 40K. In China, one company talked about 40 or 50K maybe next year. These are the stories I can hear. Is there any other information, or what about the accuracy of the information I just talked about? Gradually, the inquiries from customers are now increasing. The plans you talked about, I think that is the correct information.
For other companies, you can hear some new information gradually. About three months ago, I said that we need to wait for another three months to see some tangible plans. That's what I said about three months ago. Actually, you can hear something from our customers.
As for the situation, the logic is strong and memory, 3D NAND recover first, followed by DRAM recovery. In our factories, during the WFE adjustment period, our factories' operation has been suppressed, we try to prepare for the recovery or normalization of our operation right now.
I have one follow-up question. According to your forecast, maybe China is put aside, existing manufacturers large size the investment for 3D NAND will start in the second half of this year. Is that your view?
When it comes to the contribution to sales, the logic foundry is rather big in the previous graph, the finalization of the investment, I think inquirers are getting much clearer than before.
Thank you very much for your question. Next question, please. It is the front row. The gentleman in the front row on the next aisle please.
I am Miyamoto from Mitsubishi UFJ Morgan Stanley Securities. I have a question on the operating margin in the second half of this year. The sales was increased from the first half of the year by 20% on year-on-year basis. The sales is increased. But when it comes to the operating margin, compared with the first half of this year, slightly increased, but on year-on-year basis, the operating margin is decreased. Could you just explain the reasons why the operating margin does not increase? You said R&D expenses increased by JPY 3 billion, but that contribute only four points. Could you just give me the reason why there is no big increase in the operating margin?
There is no major reason for that. The customer mix and others are the reasons for that. That's how I would like you to understand the reason. Logic foundry increases.
Is that what you mean? Or could you just say that again, please? The sales of the logic foundry increases in the second half of this year, there is no increase in the operating margin from the first half of this year. No. The customer mix and product mix, both those two factors contribute to this phenomena.
Thank you very much.
Yes, the gentleman next to the previous gentleman, please.
I am Moriyama from JPMorgan Securities Japan. I have a question on the actual sales on the first half of this year. Once again, SPE sales was pulled forward. I want to get the breakdown of that. I think that is because of foundry business, but just for information, by application or by region, what kind of process tool is the driver of this pulling forward phenomena?
Throughout the year, once again, Coater/Developer, etching system, and cleaning system. That's what it changes. The orders from the customer or sales are now pulled forward. What sort of drivers are there? Specifically, what sort of process tool function as a driver for pulling forward the sales?
As for the first half of this year, actual sales, non-volatile memory for foundry. There is no particular customer, but sales was pulled forward. Anyway, as I said earlier in my presentation, the sales of the Field Solutions business has also increased. These are the major reasons of the increase of the sales in the first half of this year. By product, actually, we haven't reported that sort of information in the past, but there is no particular process tool to drive this phenomena. By and large, all the products drive this phenomena.
Once again, non-volatile memory foundry sales and the Field Solutions sales were found higher than our forecast in the first quarter of this year.
In particular, for example, for process EUV lithography, now introduced in the high volume manufacturing lines, so does that impact your sales?
That doesn't happen this year. Maybe next year onward, the EUV lithography might have some impacts on your business, but so far, there is no major impact on that. The product composition for sales increase are almost in the same proportion in terms of the growth rate. The increase from the previous forecast is because of the investment to the 5G application and for the memory area. For memory area, our company need to be prepared for the future recovery of memory investment. We need to be proactive to prepare for the future recovery. That sort of movement is now existing.
It is too late for us to invest huge amount of resources after we receive inquiries. We should make the best use of the time to prepare for the future recovery of the memory. That is important for the production. There are some bookings as well. It is really good for our industry because we can see the future symptom of the investment recovery to be prepared for that. As for the EUV lithography, the technology innovation is going on. When EUV lithography is installed into the manufacturing line, that will have the positive impact on our business because we have coater and developer and process tools are installed on both sides of the EUV, and we have patterning, film deposition, cleaning, and etching. We have all those products together as a company.
When EUV is introduced and technology innovation is proceeded, other application will be increasing and new applications like selective film deposition might be coming out. In either case, there is a potential for growth. Thank you very much.
Next. Yes, the gentleman on this island, please.
Thank you very much for your presentations. I am Yoshida from CLSA Securities Japan. My first question is a kind of follow-up of Takisan's question. I have a question on SPE new equipment sales. The second half of this year, NAND composition ratio is rather low. Today, Korean memory manufacturer made a financial announcement and CapEx was rather big. I wonder the sales will be incorporated into the second half of this year. Actually, the net in the second half of this year, the estimate does not include the sales. Why does that happen?
Those tools are not in operation for a while, that's why those tools cannot be accepted. Is that the reason for that? Our company sales recognition standard is completion of setup and testing. At present, we just received inquiries for memory, and the investment plan is now getting tangible or visible. The memory inquiries will start contributing to our sales from the first half of next fiscal year. For DRAM, the sales will be increasing from the second half of next fiscal year.
Thank you very much. I have one follow-up question. The next year business outlook, you talked about, if possible, WFE CY 2020 forecast, if possible, by application. Could you just let us know about the potential for growth? Today, one IC vendor made financial announcement today. You talked about that, I think macroeconomy is taken into account.
It is a bit difficult for me to say how much growth is expected in next year for the WFE market. We cannot quantify the value yet. I'll say right now is in our factory, the production has been suppressed so far, but I have issued instructions to the factories to bring back to the normal situation of capacity. Last year, our sales was JPY 1 trillion, 280 billion. At the same time, we made efforts to improve the production. Procurement as well, together with suppliers, we suppressed the procurement to some extent, but we try to bring back procurement and production to the normal level little by little. That's the current status. Relatively speaking, the plan we presented today for the sales for our fourth quarter, the January to March 2020, I think we can increase production to fill the capacity of factories significantly.
Next question, please. The gentleman in the middle in the neighboring island, please.
I am Yasui from UBS Securities Japan. I have one question. On logic investment in second half of this year, sales is expected to grow significantly. In reality, Taiwanese largest foundry is planning to make big investment. How about the continuity of this investment? Your company second half of this year sales, that level will be continuing every six months, or are there any potential drop in terms of your sales in the future? Could you just explain that, please?
In principle, I think high standard investment will continue in the future. Last year, the calendar year last year, actually, our company recorded the highest sales in our history. At that time, the semiconductor market size was JPY 468.8 billion. Year 2030, that will become JPY 1 trillion. That is the general forecast of the semiconductor market size growth.
In reality, over the past 13 years, the semiconductor device market was doubled in size. We will see another doubling trend toward year 2030. For smartphone, according to TSR forecast, in year 2023, 1.534 billion units will be sold, out of which 745 million units are to be used for the 5G. There will be various kind of devices coming up for 5G application. The customer who make big investment, when you think about their share, I think that high level of investment will continue in the future.
Thank you very much. I have one follow-up question. Next year, as for upside information, you talked about memory and logic. The high level will continue. Based on this, are there any upside final demands, for example, data center, autonomous driving, or new services? High, medium, low, are there any upside information on the final demands?
Are there any expectations from your company although they are not visible yet?
I rather want to say things are becoming more visible as expected. That's the current status. For logic, I already talked about that in my presentation. In automotive and healthcare, in various fields, CMOS image sensor is another potential area. For memories, as I said earlier, the 3D NAND market, the adjustment period is completed, coming back to normal, DRAM as well. One quarter, the RAM market will come back to the normal conditions for memories and logic, and devices for automotive and industrial are expected to grow from now on.
Thank you very much for your question. Next question, the gentleman in the front in the same aisle please.
I am Damian Thong from Macquarie Capital Securities. I have a question on Field Solutions business.
The first half of this year, the Field Solutions sales is higher than your plan. Could you give me the actual amount of money of the increase from your plan? I have one more follow-up question later on. The progress rate in the first half of this year for Field Solutions business, as I said in my presentation, is 50%+. To be more specific, 52% progress rate is achieved in the first half of this year. It has been steady proceeding. According to your original plan, 50% for the first half of the year, 50% for the second half of this year. Is that correct understanding? Yes, that's correct. One follow-up question for this time. When you have the full year forecast has been revised upward, Field Solutions business estimates are also revised upward or figures for Field Solutions business remain unchanged?
For Field Solutions business, there have been no changes in terms of the estimates for the Field Solutions business. Thank you very much. Next question, please. Yes, the gentleman in the rear of this room, please. I am Yamamoto from Mizuho Securities. I have a question on the increase of the share for the film deposition. The number of steps for hard masking ALD has been increased. That's what device manufacturers said and other tool vendors said. Maybe that's about NT333. That's my guess. If I'm not correct, please correct me.
Other companies like Lam, AMAT, ASM, they are using the single wafer process. What sort of advantage do you have? That's first question. As for logic, you said that the single wafer process is replaced by the batch process. That didn't happen so much in the past.
What sort of applications for logic, the batch replaces single wafer process? For ALD, the system you talked about, we are making best use of the characteristics advantage of that system. Our process to concept is really essential to come up with that film deposition. As for the replacement by batch process, as of today, because of the relationship with customers, we are not able to make some announcement. For the future, the number of process steps increased. Amid those circumstances, we also need to think about SDGs, environmental aspect, space or throughput aspects. All those aspects are becoming more and more important. If film deposition can be implemented in furnace, that will be the better choice.
Therefore, based on our performance and through the trial with our customers, we found it possible to use furnace for the film deposition, and we expect the further increase of the number of steps in the future. You don't have to disclose the name of the customer, what sort of film application, the replacement from single to batch take in place? Could you share the idea with us, please? One moment, please. The material is silicon. Thank you very much. Thank you very much for your question. Next question, please. Yes, the gentleman in the rear row, please. I am Nakanomyo from Jefferies (Japan) Limited. For FPD, I have a question on FPD. The first quarter and second quarter, the profit margin is declined. Could you explain the reason why? Towards the second half of this year, what will happen to this profit margin?
I also have a question on the FPD market in next year. What sort of focus do you have for the FPD forecast? The slides that there have been no changes from the first quarter financial announcement, there must be some changes over the past three months. Are there any changes in terms of your prospect or focus for the next year FPD market?
As for your first question, as far as our company is concerned, the operating margin of FPD business is to be improved, focusing on the high value-added area. The major issue is PICP, the plasma ICP etching. The steady growth is achieved so far for the future. Also Inkjet area and PICP technology are to be used to explore new applications. That's what we are doing right now. In that sense, there are further growth potential in the FPD business.
As for the profit margin, the commodity areas, we had some sales in the second quarter of this year, and that proportion increases. Because of that, this situation is just temporary phenomena. For the future, the profit ratio is expected to improve. For next year, 5G mobile area, in particular, G6 generation OLED investment is expected to grow. For G10, large-sized panel as well, partially remain in the future. As I said earlier, our business opportunities of our company include plasma ICP etching area and large-sized panel, G10 specifically. We are making some success, but that portion of the business will remain. Those two factors are driver for the next fiscal year sales forecast. May I add one more comment, providing some information? You asked about the reason why this profit margin decreased, although the sales increased from the first quarter to second quarter.
Actually, manufacturing costs, which were turned into inventory in first quarter, were recognized in the second quarter, along with the sales recognition. That is the reason for that. When you look at the first half of this year, on average, and that level remain unchanged in the second half of this year. As for the segment profit margin, we do not disclose the information for the second half of this year. It's the gentleman in the front row, please. The second row, please.
I'm Maekawa from Credit Suisse Securities Japan. I have a question about the forecast for next fiscal year. How do you view the next year condition? You said the memory investment will recover, but in principle, the announcement made by the memory manufacturers indicate declining investment, except for Samsung. You said memory investment will recover next year in your presentation.
SK hynix, Micron, Western Digital, and Kioxia, those CapEx will be declining. On the other hand, Samsung and Chinese memory manufacturers increased their investment, and their investment increases more than the decline of the other manufacturers' investment. The memory manufacturers who make announcement of decline of investment also start increasing investment when the memory device market recovers. That sort of optimistic view do you have? Could you just let me know your view, please? You talked about the conventional memory manufacturers and Chinese customers. They have different agenda, actually. Those memory manufacturers do not share the worldwide memory demand. As you said, the conventional memory manufacturers are now adjusting their inventory, and foundries and logic investment is strong, which creates new memory demands. For 5G is spreading, and now you can see new CPUs to be released in the future.
Accordingly, the high-speed data center investment will be recovering little by little, and 5G mobile also increase. At present, memory inventory level comes back to the normal situation. Probably 3D NAND supply may be less than the demand. In particular, for NAND, they will have simple demand. The NAND will replace all hard disk. There are double factors, the new demand and replacement from the hard disk. There are two different factors to drive the demand. Because of that, we now receive increasing inquiries. I'd like to sort out what you have said so far. For one thing, the inventory adjustment will be completed, and the demand will come back. Leading-edge logic devices are introduced to increase the memory demand. You talked about those issues before.
Those two factors are coming at the same time, or do you think the adjustment of inventory comes first, and after that, logic will become the new driver? Is that correct understanding? The inventory adjustment is completed to some extent, and inventory is now coming back to the normal status. For NAND, that replacement demand, I mean, replacement of hard disk by NAND is taking place, and NAND supply might be running out. That is expected to happen next year. For DRAM, things are going very smoothly and new demand for 5G and technology innovation, and also the process tools to take care of those new technology. We have new demands for those areas. That's what is expected to happen next year. Next year, bit growth of DRAM and NAND. How do you view the bit growth of DRAM and NAND next year?
Bit growth is a bit complicated, and there are various figures coming out for this year as well. Today, one customer made an announcement, and it's too early for us to refer to the bit growth for next year. Demand is expected to grow. On the other hand, the macro economy factors need to be considered, and the customers are now trying to find out the best timing for investment.
Thank you very much for your question. Next, the gentleman in the front row, please. Yes, please.
I am Sugiura from Daiwa Securities. I have a question on the profit margins. At the beginning of the fiscal year, you talked about the strategic expenses that become margin pressure. I think you said that.
That sort of strategic expenses are equal level, the first half and second half of this year, or the strategic expenses are more in the second half of the year. That's the reason why the profit margin is not so much improved in the second half of this year. That's my question. When you say strategic expenses, are you referring to the R&D expenses? Including the expenses for the evaluation tools as well. We have been carrying out very active capital investment. We are now constructing new buildings. Accordingly, we have the depreciation chronologically. When you compare first half and second half of the year, in the second half of the year, depreciation amount will be more in the second half of this year. R&D expenses was increased by JPY 3 billion, as we said in the presentation, in the second half of this year.
In that sense, the strategic investment in the second half of this year is more than the one in the first half of this year. I have one follow-up question. Now business environment is now recovering, and for the strategic expenses, do you have any plan to further increase strategic expenses in next fiscal year? For this year, R&D expenses is about JPY 123 billion. By including this year, three years to come, we are planning to invest JPY 400 billion for R&D. Thank you very much for your question. Next question, please. Yes, the gentleman next to the previous gentleman, please. I am Nishino from Tokai Tokyo Research Center. I have a question on DRAM. When customers are preparing for starting up of the new manufacturing line, they are to be used for the device node of 1Z nanometer, as you said in the page 21.
Process tool for the 1Z nodes will be the mainstream. However, yield of 1Z node is not so good. Why the yield is not so good? I think poor yield will be leading to the business opportunity for your company. In the era of 1Z, where you can find the business opportunities? That's the first question. Second question about DRAM. China, I think there are many inquiries to produce the DRAMs in China, but can you export process tool for DRAM to China without any problems? For DRAM. For your first question, 1Z node for DRAM. Yes. According to the DRAM manufacturers, 1Z node should be the mainstream, but there should be many challenges. However, those challenges will be good business opportunities for TEL. Where do you find the biggest business opportunities in terms of your product for DRAM 1Z node?
What sort of business opportunities would you expect for 1Z era of DRAM? In principle, patterning should be the key. We have the wide equipment portfolio. As I said earlier, lithography area, our company provides coaters and developers for the lithography process. Our share in this process is 90%. We are in the very good position in the lithography process. EUV for the high-volume manufacturing, our share is 100%. Cleaning, film deposition, and etching. In those area for patterning, four consecutive key processes, we can provide process tools. That is the area that we can find business opportunities. For high-K metal gate, for the material-based speed enhancement technology is required for DRAM. New applications inquiry will be coming, and that also constitute our business opportunities.
1Z, in the era of 1Z, EUV lithography, do you think EUV lithography will be used for the device node of 1Z, or do you think EUV lithography is too early? I think that is one of the hot topics for today, could you just share your idea with us, please? Each IC vendor is now studying the timing or possibility of adoption of EUV lithography. They may choose the methodology featuring highest productivity, or they may think about differentiation when you decide the product. I cannot make any clear comment on that issue yet. The IC vendors are now pursuing and studying almost all the potential options.
Yes, the gentleman in the middle, please.
I am Yoshikawa of Morgan Stanley MUFG Securities Co., Ltd. Your competitor, WFE manufacturer, one of them said, this year's China local customer's WFE investment amounted to JPY 6 billion.
Your company, if my memory serves, you said $3 billion-$4 billion investment by Chinese local customers. What is your current view of the investment of China local customers this year? What will happen next year? What sort of growth do you expect for next year in terms of the China local customers' investment? Let me answer to your question. Our company does not disclose the total amount of investment of all Chinese local customers. When it comes to the China local memory manufacturer, investment should be almost the same as last year. Last year, there are three Chinese memory manufacturers, this year there are only two Chinese local customers, we said $2 billion-$3 billion investment is expected for this year. I think the competitor may include investment of the logic, foundry, and power devices. I understand. Thank you very much.
If that's the case, your outlook remain unchanged from the previous announcement. For this year, yes, there is no changes, we haven't announced our forecast for next year yet. I forgot to answer one of your questions about the export. In principle, we are going to abide by the regulations and laws, we want to remain fair when it comes to the business. There are some issues in the U.S., China trade frictions, we do not plan to get our competitors' market because our competitors are not able to export their product to China. We try to fight against our competitors by pursuing leading-edge technologies, by providing our values. That's how we try to do business. Thank you very much for your question.
It's time for us to close the session, but there seems to be many questions from floor, so I want to take one more question, if any. No more questions from the floor? Okay, thank you very much. This concludes our financial announcement. Thank you very much for joining us today despite your very busy schedule. Thank you very much.