Advantest Corp Ord

Thank you very much for joining Advantis Corporation's financial briefing despite your busy schedule. I would like to introduce today's speakers. The four of us are the CEO of Group COO Tsukui Koichi, CCRO Sanjeev Mohan, and CFO Hisako Takada.

From the left side of the slide on the screen, Mr. Douglas Lefevre, Representative Director, Senior Executive Officer, and Group CO. Mr. Koichi Tsukui, Representative Director, Senior Executive Officer, and President, Group COO. Mr. Sanjeev Mohan, Senior Executive Officer, and CCRO. And Ms. Kisako Takada, Senior Executive Officer, and CFO.

I'm Semba from the IR department, serving as the moderator of today's session.

In today's financial briefing, Douglas will first provide the summary. After that, we'll entertain questions from the audience. We plan to close this session at 6 p.m. Japan time.

なお、本日の決算説明会は日英逐次通訳を利用して配信いたします。 Today's session will be delivered with Japanese-English consecutive interpretation. また、本日の説明会資料及び日本語・英語スクリプトはTDNet及び弊社ウェブサイト上に掲載されております。

The briefing slides for today, along with the Japanese and English scripts providing detailed explanations, are available on TDNet and our corporate website.

説明会に先立ち、皆様にお断り申し上げます。 これから弊社が行う説明におきましては、現時点での予想に基づく将来の見通しを述べる場合がございますが、 それらは全てリスク並びに不確実性を伴っております。 皆様には実際の結果が見通しと異なる場合があることをご了承願います。

Before we begin, we would like to remind you that today's briefing contains forward-looking statements, all of which are subject to risks and uncertainties that may cause actual results to differ from those forward-looking statements. Please note that today's financial briefing is being recorded for the purpose of accurate record keeping and distribution on our corporate website. Now, let me give you some instructions on the Q&A session.

If you have any questions, please click on the participant icon on the WebEx screen and press the delete button. When you are selected by the moderator, a mute button will be displayed. After you have deleted the mute, please ask your question following the company name and name. Once you have finished your questioning, please press the mute button again and delete the mute button.

If you would like to ask a question, you are kindly requested to click the participant icon and then click the raise hand button. When our moderator calls your name, an unmute button will pop up on the screen. Please unmute and state your affiliation and name before asking your question. Once your question has been answered, please mute your microphone to undo the raise hand button.

As much as possible, I would like to receive questions from as many people as possible, and I would like to say that the questions are up to one person. If you have time left, we will receive your questions until the end of the schedule. We would appreciate it if you could refrain from asking questions about individual companies.

To ensure we can take questions from as many participants as possible, we kindly ask that each person limit themselves to one question. If time permits, we will accept questions until the scheduled closing time, and we kindly ask you to refrain from asking questions regarding specific companies.

Now, Douglas will present the summary.

Doug, please go ahead.

Okay, thank you. Hello, everyone. This is Doug. Thank you for joining our financial briefing. Today, I will focus on key highlights and updates on our business performance and strategy. For details, please refer to the presentation materials and script, which are disclosed on our website today.

Let me begin with a summary of our financial results.

We are pleased to report that our consolidated fiscal 2025 results delivered new records in sales, operating profit, and net income.

The growing demand for AI-related semiconductors continues to drive expansion in the semiconductor tester market.

With the tester market expanding for the second consecutive year in 2025, we are able to achieve market share gains.

We attribute this performance to our ability to meet growing demand from key customers, successfully capturing new customer demand, and utilizing strategic production capacity expansion implemented in anticipation of sustained high demand. In fiscal 2026, supported by AI-related investment, we expect our results to post further record highs.

There are three key highlights defining our business today. First, sustained leadership in the SOC tester market. Second, technological leadership in next generation semiconductor testing. And third, robust progress in capacity expansion.

First, let us address our leading position in the SOC tester market.

The total semiconductor tester market size in 2025 was approximately 9 billion U.S. dollars.

This exceeds the previous market size peak recorded in 2024.

We estimate that the global SOC tester market expanded to approximately US$6.9 billion in 2025, marking about 68% year-on-year growth.

We estimate that the SOC tester market expanded to approximately US$6.9 billion in 2025, marking about 68% year-on-year growth.

With increasing test demand driven by AI-related high-performance semiconductors, the market expanded significantly, and our market share is estimated to have risen to 66%, an increase of around 10 percentage points from the prior year.

With the expansion of AI-related high-performance semiconductors, test demand has increased, and as the market expands, our market share has increased by 66%, with an increase of about 10 points from last year. In the AI accelerator market, we have expanded our customer base and captured a majority share of the market globally.

Meanwhile, in the memory tester market, although our market share declined by approximately 2 percentage points, it remained at around 60%.

We will continue to enhance and advance our product development by proactively addressing evolving customer needs.

Next, let me move on to the tester market trend for 2026. First, I'd like to talk about our view of the business environment. Alongside uncertainties in the macroeconomic environment, including growing geopolitical risks, the semiconductor industry faces industry-specific risk factors such as supply constraints. However, driven by the rapidly and dynamically evolving AI market, AI-related applications continue to be a key growth driver for the semiconductor market, and robust growth is expected to persist.

However, due to the rapid and dynamic evolution of the AI market, AI-based applications continue to be a major growth driver in the semiconductor market, and it is seen to continue to grow steadily.

Based on these factors and reflecting stronger than expected demand at the beginning of the year, as well as a favorable full year outlook, we revised the SOC market size forecast to $8.7 to $9.5 billion. We raised the lower end by $200 million from the January forecast.

We are keeping our memory tester market size forecast unchanged at 2.2 to 2.7 billion U.S.

dollars as projected in January.

Now let's look at our fiscal 2026 forecast.

Based on the business environment surrounding advantage and demand trends, we expect both sales and profits to reach record highs in fiscal 2026 as shown on this slide.

こちらのように当社を取り巻く事業環境及び需要動向に鑑み、こちらのスライドに示しますように、2026年度も売上利益ともに過去最高を更新する見込みで。 利益面では通期の売上総利益率は63%程度を見込んでいます。

And the operating profit margin is expected to remain at a comparable level year-over-year, reflecting continued proactive investments in R&D and other mid- to long-term growth initiatives.

Now let me return to the highlights.

The second highlight is that on the technology front, we also see ourselves as holding a superior position. Supported by our global customer base, measurement technologies developed and enhanced in close collaboration with customers and partnerships with a broad range of industry partners, we have the capability to introduce high-value test solutions for next-generation semiconductors in a timely manner.

The global customer base, the measurement technology that continues to be refined by them and us, and the collaboration with various partners allow us to introduce high-value test solutions for next-generation semiconductors in a timely manner.

This is not limited to SOC testers. Development of solutions for next-generation DRAM is also progressing according to plan.

This is not limited to SOC testers. The development of solutions for next-generation DRAM is also progressing as planned. Furthermore, in silicon photonics, we are strengthening engagement with key customers and receive the industry's first large AT order for high volume production.

Moreover, through initiatives such as the opening of the Advanced Test Innovation Center in Silicon Valley, announced earlier this month, and our participation in Applied Materials' EPIC platform, the company will strengthen collaboration between front-end and back-end testing through cross-industry partnerships, thereby accelerating the creation of advanced test solutions for next-generation semiconductors.

Finally, I'd like to discuss the third highlight, our steady progress and expanding production capacity. Our production capacity expansion efforts have been progressing ahead of our original plan.

As we expand our engagement with a growing number of customers, while its complexity in rising across the semiconductor value chain, our ability to reliably supply and deliver at scale is ever more critical.

As we expand our engagement with a growing number of customers, while its complexity in rising across the semiconductor value chain, our ability to reliably supply and deliver at scale is ever more critical.

Increasing semiconductor complexity requires us to offer an expanded lineup of tester modules and richer system configurations. This allows us to better support upgrades across customers' install base. In addition, we are also expanding our production capacity for new systems with built-in buffers to meet customer demand.

The complexity of the semiconductor requires the improvement of the tester's module line-up and the supply of components with the most rich composition. We will respond to customer demand by increasing the production capacity with buffers that enable further new systems to be imported and to upgrade the existing facilities of customers.

By accelerating our capacity expansion plan of SOC test systems to around 10,000 systems per year ahead of our original projection, we are positioning ourselves to support future growth in close coordination with customers and supply chain.

当初の見込みより早期にSOCテストシステムで年間約1万台規模への能力増強を加速することで、顧客や当社のサプライチェーンと共に今後の成長に備えていく所存です。

In a fluid business environment, demand can fluctuate.

We will be diligent in assessing near-term customer demand as well as supply chain availability and endeavor to exercise acceleration or restraint as appropriate.

Just as a note, our annual production capacity targets, of course, do not directly equate to our sales. We will continue to drive strategic supply chain transformation for potential future growth. We believe our scale is a competitive advantage for Advantest.

This concludes my prepared remarks. Thank you.