Earnings Call: Q4 2018

Apr 25, 2018

Thank you very much. It's time for us to start Tokyo Elect from the 4th quarter financial announcement. Thank you very much for joining us today despite a very tight schedule. I am Hirayama from IR department acting as a moderator for today's session. Let me introduce the members on our site. 1st of all, Mr. Kittiwo Tsemi, she represented a Director, Chairman of the Board. Next, Mr. Toshiiki Kawai, Representative Director, President and CEO. And Mr. Ken Sasagawa, Vice President Accounting Department. 1st of all, Mr. Sonae, she will give you the brief greeting. Thank you very much. For joining us. I'm very glad to see so many people in this room. Actually, we are just sitting here as silent, 3 and quiet, 3. However, today, it's not the announcement of the retirement, unfortunately. But this is the end of our fiscal year, so I'd like to give a few words to all of you. Thank you very much for your support and cooperation on our business. This is the financial announcement for the fiscal year, 55 of Tokyo Electron. You must be curious, but you may know about the financial settlement for our company. As for fiscal 56 financial estimate might draw more attention from your side. So that's how I understand. So now from now on, Mr. Kawai and to Sasagawa, we'll give you the presentations in detail. So transistor business, looking back to his 3, I have been working in this industry for long years. Ever since the invention of transition, after the last year, was 70th anniversary of Transistra Innovation. Transistra was evolving into IC VLSI and ULSI. So going through various process, now we have memory logic devices and other devices. All those devices have developed end grown rapidly significantly. I think just this first time, however, the data volume, data traffic will become the market driver. In the past, the PC, smartphones, autos, hardwares were drivers. Was the market growth. The device was the market driver in the past, but now data volume or data traffic are very important market driver, AI, big data, and IoT era has started. So now we are going to see a new era. So over the past 70 years, registered the chapter 1 for phase 1. And we are about to start the phase 2 of our history. I don't know phase 2 will last 70 years or 100 years. But we have established the foundation in the phase 1 for the further growth for the future. That's how I view this market. We have very optimistic outlook for the market trend. And when you look at other markets, it's a bit difficult, for example, out cars, automobiles, hardware, some visible products are driving the market growth, the number of things determined the size of the market. But when it comes to data volume traffic, traffic, there are invisible and Semiconductor support that kind of invisible things. So we are going to see the further growth. And that growth will be more drastic than before. So our fiscal 56, fiscal period 56, we are going to see further increase of profit and income But when you look at global level, we are just in the middle of the growth. We have many 1st tier, global players, the world class 1st tier players in this industry, quite a few, actually, So we want to get closer to those 1st tier global players, and we'd like to make every effort to further improve our performance really support to a further support. Thank you very much. Now Mr. Sargawa, Vice President, accounting department will give you the presentation about the consolidated financial summary. Thank you very much for coming over to our meeting. I am Sasagawa in charge of accounting department. I'd like to talk about the consolidated financial summary for the year ended in March 2018. The first slide shows the highlights of the year ending in March 2018 in 2017, thanks to the rapid growth of the semicon aftermarket Our productive competitive enhancement was successful and we have increased market share and our profitability was increased rapidly, as you can over here. Net sales was increased by 40 5 percent, achieving 1,000,000,000 and the profit margins, gross profit margin, operating margin, net income margin hit record high and operating income increased by 1,000,000,000, achieving 1,000,000,000, operating margin achieves 20 4.9%. Net income was increased by 1000000000 increase 77000 percent increased 1000000000. ROE was 29%. Now you can see the financial summary on the quarterly basis. In the 4th quarter, sales level the dermics have concern about lack of the achievement of our guidance for the full year sales But however, we have achieved our plan, as you can see over here. This shows financial summary compared with fiscal 2017. The net sales is driven by the SPE sales growth, increased by 1,000,000,000, achieving 1,000,000,000,001,000,000,000 yen SP sales, output for market growth, 1 truly on 1,000,000,000 FPG increased by 1,000,000,000. Gross profit margin was 42%. The group profit marking for etching, quota developer, film deposition system and cleaning system our value added products are highly appreciated by the count. Marginal profit ratio has been increased because of that gross profit margin has increased. And along with the sales increase, now you can see the reduction of the manufacturing cost per sales SG and A expenses increased by 1,000,000,000 and RNG was increased by 1,000,000,000 from previous year, 1,000,000,000 other than R and D expenses, we have some increase in bonus and labor costs because of the increase of headcounts. However, the SG and A sales ratio has been dropped drastically for the extraordinary loss was JPY 5,400,000,000. The 3rd quarter we made an announcement, the loss on division of the retirement benefit 1,000,000,000 and loss on impairment of goodwill of net next, which is the American subsidiary point 1,000,000,000 was appropriated. And bottom line, net income attributable to owners of parent was increased by 89,100,000,000, achieving 204.3 percent, EPS increased by 77.4%, 1240 5.48. Here you can see segment information SPE segment 29.8 percent segment profit margin was achieved, thanks to the draft still Capital Investment and our product driven the segment profit margin for FPG, especially Ethying Machine, our competitiveness is very high for the G8 and G10.5 and also for generation 6, PICP technology has been introduced the new product ratio achieved 100 percent, which contribute a lot to the increase of the profit margin. For FPD and this 70.7 percent is record high. And FPD profit ratio achieves 23% in the second half of last year and the 4th quarter 25.1%. So we are very in closer. 1 exceeding our target value for the midterm business plan. On this slide, SB new equipment sales application is shown. So for memory, you can see rapid increase, demand and DRAM accounts for 60% in total, in particular, driven by the strong demand for service and proactive investment in next generation technologies, sales of DRAM and non VAT higher memory increased modern twice from previous year. For Logic, for Logic device, thanks to the increase of Semiconductor demand in community, there is an investment for wide range of nodes, and we have increased our sales drastically. Now you can see SB new equipment sales by product. This slide actually on the previous slide, I explained the new product sales by application, but here by product, in the past, the we include modification parts consolidated SPE basis. However, from this year on, we are going to released information of new equipment sales only. As you can see, due to investment in non volatile memory and device shrink, enabled by multiple patterning, sales grew in our focus area, including etching, film deposition and cleaning. Here you can see fuel solution sales. In this focus area, sales has been steadily increasing this year. The sales exceeded JPY 250,000,000,000. In particular, past sales, increasing along with the increase of our product delivery, and customer utilization increases, especially for the leading switch memory line, we provide larger mantle parts depart sales increased by more than 30% and this contribute a lot to the Field Solutions sales increase. Now you can see balance sheet. The customer investment is very active. So our balance sheet reflects the future increase of sales and capacity. The details are shown in financial review, For example, inventory increased by 1,000,000,000. The breakdown includes the The inventory of 1,000,000,000, work in process is 1,000,000,000 and raw material was 1,000,000,000, fixed asset is increased by 1,000,000,000 to 1,000,000,000 and increasing of the tangible asset JPY 25,500,000,000, then Miyagi Logistics and Origin Building construction in progress is included. And in Yamanasi and kumamoto, we have in renovation costs as well. And R and D in production, we also in the machinery for production and R and D, an increase of net assets, mainly from the 22,000,000,000 increase for the retained earnings. As a result, equity ratio was 63.5%. Now you can see inventory turnover and accounts receivable turnover. As for the turnover, the because of the rapid increase of the 4th quarter sales, the turnover is improved. The inventory turnover was 111 days and accounts receivable turnover was 52 days compared with the 3rd quarter, you can see improvement in the 4th quarter. Finally, I'd like to explain the cash flow. Cash flow from operating activities is increased by JPY 57,700,000,000 from the quarterly basis, achieving 1,000,000,000 increased mainly by the net income increase. And cash on hand, which is composed of cash and deposit with period to maturity above 3 months was 1,000,000,000. Thank you very much for your kind attention. The quota data by application and by region are shown in the appendix at your handbags. The quarterly data of application and by region are shown on the appendix of your handout So please refer to that handout later on. Now I'd like to ask Mr. Kawai to make a presentation on business environment and financial estimates. Good evening. I am Kawai. For today, I'm very happy to see so many people coming to our financial announcement. We are very much honored, and thank you very much for coming to our financial from me, I'd like to make a presentation about business environment and financial estimates. 1st of all, I'd like to explain SB Business Highlights in year ending in March 2018. And there are 4 major highlights, as you can see on the slide. As you know, on July 1, 2017, We have established Tokyo Electron Technology Solutions by merging Tokyo Electron Yamanashi and Tokyo Electron TOHoku. By building this new company, the rapidly growing firm Deposition Market. The two companies, firm Devosian Technologies are well merged, and that was the aim of the establishment of a new company. We are going to start shipment of the products, but we are now sharing technology on a steady basis, and that will be helping us to further improve our potential. So that's the first highlight last year. And you can see some tangible results already. We those the sharing of the production space is a fast tangible benefits, especially in toll Hoku, they are producing vertical furnace, mainly in the past, but they have started module shipment of that product, by introducing module shipment, we have increased the capacity by twice compared with 3 years ago. So that's the system we have right now. Now we have the new space created by this module shipment, we can increase the capacity and we also introduced the production of the single wafer equipment in Tohoku as well. So this is the first highlight for SP business. I'll talk about the overall market trend later on But now we are working on the higher improvement of the efficiency and space increase. And we are going to carry out the further CapEx because midterm long term market outlook is rather optimistic. That's the reason why we have decided to carry out the CapEx. The second highlight is collaboration with customers, and we are accelerating development of solution for process integration. The device shrink, along with device shrink, we need to align processes to prevent the forecast, for example, and also for film deposition, we need to do some alignment as well. So technologies are very important in this area, and we need to take some approach for that. And cost reduction is also important. For that purpose, process integration is essential. So for both cost and technology viewpoints, process integration needs will be increasing furthermore And we can see the collaboration with customers in many increasing areas. That's the second highlight. Number 3, as Mr. Sasagawa said earlier, Last fiscal year, net sale was 1,000,000,000,000 increased by 41%. Our growth outperforms market growth. And for each value, technology value increased, and profit ratio was increased by 5.4 points. Compared with previous fiscal year in terms of profit margin. That is a 3rd highlight. Next, Miyagi Plant expansion. That is the business expansion in other words. The operation of the new logistics building started as planned. From early this year. And also in this coming autumn, as we announced earlier, we are going to add one more production line to increase the capacity by twice. Does that plan for this coming autumn? And at present, for parts, we are now working on the introduction of the automation for warehousing business in the production building, maybe in the middle of this year, we can introduce automated warehousing activities for parts. As you know, in the case of WFE, thousands of parts are to be used to build with a fabrication equipment. Now we can improve the production efficiency by introducing automation for parts warehouse. And for etching, application where we're spending and we have started construction of new developing building and this development building construction is completed in this coming September. So these are the highlights for last year. For flat panel display business highlights. For flat panel business, we tried to shape the same level of the profit margin as SBE. By introducing highly value added technology, we are going to increase the profit of FED Business. In particular, as you can see over here, the new technology like PICP Hink we are now working on In the second half of last year, flat panel display profit margin achieved 23%. So we are getting closer to the midterm business target for operating margin profit margin of 20%. But we don't think 20% is a seeding we are going to further improve operating profit margin more aggressively in the future. Now you can see the calendar year 2017. Semiconductor production equipment market share, we are now using the completion of startup and testing base instead of shipment basis, you are concerned about the Q4 sales and Q4 sales is not included But for calendar base, it's your market share increased by 3 points. For cleaning system, 5 points increase in market share, for the deposition system because of the product mix, we are not able to increase the share. However, for our focused product, ALD, we have increased our market share by two points panel display production equipment market share is shown on this slide. This slide has been shown to you several times before. I'm very sorry for that. This shows outlook of the WFE market the big picture is presented on this slide. In addition to the previous driver, you can see new driver, including IoT AI, RPA, Machine Learning, autonomous driving and blockchain, although things are getting closer, are more familiar to us. And that trend is to be accelerated for the future. Because of that trend, semiconductor demand will be increasing in financially. Accordingly, WFE is getting into the new phase of growth. So based on that market trend, now you can see our business environment outlook for this year. As for the WFE CapEx, in the previous meeting, we announced a 10% increase in the WFE CapEx. However, we can see very strong memory demand, especially for DRAM demand, is in very high. So we can add 5 more percent So now if WFE CapEx expects expected to grow by about 15% on year on year basis. For flat panel display production equipment, last year, we saw a rapid increase of growth. And in the previous meeting, I talked about 20% increase in CapEx for FPD, but as you know, the capital investment for small and medium panel for mobile applications are now undergoing adjustments. But despite the fluctuation, you can see rapid increase last year, but we can see 10% more increase this year. That's our outlook we're focused. Now you can see that WFE Market And Business Opportunity By Application. And here you can see the summary for DRAM, Last year, the 70% growth was achieved. For this year, you can see the 6% more increase, DRAM market is expected to grow by 60% this year. And 70% of investment is going for new fabs. In order to increase big capacity per wafer, 80% of investment is for the 1x1y nanometer device nodes. The number of servers is increased and also average DRAM content in server increases. So these are the driver of DRAM demand. And for DRAM itching share, we can see some increase in share in hedging and DRAM increases further more this year, so we can see more potential for growth this year. Next, Novartya Memory. The same level of focus from last year. The leading edge 9X generation investment will be accounting for 50% of However, the Chinese market and other non volatile memory demand are strong So as a whole, in the non volatile memory, you can see the same level for investment CapEx for non VATA Memory. Number 3, Logic And Foundry, the ever increasing complexity is shown in patterning technology, but again, you can see the same level of business is expected as last year. According to understanding, 2017, WFE market was 1,000,000,000. That's what I that's our understanding. For this year, JPY 58,000,000,000 is to be achieved according to our forecast. Fiscal year 2019 financial estimates. The net sales for the first half of this year is 1,000,000,000. 2nd half is 1,000,000,000 in total 1,000,000,000,000 and sales is increased by 23.8% from the last full year basis. And you can see the breakdown for SPE, FTE on the slide. For operating income, For a full year basis, 1,000,000,000, and operating margin will be point 1 percent, 1.2. Increase from the previous fiscal year for operating margin. As you can see, for the sales, our sales growth will exceed the market growth. And we can also improve the operating margin we can record profit high we can record high profit for 3rd consecutive year this year. Now you can see SPE, new equipment, sales forecast by application. This year as well, continuously, 3 d NAND will be the biggest driver For DRAM as well, you can see increase in investment, purple, represents 3 d NAND and other non volatile memories. The blue collar represent DRAM. For DRAM, as you know, the DRAM supply is very tight. So new equipment investment will be increasing rapidly. For three d NAND, The demand for SST is rather well. And also this year, and last year, 9x generation investment will be adding up, and you can see high potential. For logic and foundry, 10 nanometer 7 nanometer device node investment will continue. In parallel, the investment is also strong for classic device nodes of 28 nanometer and before. This shows fiscal 2019 R And D Expenses And CapEx plan. For R and D expenses, we'll be 1,000,000,000. For this, just like before, we are now focusing on film deposition etching and cleaning and also We'd like to continue investment for further sustainable growth for entire product portfolio. More than last year, we'd like to invest money for the R and D so that we can promote the further growth for CapEx. Last year, for etching. Eching was a major area of CapEx. However, as I said in the beginning, firm deposition, we are now working on various measures to enhance efficiency, but this year, we can see increasing demand and also future demand is also increasing and more applications are also considered in Yamanish and Talk Hoku, we are going to build the new production buildings that is necessary. So in those two area, for film deposition, gas chemical etching and test system. For those areas, we are going to construct the new production buildings to meet a very strong demand. At the same time, we need to enhance the efficiency of production. This is the last slide, the dividend forecast. So thanks to the very rapid increase of the sales, our dividend per share increased by 32% on a year on year basis. We are going to enhance the profit increase so that we can provide the shareholder return more than before. Thank you very much for your kind attention. Now I'd like to entertain questions from the floor up until 6:30. I'd like you to limit the question to one for each person followed by another question. And please identify your yourself by name and by verification, and please speak slowly and articulately. When you ask questions. Could you raise your hand if you have any questions? Just a gentleman on the front row, please. Thank you very much. I'm Madaki from Nomura Securities. Thank you very much for very positive business estimates. And current question should for the 3rd market share according to Gartner survey. I have a question for the market outlook. There are some adjustments, that's the rumor I heard, specifically Samsung investment might be increased or Hynix it's rather a pessimistic in their investment. But do you think it's okay for the market? And we're really happy if you say no to the weak trend or rumor for the investment for the future. I'm not able to make any comment for each individual customer, but as a whole in the market, as I said in my presentation, The market will be increasing steadily for the new moving on to the new phase, so I have very positive focus for the future. And my message remained unchanged though. So this industry is now getting into very stable growing phase because of the background of some customers the number of customers and also players are now fixed in this industry. So customers can have the outlook of the entire market. So as the SPA vendors, we are very happy to see that kind of trend of the of the customers, when I talk with many customers, As for the detailed issues, customers are now getting very critical view for the market strength. However, when I talk with various customers, they may take some short term investment adjustment only for short period, only for quarter basis. So there should be no kind of, is the trend of the adjustment at all in the investment. Maracas, I have one follow-up question. On page 23, you can see the sales forecast. So, memory, it will be decreasing slightly in the second half of this year, So I think could you give me your focus for next year, next fiscal year? We have very positive outlook for the future, but please wait for May when we make announcement of our midterm business plan. That's when we are going to make announcement of our medium term outlook. Thank you very much. Any other questions? Yes, the gentleman in the front row as well. Please Thank you very much. I am UGawa from Goldman Sachs Japan. I also have a question about SPE market outlook. For this year's sales increase is expected for 22% for SBE. Yesterday, your competitor made announcement of financial results And also, there are some other overseas competitors, their outlook is the same or more than your estimates for the increase in sales and you are now increasing share and you have some product mix advantages. So you may outperform the market growth But are there any reasons why you are outfluke is behind your competitors? For this year's CapEx timing, investment timing is one of the issue, but slightly, Our sales criteria is one of the factors of our sales outlook. So continuously, we are going to increase share and profit, but I'm sure the of those two areas, especially for DRAM area. Last year, we saw the successful results, and you can see steady increase in DRAM market. Especially the growth of DRAM is really big in terms of potential, so we have very positive outlook for the future. Mr. Vadaki talked about the Gartner survey results and our application orders is really high. So I think we can have a positive impact. And there, if there is any difference between our outlook and competitors' outlook, that is partly because of the difference of the sales criteria. So our competitor Swanisha announcement and our outlook might be different because of the different viewpoints. So I cannot give you anything in detail, but based on the last year's performance, our performance this year or outlook this year is not behind our competitors. I have one follow-up question about the Chinese semiconductor market outlook. Have any comments on that? In 2019, 1,000,000,000 is expected for 2019. What was the results for 2017? And what sort of outlook do we have for 2018 2019? In principle, our explanation remain unchanged from the previous meeting and there is no major changes in our outlook. Customers startups, activities are a little bit delayed and schedule delayed might take place. However, their plan remains unchanged. In future, growth of Chinese market will be steady, as I explained before. Thank you very much for your question. Next question please ask the gentleman next to the person for last question earlier. Thank you very much for your presentation. I'm Yossa from Deutsche Securities. I have a question on Slide 23. You have the new equipment sales forecast by application on the 6 months basis. When you calculate on the year on year basis, DRAM increased by 80% NAND increases by 10%, foundry increases by 30% and logic remained flat. For foundry, this year or this fiscal year, you can expect 30% increase in foundry And could you just explain why you expect 30% increase in foundry? Excuse me. Could you repeat your question once again, please? On Page 23, you can see the new equipment sales forecast And when I calculate the full year basis for foundry, about 30% increase is expected from previous year. That's what I understand. And I want to understand the background of the increase and I want to see the investment, 7 nanometer plus or beyond we've been increasing or 5 nanometer pilot line will make a big contribution. Next year, do you see some further potential in the investment for the foundry? Could you explain your background, please? There is no one single word to explain the reason why the 30% increase for foundry, but there are some investment for the shortage of the supply, while also investment for the future generations and some process under development are to be completed and which start contributing to business increase. Many things are just contributing to the increase of foundry by 30%. Last year, foundry was rather weak. So do you think there is the sustained recovery train for the foundry. For this year, On this slide, the green portion represent the foundry. For logic and others, logic foundry next year, you can see the high potential good potential for last year. Thank you very much. I have another question for that question for FPD. The second half of last year, the profit margin of 23% has been achieved for this year. The sales spaces, profitability of FPD, but it was sort of profitability do you expect for FPD based on this year's sales? I want to ask about the FPD profitability profitability of the FPD By segment, profit margin is not disclosed, but you can see very similar image. So I think the size of sales will be increasing. And product mix doesn't change so drastically. So you can see a good tax prospect for the FPD business as well. So that's maybe almost the same as the second half of last year. Is that correct understanding? I'm sorry, we do not disclose any information of segment based information. Thank you very much for your question. Next question please. Mr. Gentlemen on the front row, please. I am Hiroaka from Merrill Lynch Japan Securities. The first question is about the on the balance sheet, and I want to ask about the concept of the cash. And now you have the cash of 1,000,000,000, On the other hand, your sales is increasing. So how much cash do you need at this moment? What is the appropriate size of cash that you have? If you have any finger, please let me know that. Well, probably your question is about our approach for the share buyback was share repurchase. And our policy for share repurchase hasn't changed. And actually, I myself has been talking with the top management of the various global customer And there are so many potentials for growth. On the other hand, when you look at macroscopic economy, there are various factors in macroeconomy, I should say. So it is so difficult to make some focus for the future. Many things might happen in our economy and society, and SPE area is sure to engross further not more, and we'd like to think about the way to continue our investment. That we can promote further growth. And we need to think about the best approach to our shareholders. And we also think about sustainable growth And we also need to think about the corporate value. So we'd like to make agile use of the cash that is our policy for our internal reserve and that policy hasn't changed. Previously talked about JPY 250,000,000,000 but we don't think about that about. So at present, you don't think about any appropriate cash level of JPY 250,000,000,000 At that time, maybe I answered your question in that way. However, maybe when I was asked that question in the past, maybe I say I did to say the cash level. I answered that way, but now we are in this new phase of further growth in the market. And the answer I made previously is just the in the past, I don't think there is any misunderstanding, JPY 250,000,000,000, but about 1 year ago, Mr. Hori, was CF4 and she he talked about JPY 250,000,000,000 could be a comfortable level However, in when you look at balance sheet, we don't think we must have 1,000,000,000 It's not necessary, yes, sir. Our top priority in terms of use of cash First of all, I'm sorry, this is not a conceptual answer. I'd like to we'd like to make investment into further growth of our company. And short time basis, you may see the accumulation of cash, increased web cash. That's how you understand our cash level. However, midterm long term basis, the cash is to be used for the father growth returned to the shareholders or share buyback. Parties, including those possibilities, we'd like to make right decision for the cash usage at direct timing So that's our way of thinking. That's the reason why we try to be flexible in terms of the share repurchase. But anyway, the money we have need to be invested for further increase M and A could be one of the possibilities or options. Also, we may purchase technologies by using cash, that could be another option, we might have some business partnership. So there are various ways to use cash So the investment for growth should be the answer I need to give to you. That is the area that we place top priority In the Capital Market, we are working in the Capital Market, and that has basic rules for business with the shareholders, relationships shareholders or engagement with shareholders that we need to abide by those basic rules properly so that we can have the global standard approach in terms of use of our cash. I'm sorry, my answer is rather qualitative. Thank you very much for your answer. Thank you very much for your question. Next question please. Yes, the gentleman on the 1st row, please. I am Miya Moto from Mitsubishi. We have more than found the security I have a question on Slide 9. I can see new equipment sales by product based on this. For this fiscal year, new equipment itself, 25% sales increased expected. So if that's the middle, then for each product, which product sales increase more than 25%, which product sales were below 25% increase. Could you let me know about the image of that sales level of different products For market environment, DRAM growth will be driving DWE sales, that's what I said in my presentation. As for our products, for DRAM and other products, there is no major changes. According to Van Distounding, therefore, product mix will remain unchanged so much, especially the green DRAM greenfield investment will be the major area. So the incremental will be for our film deposition system, quota developer etching and cleaning system, and our customer understand the value of those products and we have increased value in market share as well. So All the products, we I think all the product promote the ourselves and there is no major change in the product mix either. Thank you very much for your answer. So the when I talk with the investors, your company's sustainable growth is highly expected by the investors. But in the beginning, you talked about Mr. Sonesta about the your intention to get closer to the global Tier 1 players. On the other hand, you have eliminated position of CFO and you the CFO also did Mr. Hori designed from CFO. I think CFO is critical function, but when you in the Board of Directors meeting, what sort of pros and cons? What sort of discussion was going on? For the elimination of position, therefore, could you share your idea, please, with us, please? Discussion in the Board of Meeting, Board of Directors meeting cannot be disclosed in today's meeting. But CFO was established in fiscal 2018 for the first time in our company. And during fiscal 2018, this year for position was eliminated. So I understand many of the investors get some concern, but I can say at this moment, Now we have short term midterm long term strategy for the further growth in the future. And in order for us to optimize our growth strategy, we have decided to eliminate the position of the CFO as their best top management team. That's our best conclusion for that. However, having said that, Mr. Hori is expected to further contribute to the improve of corporate value of Tokyo Electron and he is very precious human resource for our company And we haven't lost Mr. Hori at all. And another point I'd like to emphasize is absent to fiscal 2017. There was no such position as CFO. So function of CFO is necessary, and it might be better for us to have position of CFO and maybe in the future, sometime we may assign a person for the position of Tier 4 I don't know when, but there is a possibility. That's my personal expectation, and I think the function of CFO will be necessary But there are so many factors like cultural factors, as I said earlier, we have short term long term business strategies. And under the Mr. Kawai CEO, we have the appropriate optimum management team as of today, tomorrow, we may have different decision, but that's how we are going to promote our growth for the future. I'm sorry. Now you are getting closer to global 1st year company for that purpose. You think your current management team is the best way, best decision, positions or human organizational structure, we need to catch up and exceed global 1st year companies. For that purpose, We need to achieve the superiority in product and technology, which is important. Of course, management quality is really important. I understand that issue. But we are in the high technology industry and what we need to do is to enhance product performance and technology in order to fight against many competitors. So we need to further enhance our current performance. At the same At the same time, we need to create new high value added products. So now we have increased R and D expenses drastically, which is because we think the development of between products is really important. Mr. Kawai, do you have any comments? To add to my comment. As Mr. Chenay said earlier, in particular, Our market has high potential for further growth. And fortunately and fortunately, hardware FPD, SPD, is expected to have high hardware technology and software technologies. On top of that, Wafer Process Technology is essential And from now on, we need to focus on after sales service as well. Those 4 are really important and those 4 area require high experience long term experience. Otherwise, we are not able to do good job in those 4 areas. And for technology criticality, Our position is to be enhanced rather more, and the market expectation is rather high. And in order to meet customer expectation with high speed, we need to establish appropriate organizational structure. At the same time, for the future operation, rather than each one in each individual contribution, but we need to make the best use of the organizational capability so that we can focus on our growth growing area and agile, flexible operation is really necessary for us to provide value added to the customer and for us to continue growth. So that's what we Thank you very much for your question. Next question please. Yes, the gentleman in the front row please. Thank you very much for your presentations. I am Moriyama from JP Morgan Securities, Japan. I have a question about itching market share. I'd like to get some clarification from your side. Last year, 2017 3 point increase in market share for hedging. That's what you say in the presentation. Previously, you talked about this leading NetSuite area. What about market share? That is the major driver or DRAM? Area, you have enhanced the market tier 4 itching system. So I think the RAM area should be the major driver to increase the hedging market share. That's my speculation. But for this year, what sort of strategy do you have to further increase market share of etching? It was the ramp area, which made the significant growth last year, In our case, for the split process, we won the orders, but we need to win each application 1 by 1 from now on. Last year, the mass production phase contribution, I think DRAM area should be the major contributor to increase our market share for the hedging process and we want to see the continuous level for this year. For select process, we won the new application, And we have another customer, and another customer will start the investment this year. There, we want to see some positive factor for the 3 d NAND. Thank you very much. Thank you very much. We'll next question please. The gentleman on the 2nd row, please. I am Yassy from UBS Securities, Japan. I also have a question on market share. For this year's guidance, you presented the sales focused application Also on page 23, when I do some calculation from fiscal 2018 to 2019 DRAM sales, is expected to increase 76%. And earlier, you said DRAM WFE is 6% increase. So you expect this share increase NAND remains almost flat for WFE. On the other hand, your sales guidance is 10% increase. For both cases, you can see increase for the market share. But is that because of the improvement in customer mix or is that because of the technology factor that you can become is increased and product mix has increased and your sales look seems to be increased. Could you explain the reason or mechanism for this year? You can see the increase of market share for the future. For this fiscal year, yes, that's correct. As for the memory, we expect the increase of the market share. That's your question. Is that correct? For each etching system, for etching system, as I said earlier, In Korea, some growth is expected as for 9xgenerationinvestment So suite process application has been won, and that should be one of the contributors. These are the positive factors. Also for cleaning system, In particular, for 3 d NAND, batch cleaning application has been won. And single wafer process as well. New application has been won by our company That's the reason why these are the reason why we have increased our market share by 5%. So memory based investment is expected to continue this year as well. For cleaning system, the Japanese competitor won the order from the major IC vendor. Does that impact your business? Well, what are the impact the our company ourselves we are always very careful to look at the trends or situation of the competition under evaluation. Needless to say, we have grown rapidly so far and our competitors are taking appropriate approach to further enhance their business as well. So we need to work hard to challenge to the market. I'm sorry. So what you mean is you haven't lose your share because of the order given to your competitor by the major IC vendor. You are talking about the future, right? Your question is you are not going to we are not going to lose any share. Is that your question, that's correct. We don't have any intention to lose our market share. Thank you very much for your question. It's time, actually, however, there are so many people who are raising hands. So we'd like to extend our question and answer session by 5 minutes or 10 minutes. Yes, the gentle mind, the middle, please close to the wall, please. I have Nakano Mill from Jefferies. I have a question on DRAM. Midterm, long term outlook. This year, the DRAM is expected to grow significantly the market and your sales is expected to grow by 60% to 70%. But on the other hand, big growth is only limited to 20% to 30%. The DRAM price doesn't increase so much compared with last year. So I see vendors investment efficiency will be deteriorating in the future. Maybe 2 to 3 years from now in the future, what sort of outlook do you have for the DRAM market? Do you think the DRAM remain flat at high level? Or do you see do you expect some crash in the middle? The DRAM price will drop and investment will stop. Last year, when you look at the midterm perspective, do you think current level is sustainable? How do you think about the future? Outlook of the DRAM. The first of all, under the current model, The customers are now promoting device shrink. And accordingly, the number of processes is increasing and price of equipment will be increasing as well. So that's the main area of concern. And I think you're asking about that issue. It is true that we need to think about appropriate approach to these concerns As for that issue, as I said earlier in my presentation, process integration should be essential to help customers produce their products at low cost. And when I talk about the entry barrier, after sales services or have operations, we need to help our customers increase their uptime ratio enhance the yield. So that's not an approach we need to work on. These are areas that we can find business opportunities. Also, the value of semiconductor themselves are expected to change little by little. That's the gas trading that I have. In the past, the semiconductors were the product to be mounted onto PC, but From now on, the value of semiconductors will be increasing in order to create experience, good experience. So we need to enhance service furthermore. And also, we must make the best use of high technology so that we can come up as good service model. And we need to make the best use of our knowledge so that we can help customers to improve uptime ratio, improve yield, And we also provide some business opportunity to come up with the low cost devices through process integration and we also provide the high performance devices. In this way, we can continue growing furthermore. Thank you very much. Next question, please. Yes, the gentleman behind. Two to three rows behind, please. I am Yoskawa from Morgansdown stanley MUFG Research Japan. You have very positive and very strong financial estimates compared with American Competitor, your financial estimate is really strong and positive, especially when you compare first half and second half may be different in between calendar year and fiscal year. In your case, the second half of fiscal year the sales is expected to grow or higher, and that could be stronger compared with the merchant competitor. By application, the strong DRAM investment will continue. That should be the strong message from your announcement as Mr. Sakauser earlier, this year, DRAM, Greenfield investment will be taking place. So in the second half of this year, you see even in the second half of this year, we will see the continuous investment for the DRAM greenfield. So first half and second half, Are there any change are there any changes in terms of the investment for DRAM? As Mr. Sargawa Searalia, the new production line, new investment and new equipment. So investment to new lines and new products will continue this year as well. And you also announced the construction of new plants thus therefore, 2019, 2020, you said WFE was exceed $60,000,000,000. Maybe you can give us more detailed information in May. Is that correct and astounding? The market size will be determined by the expansion of applications, share increased market trend. So based on the overall comprehensive decision will be made. So in May, we are going to make some official announcement of our midterm business plan You can tell our implications from our decision to build a new manufacturing plant. Maybe we can take one or 2 questions more. Yes, the gentleman next to the person who has questions previously. I am Dania Anton from Mackoui Capital Securities Japan. I have only one question on ILUB Mythography. Now ASML announced their key messages. And your company's quota and developer and etches to 3 years to come, what sort of trend do you see? And what is the impact of Eulby lithographies on your products? For the EUVlysography, we do have a lot of expectations for this technology. There are some remaining issues in terms of EOB thermography technology, but when the EOB thermography process is completed and established, Then you can see the technology innovation breakthrough, and that is the major impact. It's not only the demand for PC and hardware, but also you can see demand on the society we have this kind of technology innovation, our business opportunities will be increasing furthermore, not only our quota and develop the blockers, this kind of technology innovation will help us to expand our business in all applications. So we'd like the EUV photography to be widely to be widely adopted by the clients. Thank you very much. Yes, the gentle mind, the middle, please. Yes, please. I'm Yamamoto Pro Minsujo Securities. I have a question about the resignation of Sheya 4. We got the press release. But would you like I would like you to give us some comments. I don't know if this is the reason or result, but according to the organization chart, the department is under CFO are now reporting directly to Mr. Kawai, and that will accelerate the speed of management. And why can you accelerate the speed of the management by having those departments under Mr. Kawai. Could you explain that area, please? So first of all, Mr. Hori has the diversified knowledge which is really critical for me and important for me, so we have a close communication with Mr. Hodi in all areas, our offices are close to each other. So when we can discuss each other at any point, So we are prepared to address any changes. And we can take that sort of action individually in addition me, myself, right now, are taking care of corporate strategy planning department and accounting departments. Now Mr. Sargawa is over here, So rather than one person's driver, but now we have very big business of size, So we have a kind of one brain. And as for the decision, to be made for the organization. We need to have an organizational decision rather than the individual decision. And we can accelerate the decision by having a rational approach, and we'd like to communicate my message throughout the world. That's the decision we made. From the viewpoint of the gap on us, I'm afraid your organizational structure is getting weak, as I hope you can come up with some fruitful result. By accelerating the speed of your Now there is one housekeeping information. We already inform you by email on May 29th in this room, we are going to hold the midterm business plan announcement meeting. If you have any time, please join us in that meeting as well on May 29th. Thank you very much. That's all about today's meeting for the financial announcement. Thank you very much for joining us today.