Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **Global Semiconductor Capital Equipment** industry, specifically analyzing the **Wafer Fab Equipment (WFE)** market, with data from the **SEAJ** (Semiconductor Equipment Association of Japan) [2][18]. Core Insights - **WFE Growth**: In April, Japan's SPE (Semiconductor Production Equipment) billing increased by **15% YoY** in USD and **8% YoY** in JPY. The 3-month average billing showed a **27% YoY** increase in USD and **15% YoY** in JPY, indicating a cyclical upward trend since mid-CY2023 [3][22]. - **Tokyo Electron (TEL)**: The billing data suggests that TEL's revenue for Q1 may exceed consensus expectations, with a predicted **-1% QoQ** decline, better than the consensus estimate of **-9% QoQ**. This indicates potential upside for TEL, especially as the company anticipates a stronger second half of the year [4][27][31]. - **Future Projections**: The global WFE market is expected to remain flat YoY in **CY2025** at **$108 billion** and grow by **6%** to **$115 billion** in **CY2026**. This growth is anticipated despite weaker spending from China, which is expected to be offset by increased DRAM spending and a recovery in NAND [5][19]. Company-Specific Insights - **Tokyo Electron (TEL)**: Rated as **Outperform** with a price target of **¥33,800**. TEL is the largest Japanese SPE supplier and is expected to gain market share and expand margins due to competitive pricing following yen depreciation [9]. - **DISCO**: Also rated as **Outperform** with a price target of **¥41,300**. DISCO holds an **85% market share** in grinders and dicers, benefiting from the growing demand for advanced packaging technologies [10]. - **Kokusai**: Rated as **Outperform** with a price target of **¥3,640**. The company is expected to see increased adoption of batch ALD technology, particularly in NAND applications [11]. - **Advantest**: Rated as **Market-Perform** with a price target of **¥7,060**. The company benefits from rising testing intensity for HBM and AI GPUs [11]. - **AMAT and LRCX**: Both rated as **Outperform** with price targets of **$210** and **$95**, respectively. AMAT is expected to benefit from secular WFE growth, while LRCX is positioned well for a NAND upgrade cycle [14]. Additional Insights - **China's Demand**: Despite expectations of a decline in China's WFE imports, the situation appears more resilient than previously feared, with YTD March imports remaining relatively stable. This suggests that the decline may not be as severe as the projected **-30%** [22]. - **Market Dynamics**: The competitive landscape includes both global players and Chinese suppliers, with domestic substitution driving growth for companies like NAURA and AMEC in China [16][17]. Conclusion - The semiconductor capital equipment industry shows promising growth prospects, particularly for key players like Tokyo Electron, DISCO, and Kokusai. Despite challenges in the Chinese market, the overall outlook remains positive, with expectations of gradual recovery and market share gains for Japanese equipment manufacturers.

SOLVING COMPLEX PROBLEMS THROUGH GENERATIONS OF INNOVATION SPRING2025 INVESTOR PRESENTATION Safe Harbor This presentation contains, or may be deemed to contain, "forward- looking statements" (as defined in the US Private Securities Litigation Reform Act of 1995) which reflect our current views with respect to future events and financial performance. We use words such as "anticipates," "projection," "outlook," "forecast," "believes," "plan," "expect," "future," "intends," "may," "will," "estimates," "see," " ...