Earnings Call: Q2 2020

Oct 31, 2019

It's time for us to start to occur, Electrolux Financial Announcement for the second quarter of fiscal year ending March 2020. Thank you very much for joining us despite a very busy schedule. I am yet CUDA of IR department acting as today's moderator. Before introducing our attendees for today, we'd like to express RDE best sympathies and condolences to the people who were affected by a series of typhoons attacking Japan last month and this month. Our CEO, Kauai and all our employees sincerely hope for prompt and early recovery. Now I'd like to introduce the attendees on our side. Tito Otton AGchi, Representative Director, Chairman of the Board. Next, Toshiikoi, Representative Director, President and CEO. Next, Yoshika Zulu Nokawa, Corporate Director, Executive Vice President And General Manager of Finance Division. So first of all, Mr. Nuno Gawa Corporate Executive Vice President And General Manager of Finance Division will present the 2nd quarter consolidated financial summary. Good evening. It's getting dark. Thank you very much for joining us despite a very tight schedule today. I'd like to make a presentation 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 50,400,000,000 and operating margin was 20.2%. Part of SB 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 weak 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 4 year sales forecast. Later on, Mr. Kaway will talk about this issue. We have repurchased 6,350,000 shares since May 2019. Total repurchase has amounted to 1,000,000,000. This corresponds to 70% over the maximum of 1,000,000,000 On this slide, you can see the financial summary for every 6 months. As I said earlier, compet result forecast net sales because of the port 4 sales from the second half of the year and strong fuel sales business JPY 508,400,000,000 and profit is higher than expectation. Profit margin was 40.2% and operating margin was 20.2%. Achieving 1000000000. Now you can see the financial summary on the quarterly basis. On the quarterly basis, the 2nd quarter net sales was increased by 34.9 percent from the first quarter, achieving 1,000,000,000. The group profit margin was 39.3 percent. Operating margin was 20.5% in 2nd quarter. This slide shows graphical presentation of the information shown in the previous slide. On the right hand side, you can see 2nd 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 quarter based segment information. On the left, you can see SPE in the middle, you can see FPD sales information. As for SPE between quarter 1st quarter 2nd quarter, the sales was increased by 37.2% the first quarter 2nd quarter. FPD in the middle sales increased by 10 point 3% from the first quarter to 2nd 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 SP sales by region. Again on the quarterly basis. On the right hand side, you can see the result of the 2nd quarter. The compared with the 1st quarter results, the 2nd 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 a quarter based new equipment sales by application. On the right hand side, you can see second quarter results. Second full quarter of fiscal 2018, as you can see over here, left hand side over the past 2 years, I should say. The top portion blue color portion and purple color portion, representing memory Specifically, DRAM and non HORIDA are conspicuous, about 60% to 70%. While logic sales accounted for 30% to 40%. However, On the right hand side, you can see 2 bars on the right hand side. The proportion between memory logic now become 50% to 50%. So the proportion has been changed over the past 2 quarters. Now you can see fuel solution sales on the quarterly basis. 2nd quarter of this fiscal year sales was 1,000,000,000 Against the full year forecast, our progress level is about 50% in the first half of this year. So the sales progress steadily for the fuel solution business. You can see the balance sheet, again, quarterly basis. On the left, assets are shown on the top, cash and cash equivalent 1,000,000,000. In the middle, you can see like blue portion, which represent inventories, in the second quarter, 1,000,000,000, 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 803,100,000,000, As you know, because of the share repurchase, the net asset declined from the first quarter. But still, equity ratio is about is 68%. Now you can see inventory turnover and accounts receivable turnover on the quarterly basis. The top line, green call shows the inventory turnovers. In the second quarter, as you can see, The high level inventory turnover is maintained from the 1st quarter. Because the inventory turnover is calculated based on the past 12 months sales. So all the sales are shown on the bar graph in the blue color. So when you look at the sales of the 12 months, you can see the reason why the inventory turnover level is rather high. And 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 1,000,000,000, Cash flow from investing activities was -1000000000. Cash flow from financing activity was minus 1,000,000,000 out of which share repurchase amounted to minus 1,000,000,000 So most of the cash flow from financing activities are from share buyback. Free cash flow, the green color line was JPY 65,800,000,000. Thank you very much. This concludes my presentation. Thank you very much for your kind attention. Next presentation is given by our CEO, Ms. Kawai. He will be talking about business environment and financial estimate revisions. Mr. Kawawai, please? Once again, I am Kauai. Good evening. Thank you very much for joining us despite the late hours. Now I'd like to talk about business environment and financial estimate revisions. Let me start with the business environment. For both SPE and FPD segment, 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% to 20%. The logic and foundry is expected to be strong. For memory, inventory adjustment are in progress. And we can see the recover investment next year and that outlook remains 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 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. 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 well memory has been suppressed, but you can see some recovery trend next year. Now you can see 2nd quarter business progress. The SB Business strategy is implemented as planned. For 3 focus areas, namely etching, film deposition and cleaning, we are we want the PORs continuously for etching. We want PORs in the IoT and automotive area in second quarter as well as the 1st quarter successfully. And we can win back applications from our competitors. For filmdeposition, for L. D. And batch filmdeposition, We saw some progresses for ALD, both of them are for leading edge logic devices. For ALD, the high hard mask formation for the critical patterning process, we won PORs. This is for selective firm deposition process. The application for the selective firm 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. So our budget system replaces the competitors' single processes and we already own the PORs. For cleaning, pebble cleaning application is increasing. Newly, we won orders from a new Chinese customer, Chinese customer. For the future, the movers law continues on the other hand, the Hypermas area, commodity Hypermas 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 Frilida, United States, and 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 rightsized customers, In the future, all the investment is expected. And we won orders for the inkjet Now I'd like to talk about this fiscal year financial estimate. 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. Nunaoka said earlier, for the first half of this year, part of SPE sales are pulled forward. The second half of the year, the financial estimates have been revised by reviewing the latest information. Accordingly, The 4 year sales forecast is now JPY 1,110,000,000,000 increased by JPY 10,000,000,000. Operating income is JPY 225,000,000,000, increased by JPY 5,000,000,000, and the net sales attributable owners of parent is 1,000,000,000 increased by 1,000,000,000. 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 10,000,000,000 from our plan because part of sales was pulled forward from the second half of this year. The sale breakdown by application was in line with our plan. The sales estimates for the second half of this year is 1,000,000,000, the 4 year sales estimate increases by 1,000,000,000 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 and D expenses and CapEx plan. The R and D expenses are raised by 1,000,000,000 from the 1st quarter financial announcement to become JPY 123,000,000,000. We additionally increased R and D expenses to achieve our midterm business plan and to prepare for the future growth. For the CapEx and depreciation, there have been no changes from the previous financial announcement. Finally, this shows this year dividend estimates. The interim dividend is in the share repurchase results in the first half of this year. Expected to be when the ongoing share buyback is not taken into account, but we are planning to revise this focused 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. Now we'd like to entertain questions from the floor of Gensio 630. First of all, 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 application. And today's financial announcement will be uploaded to our website. So please make sure to speak slowly and precise concisely. Okay. Could you raise your hand if you have any questions, please? So the gentle mine, the front law, please. I am Madaki from Namira Security, 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 20 k might have to 40 k and in China, one company talked about 40 or 50 k maybe next year. So these are the stories I can hear. Are there any other information or what about the accuracy of the information I just talked about? Gradually, the inquiry from customers are now increasing. So the plans you talked about, I think that is the correct information for other companies. You can hear some new information gradually. About 3 months ago, I said that we need to wait for another 3 months to see some tangible plans. That's what I said about 3 months ago. And actually you can hear something from our customers. As for the situation, Forelogic is strong and memory, 3 d NAND, recovery first and followed by DRAM recovery. So in our factories during the WFE adjustment period, our Steries operation has been suppressed, but we try to prepare for the recovery or normalization of our operation, now. I have one follow-up question. According to your focus, maybe China is put aside. So think manufacturers, large sized investment for 3 d NAND will start in the second half of this year. Is that your view? So when it comes to the contribution to sales, the logic foundry is rather big in the previous graph, but the finalization of the investment. So I think inquirers are getting much clear than before. Thank you very much for your question. Next question please. Stiflut row, the gentleman in the front row, and next island, please. I'm Mia Matopram Mitsubishi from 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. So could you just explain the reasons why the operating margin does not increase. You said R and D expenses increased by JPY 3,000,000,000, but that contribute only point four points. So 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. So LogicFoundry increases. Is that what you mean? Could you just say that again, please? The sales of the logic fund increases in the second half of this year. So there is no increase in the operating margin from the first half of this year. No, no, no. So the customer mix and product mix, both those 2 factors contribute to this phenomena. Thank you very much. Essendona, next to the previous gentleman, please. I am Moriyama from JP Morgan Securities, Japan. I have a question on the app 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 our foundry business, but just for information, by application or by region, what kind of process tool is the driver of displaying forward phenomena. Also, throughout the year, stem and cleaning system. So 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 these sales? As for the first half of this year actual sales, non volatile memory for foundry. So 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 was also increased. So 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, but by and large, all the products drive this phenomena once again, non volatile memory foundry cells and the field solution cells, were found higher than our So in particular, for example, where process EUV desography now introduced in the high volume manufacturing lines, So does that impact your sales? But that doesn't happen this year. Maybe next year and on onward, the EUV lithography might have some impacts on the your business, but so far, there is no major impact on that. The product composition or sales increase are almost in the same proportion in terms of the growth rate. The increase from the previous focus 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. So 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. So we need to be resubularies installed in to the manufacturing line that will have the positive impact on our business because we have quota and develop 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. So when EUV 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's a potential for growth. Thank you very much. Next, Mr. Gentlemen on this island, please. Thank you very much for your presentations. I'm Yoshida from S. A. Securities Japan. My first question is a kind of pull up of Pakistan's question. I have a question on SB, new equipment sales, second half of this year, NAND composition ratio is rather low. Today, Korea Memory Manufacturers made a financial announcement and CapEx was rather big. So I wonder the sales will be incorporated into the second half of this year. Actually, the net in second half of this year estimate does not include the sales. Why does that happen? Because 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 test Stink. At present, we just received inquiries for memory, And the investment plan is now 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 I have one follow-up question. The next year business outlook, you talked about if possible, WFE COI 2020 forecast if possible by application? And could you just let us know about the potential for growth? Today, one IC vendor made financial announcement today. You talked about that. And 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, but our fear right now is In our factory, the production has been suppressed so far, but we I have issued instructions to the factories to bring back to the normal situation of capacity last year, ourselves was JPY 1,280,000,000,000. 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 to significantly. Next question, please. The gentle minder middle in the neighboring island, please. I am Yassy 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 Planry is planning to make bigger investment. How about the continuity of this investment? Your company second half of this year sales, that level will be continuing every 6 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 $468,800,000,000 year 2030 that will become $1,000,000,000,000. That is the general focus of the semiconductor market size growth. In reality over the past 13 years, the semiconductor device market was doubled in size and we will see another doubling trend toward year 2030. For smartphone, according to TSR focused, in year 2023, 1,500,000,000 units will be sold, out of which 745,000,000 units are to be used for the 5G. So there will be various kinds of device coming up for 5G application. So the customer who make big investment, when you think about their share, I think that double 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. So based on this, are there any ups side, final demands, for example, datacenter, autonomous driving, or new services, high medium loan, are there any upside information on the final demands, are there any expectation 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 made talked about that in my presentation. And Automotive, and health care in various field, CMOS image sensor is another potential area. For memories, as I said earlier, the 3 d NAND market the adjustment period is completed coming back to normal DRAM as well. Next 1 quarter, DRAM market will come back to the normal conditions. For memories on logic, and devices for Automotive And Industrial are expected to grow. From now on. So next question, the gentleman in the front in the same island, please. Hi. I'm Damien Tong from Kuri Capital Securities. I have a question on Field Solutions Business. The first half of this year, the fuel solution sales is higher than your plan. Could you give me the actual amount of money of the increase from your plan. And I have one more follow-up question later on. The progress rate in the first half of this year for field solution business, as I said in my presentation, is 50% plus, to be more specific, 52% progress rate. Is achieved in the first half of this year. So it has been steady proceeding. So according to your original plan, 50% for the first half of the year, 50% for the second half of this year. Is that 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 fuel solution business remain unchanged. For field solution business, there have been no changes in terms of the estimates for the field solution business. Thank you very much. Yes, the general mind, the rear of this room, please? I am Yamamoto from Mizwell Securities. I have a question on the increase of the share for the family position. The number of steps for hard masking LED has been increased. That's what device manufacturer has said and other 2 vendors said. Maybe that's about NT333. That's my guess. If I'm not correct, please correct me, but other companies like Lam, aim at ASM, they are using the single wafer process 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 ALT, the system you talked about, we are making best use of the characteristics advantage of that system. So our process to concept is really essential to come up with that firm 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 But for the future, the number of process steps increased. I mean, those circumstances We also need to think about SDGs Environmental Aspect, Space Or Throughput Aspects all those aspects are becoming more and more important. So if film deposition can be implemented in fairness, that will be the better choice. Therefore, so based on our performance and through the trial with our customers, we found it possible to use finance 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, but what sort of firm application, the replacement from single to batch taking place, could you share the idea with us, please? One moment, please. The material is silicone. Next question, please. I am Nakanomeo from Jefferies Japan Limited. For FPD, I have a question on FPD. The first quarter 2nd quarter, the profit margin has declined. And could you explain the reason why toward 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 there have been no changes from the first quarter financial announcement, but there must be some changes over the past 3 months. Are there any changes in terms of your prospect or focus for the next year, FPD market. As for your first question, As well 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 plasma ICP itching. The steady growth is achieved so far for the future. Inkjet area, and also 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 FPI Business, FPD Business, As for the profit margin, the commodity areas, we had some sales in these 2nd quarter of this year and the proportion increases. Because of that, this situation is just temporary for NOMENA. For the future, the profit ratio is expected to improve. For next year, 5g Mobile Area, In particular, G6 generation OLEDinvestment is expected to grow. For G10, large sites panel as well, partially remain in the future. As I said earlier, our business opportunities business opportunities of our company include PICP itching 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 2nd 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. So 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. As the gentle minor front row, please. The second row, please. Hi, Mike. I'm from Credit Suisse Securities Japan. I have a question about the forecast for next fiscal year. How do you view the next year condition? Now you said the memory investment will recover, but in principle, the announcement made by the Memory Manufacturers. Indicate decline in investment, expect for Samsung, but you said, memory investment will recover next year. In your presentation, SKYY Hynix, Micron, Western Digital and Kokis, Kiyaksha, those CapEx will be declining. On the other hand, some and China, Chinese memory manufacturers increase their investment and their investment increases more than the decline of the other cholar's investment or 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. So those, namely, 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, 5g 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 3 d NAND supply may be less than the demand. In particular, for NAND, they will have simple demand also the NAND will replace all hard disks. So there are double factors. The unique demand and replacement from the hard disk So there are 2 different factors to drive the demand. Because of that, we now receive increasing inquiries. So I'd like to sort out what you have said so far. So for one thing, the inventory adjustment will be completed and the demand will come back. Also logic leading edge logic devices are introduced to increase the memory demand. So you talked about those issues before. So those 2 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? So the inventory adjustment is completed to some extent, and inventory is now coming back to the normal status. For NAND, the replacement demand, I mean, replacement of hot disc 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. So we have new demands for those areas. So that's what is expected to happen next year. So next year, bit growth of DRAM and NAND, how do you view growth of DRAM and not next year. Bit growth is a bit complicated, and there are various figures coming out for this year as well. Today, one customer missed 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 macroeconomic 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. So next, the gentleman in the front row, please. Yes, please. Hi. I'm Suryra from Daiwa Securities. I have a question on the profit margins that the beginning of the fiscal year, you talked about the strategic expenses that become margin pressure. I think you said that So that sort of strategic expenses are equal level, the 1st 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 expenses, including the expenses for the evaluation tools as well. So 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. And R and D expenses was increased by JPY 3,000,000,000 as we said in the presentation in the second half of this year. So 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. So 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 and D expenses is about JPY 123,000,000,000. By including this year, 3 years to come, we are planning to invest JPY 400,000,000,000 for R&D. You very much for your question. I am Mishina from Tokai Tokyo Research Center. I have a question on Durham. When customers are preparing for starting up of the new manufacturing line, they are to be used for the device node of 1Z no matter as you set in the Page 21. So device sorry, process tool for the 1z notes be the mainstream. However, yield of 1z note is not so good. Why the yield is not so good? And I think port yield will be leading to the business opportunity for your company. So in the era of 1Z, where you can find the business opportunities? That's the first question. And 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, the according to the DRAM Manufacturers, 1Z, nodes should be the mainstream, but there should be many challenges However, those challenges will be good business opportunities for Tal, where do you find the biggest opportunity, business opportunities, interim itself? Your product for DRAM 1Z node, but sort of business opportunities which we expect for 1Z era of DRAM. In principle patterning should be the key We have the wide equipment portfolio, as I said earlier, the geography area, our company provides quotas and developers for the lithography process. And our share in this process is 90%. We are in the very good position in the lithography process. EOB for the high volume manufacturing, our share is 100 percent, cleaning, film deposition and etching. So in those area for patterning, 4 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. So new applications inquiry will be coming and that also constitute our business opportunities. So 1C in the era of 1Z EUV lithography do you think EUV lithography will be used for the device node, the 1Z, or do you think EUV is too early? I think that is one of the hot topic for today, but could you just share your idea with us, please? Each IC vendor is now studying the timing or possibility of adoption of eager be lithography, they may choose the methodology featuring higher productivity or they may think about differentiation when you decide the product. So we can't I cannot make any clear comment on that issue yet. The IC vendors now pursuing and studying almost all the potential options. I'm your scrubber of Morgan Stanley MUFG Research Japan. Your competitor, WFE manufacturer said, one of them said, this year's China local customers WFE investment amounted to $6,000,000,000 But your company, if my memory serves said $3,000,000,000 to $4,000,000,000 investment in by Chinese local customers? And 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 Let me answer to your question. Our company does not disclose the total amount of investment of the all Chinese local customers. But when it comes to the China local memory manufacturer, investment should be almost same as last year. Last year, there are 3 Chinese memory manufacturers. But this year, there are only 2 Chinese local customers and we set 1,000,000,000 investment is expected for this year. And I think the competitor may include investment of the logic, foundry, and power devices. Thank you very much. So if that's the case, so your outlook remain unchanged from the previous announcement. For this year, yes, there is no changes, but we haven't announced our forecast for next year yet. I forgot to answer one of your questions about the export. In principle, So we are going to abide by the regulations on those. And we want to remain fair when it comes to the business. So there are some issues in the America, China, trade frictions, and we do not plan to get our competitors market because our competitors are not able to export their product to China, but we try to fight against our competitors by pursuing leading edge technologies by providing our values that how we try to do business. It's time for us to close the session, but There seems to be many questions run through. 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 our very busy schedule. Thank you very much.