Financial Data and Key Metrics Changes - The company reported operating income of JPY456.2 billion, a decline of 26.1% year-on-year, with an operating profit margin of 24.9%, down 3.1 percentage points due to continued investment in future growth, particularly in R&D [5][9] - Net sales were JPY1,830.5 billion, a decrease of 17.1% year-on-year, attributed to a slowdown in customers' capital investment [8][10] - Net income attributable to owners of parents was JPY363.9 billion, down 22.8% year-on-year [10] - Gross profit was JPY256.1 billion, an increase of 15.3%, with a gross profit margin of 46.8%, down 1.1% due to strategic changes and inventory costs [12] Business Line Data and Key Metrics Changes - DRAM accounted for 27% of sales, with both sales and proportion increasing due to active investment by Chinese customers [15] - Non-volatile memory sales and proportion declined due to low capital investments from customers [15] - Sales to non-memory customers accounted for 66% of total sales, while non-volatile memory accounted for 7% [45] Market Data and Key Metrics Changes - The proportion of sales in China exceeded 40% in fiscal 2024, driven by strong investment in mature nodes, despite adjustments in leading-edge node investments [14] - The WFE market is expected to achieve double-digit growth in 2025, driven by demand for AI-related devices [21][84] Company Strategy and Development Direction - The company plans to invest JPY1.5 trillion in R&D and JPY700 billion in capital expenditures over the next five years to maximize growth potential [24] - The focus is on developing technologies for next-generation products and enhancing resources both domestically and internationally [23] - The company aims to expand its market share in high-value-added areas and is actively investing in R&D to capitalize on future opportunities [53] Management's Comments on Operating Environment and Future Outlook - Management noted that while leading-edge chip makers have suppressed investment, there is a pull-forward in investment for mature nodes, leading to an upward revision of financial estimates during the fiscal year [19] - The company expects a recovery in capital investment for NAND and advanced logic/foundry driven by AI server demand, with an annual growth rate of 31% anticipated [21] - Management expressed confidence in achieving a gross profit margin of 47% in the second half of fiscal 2025, driven by high-value-added products [72] Other Important Information - The Board of Directors approved a share repurchase program of up to JPY80 billion, reflecting a comprehensive assessment of various factors [27][101] - The company has set a target year of 2040 for achieving net zero emissions, advancing its mid-term environmental goals [20] Q&A Session Summary Question: What is the outlook for the WFE market? - Management expects double-digit growth in the WFE market next year, with no changes in their perspective despite previous reductions in leading-edge chip maker investments [31] Question: How does the company view the situation in China? - Management indicated that they cannot comment on export control regulations but noted that they will follow government decisions and do not see a decreasing trend in investment in China [70][112] Question: What are the reasons for the expected increase in NAND sales in the second half of the fiscal year? - The company anticipates increased sales to NAND customers based on shared long-term production plans, with significant orders already received [126] Question: What is the strategy regarding R&D expenses? - The company plans to maintain flexibility in R&D investments, focusing on high-value-added products and not setting an upper limit on the R&D-to-sales ratio [109][111] Question: What is the timeline for hybrid bonding technology? - Management expects hybrid bonding technology to start gaining traction within two to three years, with backside power delivery networks potentially following in three to four years [140]
TEL(TOELY) - 2024 Q4 - Earnings Call Transcript