Earnings Call: Q1 2019

Jul 26, 2018

So it's time for us to start to get a strong financial announcement of the 1st quarter. Thank you very much for joining us despite a very busy schedule and very, very hot weather. I am Hirayama of IR department acting as today's moderator. Now we'd like to introduce the attendees on our side. Mr. Tetsu Otsunishi Representative Director, Chairman, the Board. Mr. Toshiaki Kawai, Representative Director, President and CEO. And next, Mr. Ken Sazagawa, vice president Accounting department. Now first of all, Mr. Sezago, our vice president accounting department will make announcement or presentation about the consolidated financial summary. Mr. Sasazawa, please. Good afternoon, everybody. Thank you very much for joining us back a very busy schedule. I am Sasagawa, Vice President of Accounting Apartments. I'd like to talk about the did that financial summary of the first quarter of the fiscal year ending in March 2019. First of all, you can see the highlights of the first quarter. As you can see over here, the Q1 results showed good progress in line with the plan for the first half of this fiscal year. For the 2nd quarter, new equipment sales plan, more than 60% of SPE and 100% of FPD tools have been shipped. Waiting for the installation. Therefore, we are on the very good progress as well. 2nd point, the SP sales remained very strong due to increasing demand for data centers. Similarly for FPD as well, the investment for G10.5 in particular has been very strong and we can see the very good progress as well. Let's go to the next slide So this shows the quarterly financial summary. On the write downs side, you can see the first quarter results. The net sales was 1,000,000,000, decreased by 17% from the quote 4th quarter SPISA was 1,000,000,000 and FPD sales was 1,000,000,000 The corresponding gross profit was 1,000,000,000. Gross profit margin was 41.4%. The margin was decreased by 1.7 percentage point because of the decrease in net sales, The proportion of the production costs has increased. That is the reason why we have the decrease of 1.7% points. And SG and A expenses JPY 50,000,000,000 and operating income was JPY 72,400,000,000, operating margin was JPY 24.5 percent income before income tax was 1,000,000,000 and net income was 1,000,000,000 and R and D expenses, capital expenditures and depreciation are shown on the slide. Now you can see the financial performance on the graphical basis. As you can see on quarter to quarter basis, both net sales and income goes up and down. However, when you look at every half year or every year, you can see the steady increase in trend overall. Next slide please. Here you can see the segment information. Our segment income is based on income before income taxes. Let me start with SPE sales was 1,000,000,000 on the first quarter the segment income was 1,000,000,000, segment profit margin was 27.9% compared with 4th quarter marginal profit ratio product increased. However, as I said earlier, because of the proportion of fixed cost increases against sales, Segment profit margin declined, absent to last year, the R and D expenses, some of them included in the adjustment, they are transferred to the SPA segment. That's the reason why slight decline was observed. Next FPD segment sales was JPY 15,100,000,000, segment income was JPY 2,400,000,000 and profit margin was 16.2%. Again, just like SPE because of the reduction in sales, proportion of fixed costs increased because of that profit margin declined from the fourth quarter. For FTD over here, we are providing high value added products only So in this percent for the midterm business plan and composition net sales is shown on the right hand side. Next slide, please. This shows SB sales by region. As you can see over here, for the first quarter. As for the volume for sales, the first one is in Korea because of the very active investment in memory devices. An increase in sales is observed in China as well. Growing ratio is also baked in China, the pink color on the bottom. In Japan, you can see increasing trend of sales as well. Both of them memory investment are the primary reasons. Next slide shows the new equipment sales by application As I said earlier, the Korea, China and Japanese, memory customers and major investors, So the proportion for non Vratai memory was 49% DRAM accounted for 30% memory proportion was rather high in the fast quarter compared with others. Next slide shows distribution sales every quarter. As for the first quarter, 1,000,000,000 SPE 60,600,000,000 NFPG sale was 1,000,000,000. Again, you can see some up and down by quarter, but when you look every 6 months, you can see a steady increase in trend for the field solution sales. Next shows balance sheet. On the left, you can see assets the total assets was 1000000000 compared to previous quarter declined by 1,000,000,000 on the top cash and cash equivalent declined by 1,000,000,000. From the fourth quarter. The major breaks down, actually there are quite a few breakdown and please see the financial review for the details, but major one is payment of the dividend 1,000,000,000 and accounts receivable, almost the same level as the previous quarter. Inventories, compared with the end of the end of 4th quarter, 1,000,000,000 declined by 1,000,000,000 because we are going to prepare for the second quarter and you can see we expect the high level of sales because of that we have see some increase in inventories. Next, on the right hand side, you can see liabilities and net assets for liabilities in total, 1,000,000,000 declined from the fourth quarter by 1,000,000,000, the net assets was 1,000,000,000, The 1st quarter equity ratio was 64.5 percent. Next slide shows inventory turnover and accounts receivable turnover. The bar graph shows the sales. An inventory turnover was 170 days on the first quarter, increased by 6 days from the end of the installation at the customer sites. Accounts receivable turnover was 46 days. Decreased by 6 days from the previous quarter. This slide shows cash flow Orpheus, as I've shown on the slide, the cash flow from operating activity was 1,000,000,000, Next, cash flow from investing activity was -1000000000, mainly for the capital investment and cash flow from the financing activities minus 1,000,000,000, again, the payment of the dividend was a major Faxter. Free cash flow was JPY 39,300,000,000. And finally, the cash on hand was declined by 1000000000 from the previous quarter amounting to 1,000,000,000. Thank you very much. That's all from me. Now next, Mr. Kaway, RCO make a presentation on the business environment and financial estimates. So Mr. Kawai, please. Thank you very much, and good afternoon. Your evening, I should say. Once again, thank you very much for joining us despite the very tight schedule and hot weather Mr. Hiroayama said earlier, I'd like to make a presentation on business environment and financial estimates. This slide shows the future market outlook of WWE by application in May when the midterm presentation of the midterm management plan, we talked about very similar issue the new applications having semiconductors and the service for data storage and high speed paragulation are increasing rapidly. Therefore, WFE market is now exceeding $60,000,000,000. That's a new phase that we are getting into. This shows business environment as of July 2018. Let me start with WFE CapEx. The WFE investment in calendar year 2018 is expected to grow by 10% to 15% on the year on year basis driven by active demand for memory devices for data annual production equipment CapEx for the TFD area process. For this, the FPD production equipment investment in expected to remain as high as last year due to significant growth of CapEx for G10.5 despite adjustment to the investment in small million panels for mobile devices. In the previous time, I talked about 10% increase for flat panel display CapEx. However, this time, we just expressed it as high as last year just because of part of the push out of the G10.5. Now you can see the WFE market growth and business opportunities by application for this calendar year for DRAM last year, it increased by 70%. On top of that, The CapEx or DRAM expected to grow by 60% to 65% on the year on year basis. For DRAM, actually, there is a tight supply situation. Supply cannot catch up with demand. Therefore, 70% of the investment is to increase capacity. Also, in order to increase the bit capacity per wafer, 80% of the investment is for the leading edge devices. For DRAM is driven by the devices for servers. As for the non VAT anomalies, again, last year, about 70% increase was recorded. For this year, CapEx for nonvata memory is expected to be similar to the last year level or increased by 5% on a year on year basis for NAND investment, the leading edge 9x Lager generation is a major area for investment. In particular, demand of SSDs for data centers and PCs will grow furthermore. For business opportunity, high value added etching and cleaning processes are the area that we can differentiate ourselves from the competitors. You can see a good progress here. At the same time, for firm deposition and high speed testing system, we are in all products, we are getting higher positions and we can have good progress and we are enhancing our efforts to further increase our position for logic and foundry. The CapEx for logic foundry will drop by 10% or remain unchanged from previous year. For leading edge 10 nanometer or beyond devices accounts for about 50% of the total investment For this year, for 7 nanometer node, high volume production will start and also investment to the pilot production of 5 nanometer node also start. Compared with 3 months ago, there are slight push out trend in the investment. However, semiconductor demand does not get decreased, but we should say that is because of the technology migration. That's how we understand the trend of the slight push out. Under those circumstances, when you look at by each application, on the quarterly basis, you can see some increase or decrease up and down trends. But when you look at the entire big picture, there is no change as semiconductor demands continued very strong. So midterm or long term demand remains unchanged. From the previous report announcement. Now you can see the business progress of this fiscal year, fiscal year ending in March 2019. The SP business strategy is being implemented as planned. For etching, 3 d announced lead process for DRAM combined patterning and interconnect process are very strong. We can increase share and we are going to increase sales as well for film deposition as well. This year, we are focusing on same batch LOD. We have won several certification of the POR for the volume production, you can make some contribution to the next year's sales as well. For cleaning process as well. The process to for the Patheon Klap's prevention, we can get the POR as well. As for the flat panel display production equipment, as Mr. Sakaue said earlier, a little bit, high value added products, PICP etching products is now getting into the generation 8.5. Last year G10.5 was a major area we increased our position by gaining some PORs. But this year, the mass production of G10.5 started So FPD production equipment profit margin is now increasing right now. For Miyagi Factory for etching equipment, we have the automated warehouse system, which was supposed to start this operation in June and actually operation started in June, And second new development building is supposed to be completed in September. And this construction of the new development building is under progress. A new production line is planned to start operation in November this year, not only this year, but also 2019 2020, you can address the demand for the future. Now I'd like to talk about the financial estimate for the year ending in March 2019, there is no changes from the previous announcement. As a said earlier, By application, you can see some increase or decrease. However, by and large, there is no major changes. There is no changes at all. We expect the sales growth to exceed market growth and generating record high profit for the 3rd consecutive year. Next you can see SB division, new equipment sales forecast. Sales by application. For Q1, we, sales of Q1 were in line with the plan and more than 60% of Q2 sales target has been shipped. As you can see, beyond 2 second half of this year, we can expect high level investment for memory devices. R and D expenses and CapEx plan, again, there is no change from the previous announcement midterm, we have billion plus market trend. So we are going to active in investment for further growth, our company. Next slide, the final slide. The last slide shows dividend forecast Again, there is no changes and we don't have any change in the dividend strategy. So the plan is just the same as previous announcement. Thank you much for your kind attention. Now I'd like to entertain questions from the floor up until 6 o'clock. I'd like you to limit the number of question by 1 purpose and with the follow-up question, could you identify yourself by your name and affiliation? And please make it sure to speak accurately and briefly because today's financial announcement will be uploaded to our website. So could you raise your hand if you have any questions, please? Yes. The gentleman in front, please. I am Adaki Filomena Securities. Thank you very much. The first question, only one question. So actually, I am I think the your company is very bullish, and I'm very happy to see there is no change in financial estimates, but there are some concerns. Therefore, I'd like to ask one question. Actually I interviewed about 10 suppliers and actually overall the supplier said the number of orders, the amount of order have decreased by half, but when I look at Samsung Micron and Intel, there are some push out announcement. And when you look at the entire push out plan, it's within this fiscal year, so there should be no problem as well as this clearly is concerned, but actually you haven't changed your financial estimates. You said there is no problem and could you let us know about the reasons why you didn't change the financial estimates. First I'd like to you Mr. Kawayi to let me know your opinion after that. I also want to get some comments from Mr. Tunisia as well. Thank you very much. I am Kawai. I'd like to give you my answer first. For this year's growth for SPE, a 15% increase is expected in the past, but this time it's a 10% to 15% is the growth rate for SBE in today's announcement. We have been getting questions that our focus is to bullish. That's the question I myself received in the past, but actually I am talking with customers based on that discussion with customer, we announce our financial estimates. When you look at the recent information, I do understand there's some trend or information coming up from the industry. However, in the shareholders meeting, general shareholders meeting, I got the question. The question was what are the risks for our company? I answered that our financial risks, geopolitical risks and also the trade dispute between United States and China also some potential risk is in the investment for scaling, whether the investment will progress as planned. That's another potential risk. So as for your question, Mr. Wazawa, get an answer to your question, there are some push ups trend, by and large, that is the migration to descaling a bit delayed compared with the plan And I think that review of the plan has already considered. That's how I view and I'm Suneshi and I quite agree with Mr. Kawai when it comes to financial estimates till March next year, the end of our fiscal year. So when you look at WFE for calendar year, but also when you look at the end of March, 2019, of course, when you look at short term trend quarter to quarter, you can see some increase or decrease. However, there's no situation to force us to change the financial estimate for this fiscal year up to until next year I think the market trend is rather good. Market is active in big picture. That's the reason why we didn't change our financial estimates. One follow-up question, many other companies often say that every 3 months, it's so difficult to change or revise the financial estimates. So we need to wait for 6 months to come up with more precise financial estimate, does that how you also think about the financial estimates or do you really think there is no need to change financial estimate now? For midterm, long term period, and there was same at sameconvest And I talked with many people at semicon West the other day, 2019 2020. Positive messages were heard in Semiconductor as well. So when you look at big picture, there have been no changes at all. So very strong demand continue. That's what I want to report to you. As I said earlier, the plan it's not because of the decrease in demand, just because of the migration, plan, revision, So Pechants exist at the same time, there are some pull ins existing as well. In that sense, we have very strong demand there are some increase or decrease in push shut and pull ins, that trend are also incorporated. Thank you very much. Thank you very much, Priyans. May I? I am Tineshii. Even in the past, as you know, we revised our financial estimate even in the first quarter that happened in the past. In principle, essentially, as necessary, we revise or change the financial estimate. If it's necessary, if there is no need, we don't change our financial estimate. That is our basic approach. So there is no such cycle of every 6 months. Next question please. Yes, this gentleman in front row, please. Thank you very much for your presentations. I'm Yoshita from Daisha Securities. About just the new equipment sales forecast, the 2nd quarter, 60% of the sales plan has been already shipped, but there is a big difference between first quarter 2nd quarter. Similarly, in the second half of you, there should be a big difference between the 3rd fourth quarter as well. That's my question. So your question is about whether there are any difference between 1st, 3rd and 4th quarter? Is that your question? Is that correct? In particular for this fiscal year, Actually, there should be no major difference from the previous trends. So on the budget approval, by the customer might have some impact and because of that, there are some ups and downs, But in some cases, customer places older and right away, they want to get the delivery of the products. But for this fiscal year, there is no major difference from the previous years that's how I view the trends. So maybe the January March in the second half of this year compared with October to December, there are some increase of the sales in January to March compared with the October to December. Is that how I can view that? There might be slight trend as such, but we don't change our plan at all. And when you look at closely, the 3rd quarter and 4th quarter, we haven't announced any breakdown between 3rd quarter 4th quarter, but this year is not different from the previous years. My follow-up question for FPD, actually 1st And Second Quarter, there are some big difference between 1st 2nd quarter as well. And you said the 2nd quarter sales plan has been already achieved. So very similarly on the second half of this year, how do you view the trends of the sales for this FPD? So the FPD requires very big production equipment and put on are not able to make any comments on the details of the 3rd fourth quarter, but when you look at the overall market of FPD this year, next year, and the DF year after, there should be a very similar trend for 3 years to come. In our company, as Mr. Salgado said earlier, we are trying to increase our profit margin. So 20% of operating profit margin is to be achieved by focusing on the high value added products because of that, there might be some increase or decrease in the future. That's how I would like you to understand our future trends. Thank you very much for a question. Any other questions? Yes, the gentleman next to the previous gentleman, please. Thank you very much. I'm UGawa from Goldman Sachs, Japan. Again, I have a question about this fiscal year plan. For WFE, you said 10% to 15% growth expected. A slight decreasing trend on the other hand, you haven't changed the full year plan because you have when there is conversion between the Cardenya to fiscal year, there is no change or even for your fiscal year just like W5 point fractation factors are incorporated. That's what I want to understand. So application, which might affect your financial estimate logic as the important driver or memory also drive the changes. So demand is rather big, significant And I mean, those circumstances there are quite a few planes and pull out in all applications that's the reason why we haven't changed. So for your second question, could you just repeat your second question, please? So you're talking about memory or logic, right. So your question is whether pull in and pull outs are driven by memory devices or logic devices. Application actually, right. For three d NAND DRAM for logic devices, the pulling plus happens in every application. Thank you. So it's not because of demand, just because of skating driven by the leading edge technology. So push out for this fiscal year, maybe next fiscal year, we can see the realization? Or are there something which just disappear? What happens for bullying pull out, that's on the basis of 3 months or 6 months period. Thank you very much. In particular, so when it comes to scaling, maybe demanding device structure, maybe the yield should be one of the factors. As I said earlier, The high volume production of the existing or previous nodes does not the area that capacity is increasing rather, capacity is tried to be added for the leading edge nodes to increase the peak capacity per wafer. So that's where the investment plan in line with descaling causes some planes or clouds. Thank you very much. Next question, please. Again, the gentleman in the front row please. I'm Hirokawa from Merrill Lynch Japan Securities. My question is very similar to the previous ones for push out. I think I understand what push out next place, but I want us I'm not able to understand why pull in takes place because you elaborate why pull in takes place in the market. I cannot give you something specific, but for example, when yield is improving rapidly, then maybe we can do some pull in. That is one of the reasons why pulling takes place. For IoT, Internet of Things, application as a whole is expanding at the same time, application is diversified Therefore, the device manufacturer to address the expanding or diversifying applications. That's the reason why pull in takes place. Not only the yield increase, but also the expansion of the IoT application is one of the reasons why pulling takes place. Thank you very much. Next question, please. So there is a gentleman raising hand in the middle of this room. I am Yamamoto from Mizuho Securities. I have one question. I have a question to Mr. Sasagawa. So Slide 9, very similar question asked earlier, so I'm sorry for that, but your quota sales when I built it, so 1st and third quarter sales is rather low and second 4th quarter sales are rather higher. Only like American two vendors, their sales are very close to the final demands in trends. But while in the case company, there is some seasonality in your sales, the 2nd fourth quarter sales rather higher than the other two quarters. You are now following using the CST rather than shipment based sales recognition that tells trend might be very close to American companies, but I think you define your own CST. So you can control the timing of sales recognition. Could you just elaborate the reason why this kind of trend happens in your company, Mr. Sasagawa, please? So I'm Sasagawa, So from the accounting viewpoints, actually I have no accurate idea about the other company situation, but generally speaking, when you look at the American competitors, they are recognizing sales, very close to the shipment based sales recognition. So shipment itself doesn't change so drastically from month to another or quarter to quarter. So I think American competitor sales are increasing linearly. That could be the style of Accounting System, American Companies. In the case of our company, on the other hand, as you said earlier, we are not based on shipment, but we are using CST completion of startup and testing Of course, we are shipping our products on a linear basis, but we recommend to recognize ourselves for each line of the client altogether although those tools are shipped in different timing. Therefore, a certain week or in certain month, sales tend to be recognized altogether That's the reason why you can see some increase decrease in our sales from the viewpoint of accounting. So there is no intention at all but sales recognition is increased in September 4th quarter. Are there any no, there is no particular reasons for that. Thank you very much. This the gentleman just behind three rows behind the gentleman for last question earlier. I'm Nakano Mill from Jefferies Japan. My question is rather vague. I'm sorry for that. Earlier so we are now observing some push up because of the scaling It's not because of the supply demand relationship. That's what you said. And that's what's happening. However, when you look at the future trends, scaling program is will be solved and that might be some problem with supply and demands in the future, maybe next year, don't you have such kind of a concern for the future? In other words, the supply demand relationship will not improve so rapidly, and we don't have to worry about the that particular issue, could you just give us some qualitative answer to my question, please? So hyperscale data centers, and based on IoT, big data error is now unfolding and there is very strong demand coming out. So high capacity device, high speed, high reliability and low power consumption. Those devices will be required in the future. So in which demand increase, but technology innovation is necessary for the future. And that technology, leading edge technology, I think there is only limited number of clients who are able to address Leading Edge Technologies. And those clients who can address leading edge technologies are rather dominant in the market because they have very Excel Technologies. In other words, those limited number of customers can have a very good command and view of the market. They understand the market. So technology innovation is required that only limited number of clients can address the high level of technology innovation Those limited number of customers are having very good command of view on the market. So therefore, customers do not produce the same thing at the same time. That happened in the past, but it doesn't happen right now. Because every customer, leading customer can see the market trend very well. That is the background. And now we have the forecasts. So there should be no change expected for the future. There is no need for us to worry about the measure of change in the future. Thank you very much. Once again, Actually, this today, Hynix make financial announcement and this year, next year, Hynix is going to increase the CapEx capital investment. That's what he what they say. So under those circumstances still, use your current comment or your current view doesn't change. So limited number of clients can see the trend of demands can see understand the market trend. Is that what you want to say? Yes, that's correct. Thank you very much for your question. I'm Miyamoto from Mitsubishi Fiji, Morgan Stanley Securities. On Page 15, slide 15, I'd like you to give us some extra explanation. For outlook of WFE So for this year, 1,000,000,000 has been replaced by range from 1000000000 to 1000000000. It looks like some decline So that billion will disappear or the figure for 2019 will be increased from 1,000,000,000 to 1,000,000,000 So I want to see where does it go, the billion decrease. And I would like you to give us your comments on that issue. Understand your question. For this financial announcement, we just focus on this year's values, figures, as I said earlier, the skating, the migration to the skating causes push out because of that, when there is a strong push out due to the migration for scaling, we just include 56 1000000000 to 1000000000, but we haven't revised the figure for calendar year 2019. That's the reason why those figure does remain. In principle, pulling and push outs take place, but that to be a more not disappear at all. That's why I want to answer to your question. Thank you very much. So I have one follow-up question. When you talk about scaling, is that scaling for logic and gear up, but when it comes to 3,000,000,000, there is no further scaling. So 3,000,000,000 is not relevant. To your story. Is that correct understanding? Now for 3 d NAND, in the structure of 3 d NAND, the leading edge 3 d NAND some revision takes place, but you said scaling, not only divashoring, but also in is included. Is that correct? Is that correct? Thank you very much for your question. Yes, the gentle reminder front row please. I'm Damien Tom from Macquarie Capital Securities. I have some additional questions. For this fiscal year, WFE market outlook back in April for DRAM used to have 60% increase is expected, but this time, you said 60% to 65% increase. NAND flash the same as before, that's what you said in April, but this time you said 5% increase, But when it comes to this increase for the memory, are there any reasons for that? As I think 3 NAND fresh, the scaling trend is slowing down. So Why do you think memory market is growing? Could you give me some reasons for that? Actually, the 3 d NAND investment is a actually stronger than our expectation. That's the reason why. Okay, understand. Thank you very much. Thank you very much. Next question please. There's a gentleman next to the previous gentleman, please. I'm Sivra from Daiwa Securities. Thank you very much. So you said there is no change in picture and I think I understand it very well, but you said months with 6 months push out taking place. And if it is just because of the yield program at the customer sites, do you think that your problem will be corrected or solved in 3 months or 6 months? Do you think this is rather accurate that will be completed when 3 months to 6 months. Or depending on situation, there might be some possibility that the shut period will be a send it furthermore. Could you give me your comments, please? As I said earlier, 1 quarter or two quarters, 3 to 6 months should be the push up periods. That's the image I have. Whether it will be extended furthermore, not actually it's up to customers, the customer's progress. So I'm not in the position to make some comments on that issue. In that sense, so now you are communicating with customers and you think maybe yield problem can be solved within the 3 or 6 months. Is that how you view the situation? This is correct. I have a follow-up question on page 21, slide 21, Now you can see the sales fabrication competence previous announcement when I look at competition, the non VAT proportion increases in this composition. So I wonder, but there's a background, for example, which generation of NAND increases in competition or propulsion. Could you give us the reason why the proportion of NAND devices increasing. So this is the competition of our sales So this is not the composition of the market itself. I don't have any appropriate figures, but But DRAM composition in the market is in proportion in market is increasing, but as well as our sales is concerned, Since last year, we have been focusing on ditching and cleaning process, which are to be introduced in treating NAND processes. So we have added that bit. That's the reason why the composition of 3 d NAND increases So 3 d NAND and DRAM, I think they are rather comparable each other, almost the same level, but we have been working hard for the 3 d NAND. Now we can see successful results and contributes that treaty and that success contribute to ourselves. That is the meaning of this purple color. So this is this reflects our efforts, and we are very happy to see that. Gentlema on the 2nd row, please. I am Hania from SMBC in Eco Securities. My question is very similar to the previous question. As for the new equipment sales forecast shown on the Page 21, when I just roughly calculated it from the 3 months ago, after the sales for DRAM, has been decreasing according to my calculation. However, for WFE growth rate for DRAM was increased from 60% to 65%. So but the sales for DRAM is not increased. Why does that happen? Could you explain the reason why please? Just because of the changes in mix, there is some slight change in DRAM plan, and there are some factors to replenish it, but there have been some changes. Thank you very much. As for non volatile memory, again, WTI almost the same level to plus 5% 5% increase. But when you have the breakdown NAND and other known VADA Memory. For example, 3 d NAND might be decreasing while others increasing Could you give us some breakdown between NAND and others in non volatile memory? Could you give us some comment, please? The competition of non VAT and memory cells haven't changed. Thank you very much. We do have 10 more minutes. So maybe if you can come up with second question, I'm sorry, We have a gentleman in the rear of this room. Could you ask her a question please? Thank you. I am Mentional from Talkaytogou Research Center. There are some technological hurdles and there are some push outs. That's what I heard from manufacturers. But for DRAM, there was a program in 18 nanometer node. Also in the case of NAND, 96 layers technology doesn't go so well. In the case of logic device, certain nano node might be skipped Strictly go to 5 nanometer node. That's what is happening for each application. From your viewpoint, what are the technological hurdles to close push outs? And I think several programs are being solved, but to you make some proposal to solve those programs because in push outs, could you give us some comments on that technology issue, please? It's a bit difficult for me to give you the specific answer to that. I'm not in a position to give you the technology rights issues. And for the details, I'm not able to get the information. That's the reality. However, it is just a matter of process tuning there is no need to change the materials or change the device structure. The program is not that significant. That's what I heard. If that is the case, in 3 months or in 6 months, push out will be completed and you can solve the programs by carrying out some process tuning. That's the current state as a problem according to your understanding. Is that correct? Yes, that's how I understand distribution. I have one follow-up question. As for the flat panel display, G10.5 There are some push outs. That's what you said earlier. So what is again the technology issue make the push up is making the push ups or I just heard because of several issues, construction of factories is delayed. That is the reason why there are some push up. Is that craft understanding? Well, some of the customers are now revisiting the CapEx. Thank you very much. Any other questions from the floor? Maybe second question will do. Yes. Coming back to the earlier gentleman, the gentleman of row, please. I am from Goldman Sachs, Japan. 2019, 2020, there is no change in big picture, but in the past, 2019 NAND investment will be increasing. That's what you said earlier. Mr. Kawa, when you discuss with our clients, what sort of message you got from the customer? Next year on, if the NAND price and NAND profitability were sort of comments that do your customers have a present NAND prices going down, but still customers are willing to invest in demand. Actually there is a big demand in principle, but for NAND, the scaling investment investment for scaling is a major driver for NAND flash. The investment to the 9 next layer is the dominant is dominant. I'm sorry, this is not scaling the layer stacking, I should say. For beyond 2019, for the purpose of the they are stacking, not for the greenfield, the investment will be continuing for the purpose of this asset Is that correct, understanding for 3 d NAND clients? They are mainly investing to introduce 9x generation. This fiscal year, some clients already started the investment for 9x-rayer generation, but there are some customers to shift the existing a production line to produce 9x layer generation or some other customers want to invest in new production lines. If that's the case for NAND manufacturer, they are concerned about the profitability when they make an investment decision. Is that correct? Yes, every customer is always concerned about profitability. That's the reason why we are observing continuous stable growth in the market. The demand itself is rather big. And I am Snais, let me answer to your question. So when you look at the market, view. I don't know whether my view is correct or not, but now we have the data center and big data drives NAND, DRAM and logic because there are servers. There is a drastic growth in the area. When you look at customer CapEx timing, in some cases, they are making investment decision in order to improve yield or to introduce new technologies. But in reality, for each quarter, customers are looking at the EPS and operating profit margin and many clients which are very much concerned about EPS and operating profit margin are now investing. So customers do not like to see any decline in EPS or profitability and that's how they make a decision when to invest. And it does should be the appropriate way to look at the market at present. So demand itself, for example, data centers Probably, I personally think, so unlimited bit demand exists in the market. And in the future, when 5G is introduced, we will see more and more. Demand and more data centers are to be established. So beyond 2020, we'll see much data and data traffic will be increasing rapidly in every part of the word. As I said earlier in the previous meeting, when it comes to CapEx, or investment for the cash seminar. So when they invest some money, they want to see the solid returns and they are making decision to invest when they are sure they can get return from the investment. For Chinese emerging customers, you may think differently. However, the major DRAM vendors NAND fresh vendors and logic device vendors or those major players are essentially looking at profitability, EPS as well as the operating profit margin Those three parameters are the core when they make a plan full investment. And there's no concern about declining bit demands for a few years to come. There's not major concern However, when the price dropped so suddenly or drastically in the future and if customers' EPS will be declining, then they may decide not to invest so much. However, when it comes to bit demands, there should be no concerned, there is no need to concern about as well as big data, Era takes place. That's how I view the market right now. Thank you very much. I am Kawai, and I would like to add some more comments. Recently, when I talk with our customers, Actually, customers are always looking at their business strategy when we discuss with customer Reifree has been working in total return for over the past 30 years. In the past, customers are just focusing on increasing their market share, but right now currently customers always think about their business strategy and business plan when we when they talk with us So as Mr. Sunay said earlier, I quite agree with him. Thank you very much. Thank you very much for your question. It's time for us to close this financial announcement. Once again, thank you very much for joining us despite your very busy schedule.