Advantest Corp Sp/Adr

Thank you very much for joining the Trans-Corporations Financial Briefing for the first quarter of fiscal 2024 despite your busy schedule. I'd like to introduce the attendees on our site today. Mr. Douglas Befavia, Representative Director, Senior Executive Officer, and Group CEO. Next, Mr. Tsukui, Representative Director, Senior Executive Officer, President, and Group COO. Mr. Mihashi, Senior Executive Officer, CFO, CSO, Executive Vice President of Corporate Strategy Group. Mr. Nakahara, Senior Executive Officer, CCRO, and Executive Vice President of Sales Group. Serving as a moderator of today's session, I am Oike of IR department of Corporate Strategy Group. Today, Mr. Mihashi, Mr. Douglas will talk about the summary of this financial briefing. And after that, Mr. Mihashi will touch upon the financial results of the first quarter of fiscal 2024. And after that, Mr. Refiba will present fiscal 2024 outlook. before entertaining questions from the audience. We are going to finish up today's session at 7 o'clock Japan time. In today's financial briefing, we will use English-Japanese simultaneous interpretation. If you prefer to use a Japanese language channel, we are kindly requested to click the globe icon on the lower left of the WebEx screen and select Japanese in the menu of my preferred interpretation language. If you slide the bar of the balance to the right end interpreter, you will hear interpretation into Japanese when the original language is English. If you prefer to hear original audio containing Japanese and English, you don't have to change the setting. Please join us with the default setting. Today's presentation materials are posted on TDNet and our website. The audience joining us through a telephone line is kindly requested to download the materials. Now, during today's briefing, we will project the Japanese version of the materials. Sorry. Before we begin, we would like to remind you that today's briefing contains a forward-looking statement, all of which are subject to risks and uncertainty that may cause our actual results to be different from those in such a forward-looking statement. We appreciate your understanding. Firstly, Mr. Lefevre will present the brief summary. Please refer to page 4 of the materials.

Thank you. Hello everyone and thank you for joining 1st, provide an overview of the 2024 before delving into the results of the 1st quarter. Over the past year, we have outlined the business opportunities arising from generative. And the 1st quarter, we saw some of this manifest. While we had anticipated the semiconductor test-related market to revert to a growth cycle in FY24, increasing complexity is raising tester demand more rapidly than originally expected, especially for SOC testers. In the first quarter, sales, operating income, and net income increased quarter over quarter and year over year. Against the backdrop of continued demand growth driven by semiconductor performance and rising complexity, our product deliveries to customers exceeded our original plan and our sales mix improved. Therefore, we are revising up our full year guidance for FY 2024. As such, we are off to a very good start for our third midterm management plan. Now, Mahashi-san will explain our first quarter results. Thank you.

Thank you. Now I'd like to talk about the first quarter summary of the results. Could you refer to page 5, please? In the first quarter, we posted an increase in sales and profit quarter-over-quarter, partly boosted by the yen depreciation against the U.S. dollar. There was robust capex spending by customers for high-performance semiconductors in both SOC and memory, mainly related to generative AI. On the other hand, Demand for mature process application have remained soft since the third quarter of the previous fiscal year, resulting in quarter-to-quarter decline in sales. Details of the result will be explained in the following pages. Could you refer to page 6, please? Associate tester sales were 69.1 billion yen, an increase of 10.4 billion yen quarter-over-quarter. Sales increased due to a significant increase in demand for advanced process applications such as HPC and AI. On the other hand, for mature process application, in addition to the soft demand of automotive and industry-adjusted earlier, sales for display driver IC also decreased. Display driver IC is DDIC. Memory tested cells were flat or quarter-quarter at 32.0 billion yen. Demand remained elevated for high-performance DRAM, particularly HBM. Next, mechatronics systems and service support others. Sales of device interface increased quarter over quarter in tandem with increased sales of testers. However, segment sales decreased quarter over quarter due to the absence of the bulk sales of non-technology product booked in the previous quarter. As for service support and others, in the system-level test business, which has high sales exposure to a limited number of customers, sales decreased as the demand remained soft in the consumer sector. the page seven. Now we can see the cells by region. In Taiwan, first of all, increasing complexity of HPC-aerated semiconductors driven mainly by U.S. public companies resulted in the longer-than-expected test time, leading to an increase in tester volume demand from the related country and OSOT. As a result, capacity of testers has been largely digested, and sales of SOC testers increased furthermore. Next, in Korea, memory tester sales increased as customers' investment appetite remained robust, particularly in the DRAM applications. In China, while sales of both SoC testers and memory testers decreased quarter over quarter, the sales level remained high. Regarding the tightening of restrictions on the export of semiconductor production equipment to China by the U.S. and its allies, the direct impact on our fiscal 2024 earnings is expected to be limited under the current rules and regulations, but we will continue to closely monitor the situation. Next page, please. Slide 8. So the sales growth profit Operating income in first quarter 2024, gross margin increased quarter of quarter, mainly due to the improved mix, reflecting an increase in the sales composition for high-end SOC. SC&A, including all the other incomes and expenses, decreased by 4.5 billion yen quarter-to-quarter. However, poor SC&A increased quarter-to-quarter due to the booking of impairment loss of proportion of Goodwill of about 9 billion yen as other expenses in the previous quarter, as well as impact of yen depreciation and increase in provision of performance-linked bonuses. Next slide, 9. This is investment and cash flow. R&D expenses, capex, and E&A are illustrated on this slide. R&D expenses remain high following the previous quarter. As for cash flow, the cash flow operating cash flow decreased quarter over quarter due to the bonus and other payment in the first quarter. With regard to investment cash flow, we completed acquisition of Talent Engineering, a Dutch test service engineering company on April 2nd, 2024. This result in an increase in cash outflow from investing activities in the first quarter. The acquisition is intended to strengthen the mid-term and long-term growth foundation as not expected to have significant impact on companies' financial performance in fiscal 2024. Next, page 10. This is balance sheet. Inventories increased slightly quarter of quarter. While our sales have increased, the status of demand recovery varies from one application to another. For high-performance semiconductor, where test cell demand is growing, we are strengthening procurement to increase production. On the other hand, for product where demand recovery is likely to take place, take time, we will continue to work on inventory management. This concludes my presentation. Now I'd like to hand over to Doug, who will go over fiscal 2024 outlook.