Tokyo Electron Unsp/Adr

It's time for us to start Tokyo Election Financial Announcement for the fiscal year ended March 2026. Thank you very much for joining us today despite your busy schedule. I am Yatsuda of IR department serving as a moderator of today's session. I'd like to introduce today's attendees. Toshiki Kawai, Representative Director, President, and CEO. I am Kawai. Thank you very much. Next, Hiroshi Kawamoto, SVM and GM Division, Officer of Finance Division. I am Kawamoto. Thank you very much for joining us today. Before starting the presentations, let me explain the flow of today's session. First of all, Kawamoto and Kawai will make presentations. After that, until 6.30pm Japan time, we will have a question and answer session where we entertain questions from the audience. This meeting uses two channels of WebEx for the simultaneous interpretation between Japanese and English. As we explained in our email, you are kindly requested to use apps on PCs or mobile terminals if you wish to ask questions. But if you are not going to ask questions, you can use telephones. Since this conference is intended for institutional investors and analysts, we would appreciate your understanding that we receive questions only from institutional investors and analysts as usual. We will post the audio contents of this conference in Japanese and English on our website within a couple of days. It will be appreciated if you could also visit our website. Now, Mr. Kawamoto will present the consolidated financial summary. Kawamoto-san, please. Good afternoon. I am Kawamoto, Finance Division. I'd like to present the consolidated financial summary of the fiscal year ended March 2026. I will start with the quarterly financial summary. I will mainly refer to the figures in the blue box. In the fourth quarter, we generated net sales of 711.8 billion yen, 28.9% increase from the third quarter, when net sales showed a temporary drop due to shipment timing. Accordingly, gross profit was 333.1 billion yen, 41.3% increase from the previous quarter. Gross profit margin was 46.8%, 4.1 percentage point increase quarter over quarter. Although SG&A's expenses increased mainly due to R&D expenses increase, SG&A to sales ratio declined, which resulted in 77.1% quarter-over-quarter increase of operating income at 205.6 billion yen. Operating profit margin was 28.9%, increasing by 7.9 percentage points sequentially. Net income attributable to owners of parent was ¥214.2 billion, 80.8% increase quarter-over-quarter, partially due to extraordinary income generated by selling strategic shareholdings. This slide shows net sales by region. As for the competition in the fourth quarter, proportion of sales in Taiwan significantly rose by 40% from the previous quarter to 22.0%. Meanwhile, as growth rate of spending for leading-edge news was higher than that of mature news, proportion of sales in China dropped to 26.8%, 5.0% for a declined quarter of a quarter. On the four-year basis, in the fiscal year ended March 2026, proportion of sales in China was 34.1%. Now I will move on to the four-year financial summary. Since the leading customers continued active investment and our field solution sales were strong. Thanks to the increased utilization rate of the customer's FAP, we generated net sales of 2,443,500,000 yen, 0.5% increase year-over-year, hitting record high following the fiscal year ended March 2025. Gross profit was 1 trillion 907.8 billion yen, exceeding 1 trillion yen in the second consecutive year, while gross profit margin declined by 1.8 percentage point year over year to 45.3%. This is due to soaring cost in parts and materials as well as changes in the product mix. Another factor is the increase of the number of field engineers outside Japan to prepare for the future growth. Operating income was 624.9 billion yen. Operating profit margin was 25.6%, 3.1% drop year over year. This is because of active R&D investment to prepare for further growth and enhance our competitive edge. R&D expenses were 277.8 billion yen, increasing by 11.1% year-over-year. Net income attributable to owners of parent was 574.4 billion yen, 5.6% increase year-over-year, reaching all-time high. Results of the strategic shareholdings and recorded extraordinary income of 115.4 billion yen. Capital expenditures were 216.0 billion yen, mainly due to the completion of the development buildings in Miyagi and Kumamoto and contracts production and logistics center in Iwate and procurement of in-house use evaluation tools. Depreciation was 80.9 billion yen, 30.3% increase year over year. This is a graphic representation of the financial summary shown on the previous page on the chronological basis for your reference. ROE was close to 30% following the previous fiscal year. This shows SPE new equipment sales by application. In the fiscal year ended March 2026, from the top of the chart, sales to DRAM customers accounted for 31%, non-flutter memory accounted for 10%, and non-memory accounted for 59%. For DRAM, while investment in advanced technologies such as HVAM continues to be strong, investment levels are varied among customers. As a result, DRAM sales and proportion remained almost unchanged from the previous year. For non-blutter memory, utilization ratio of our customers have improved significantly and investment has been back on course of recovery. Accordingly, both sales and proportion were in the increasing trajectory. For non-memory, while investment for mature nodes paused tentatively, investment for advanced nodes was very active. Accordingly, non-memory investment exceeded 1 trillion yen just like in the previous year. This slide shows field solution sales. In the fiscal year ended March 2026, field solution sales were 626.0 billion yen, increased by 16.3% from year over year. Along with further improvement in utilization rate of the customer staff, our parts and service business grew and there were quite a few modifications to enhance productivity. Accordingly, food solution sales were strong. This slide shows the balance sheet. Total assets were 2,860,000,000 yen. Cash and cash equivalents were 506.2 billion yen, increasing by 87.7 billion yen from the previous quarter. Notes on accounts receivables were 525.8 billion yen, rising by 124.3 billion yen sequentially. Inventories were 713.1 billion yen, decreasing by 12.2 billion yen from the previous quarter. Tangible assets were 589.3 billion yen, increasing by 15.3 billion yen quarter over quarter. For the liabilities and net assets shown on the right-hand side, liabilities were 791.0 billion yen, increasing by 161.2 billion yen quarter over quarter. Net assets were 2,069.9 billion yen, rising by 64.7 billion yen sequentially. This slide shows cash flow. The cash inflow from operating activities in the fourth quarter was 205.7 billion yen. The cash inflow from investing activities was 33.2 billion yen as a result of acquisition of tangible assets and sales of investments in securities, among others. The cash outflow from financing activities was 150.8 billion yen due to the share repurchase. Free cash flow was plus 239.0 billion yen. The full-year free cash flow was also positive at 433.2 billion yen. Both full-year and quarterly free cash flow hit record high. Finally, I will present total return amount. The share repurchase we announced in February 2026 was completed. The total acquisition amount was 149.9 million yen. At the Board of Directors meeting held on March 27, 2026, it was decided to cancel 3,600,000 Treasury stocks on April 30, 2026. The total return amount in the fiscal year ended March 2026 was 437.4 billion yen, which exceeded that in the previous fiscal year, reaching all-time high. This concludes my presentation. Thank you very much. Now, next, Kawaii will talk about business environment and financial estimates. Kawaii-san, please. Once again, thank you very much. I am Kawaii. I will present business environment and financial estimates. Let me start with fiscal 2026 full-year business highlights. In fiscal 2026, we generated net sales of 2,443,500,000 yen, hitting record high. In addition to the active investment for Advanced Logic and DRAM HBM for AI servers starting in the previous fiscal year, investment for 3D NAND, which had been muted for a long time, finally showed some signs of recovery. Along with improvement of utilization rate of customers' fans, our field solution sales grew as well. We delivered record four-year net income of 574.4 billion yen as we strive to improve capital efficiency and recorded extraordinary income by selling strategic shareholdings. The R&D centres in Miyagi and Kumamoto and production and logistics centre in Miwate, which we had been constructing to prepare for next phase growth, were completed. We also started constructing a new production building in Miyagi, which adopts the smart production concept to support manufacturing in the future. To properly address rapidly expanding WFE market, we are securing robust and strong capacity. Winning PORs in the advanced domains is another critical fiscal 2026 highlight, which will contribute to our sales growth in the future. For memory applications where we are strong, we want high market share in major edging processes, including capacitor process and HBM interconnect process. For advanced packaging, which shows remarkable growth, supported by our broad product portfolio, we want PORs for multiple products, ranging from front-end process to 3G integration and testing. Next, I will present the business environment. For two years from calendar 2026 and 2027, we expect the WFP market to grow by 20% or more from calendar 2025, ranging from $150 to $170 billion for each year. For spending in high-end devices we focus our efforts on, as we are currently receiving strong inquiries, we expect 30% or more year-over-year growth. As for ongoing geopolitical risks, for the time being, we do not see any changes in our customers' investment trends. When the blockage of the straight of homes is protracted, however, we must pay close attention as there is a concern about the shortage of parts and materials triggered by supply chain disruption. Now I will present our fiscal 2027 sales growth drivers under such business environment. Among the investment for high-end devices which will drive market growth this year, quarter developers and etching systems are expected to make a significant contribution to our sales. In the quarter developer business in particular, our share in the global market exceed 90%. We receive inquiries regarding investment both for capacity enhancement and device scaling from almost all customers as CRM customers adopt EUV technology and logic customers introduce EUV multi-patterning. Accordingly, fiscal 2027 quarter developer sales expected to grow by 50% or more year over year. For etching system, we are strong in the field of dielectric etching, recording 50% or more global market share at present. For DRAM capacitor process, we have won PORs from all leading customers and maintain a very high market share in the interconnect process, which is growing for HVM applications. For the GAA, or Gate All-Around Structure, which was first adopted by 2-nanometer logic, business opportunities were expanding in gate etching and isotropic etching. Driven by these factors, fiscal 2022-2027 etching system sales expected to increase by nearly 30% year-over-year. As we have a broad product portfolio, we are blessed with numerous growth opportunities also for advanced packaging. In the business of prover for advanced logic, where we have a compelling market share, the sales are growing steadily and expected to top 100 billion yen in this fiscal year. Sales of bonder-de-bonder for the HBM, permanent wafer bonding for logic 3D integration, and bonder for 3D NAND are growing. In fiscal 2027, sales for advanced packaging, including quarter developer, etching systems, and deposition systems, are expected to grow by 60% or more year over year. Next, I will present the financial estimates. First of all, let me talk about a change of the financial estimate disclosure period. While SBE market is expected to grow in mid-term and long-term, the size of customers' investment gets bigger than before, and their investment plan may change in the middle of fiscal year due to supply-demand balance, customer strategy, and geopolitical factors. Particularly as investment of some customers has been becoming extremely big in size, impacts of their movements on our group performance are getting relatively bigger. Taking account of those factors, although in the past we disclosed full-year financial estimate of following fiscal year at the timing of year-end financial announcement, from fiscal 2027 onward, we will disclose financial estimate of the first half of fiscal year and thereby we will strive to share more timely and realistic information. For the financial estimate of fiscal, our first half of fiscal 2027, driven by the strong demand for AI server, we expect net sales of 1,570,000,000 yen, gross profit of 715,000,000 yen, and operating income of 431,000,000 yen, all of which are expected to hit half-year records. For the second half of fiscal 2027, stronger growth than the first half is expected, as we expect further increase of shipment, maybe to DRAM and advanced logic customers. As I said before, we must pay close attention to impacts of blockage of the straight of homes, but at present, we do not see any changes in our customers' investment plans. We have secured parts and materials we will need for tools to be sold in the first half of fiscal 2027. This slide shows fiscal 2027 SP new equipment sales forecast. The new equipment sales in the first half of this fiscal year are expected to grow by 41% year over year to 1 trillion 200 billion yen. The breakdown by application is shown on this slide. Driven by AI server demands, sales of our system for high-end devices are expected to increase. This slide shows our plan for R&D expenses and capex. In fiscal 2027, we plan full-year R&D expenses of 330 billion yen. We will actively promote R&D to enhance foundation of our technology competitive edge and support semiconductor technology innovation. For CAPEX, we plan to spend 190 billion yen on the four-year basis. We plan to acquire equipment for the new development buildings whose construction was completed in fiscal 2026, and we plan to complete construction of a new production building in Adopting the SMART curve in summer of 2027, we will utilize robust infrastructure shown in this slide and capitalize on future development opportunities to maximize our corporate value. Finally, I will present the dividend forecast. Along with the revision financial estimate disclosure period, for the dividend forecast as well, we present the forecast of interim dividend alone. Fiscal 2027 interim dividend is expected to be 361 yen per share. maintaining high level just as second half of fiscal 2026. This concludes my presentation. Thank you very much for your kind attention. Now we will have question and answer session until 6.30 p.m. Japan time. You can ask questions either in Japanese or English, but as our speakers are on the Japanese channel, please allow us to take audio questions only in Japanese. If you ask a question in Japanese, please click the raise hand button on the WebEx. For details, please refer to the instructions attached to the invitation email. I will call the name of the person one by one. Our secretariat will contact you in advance, so please check the WebEx chat box. When asking a question, you are kindly requested to unmute your microphone for yourself. When your question is answered by our attendees, please hit the raise hand button again to remove the raise hand signal. We will refrain from answering questions if your name and affiliations are not given. We will translate your English question, and on the Japanese channel, I will read it out in Japanese, and speakers will answer in Japanese. On the English channel, the question and answer will be simultaneously interpreted into English on the real-time basis. As we would like to take questions from as many participants as possible, we will take one question per person. If time allows, we will take additional questions. So the first question. is from Mr. Yoshida of CLSA Securities. Thank you very much. I am Yoshida from CLSA Securities Japan. Slide 15, I have a question regarding the outlook of the WFE market. Roughly speaking, according to this slide, by 2025, the WFE market was $120 billion. By 2026, more than $150 billion, maybe $155 billion. Accordingly, 2027, that should be $170 billion. That's what it looks like. So it's a correct understanding. And by application, I think you've made some comments. By application 26 and 27, what sort of growth do you expect? Are there any changes from your focus three months ago? And for China? I would like to see your view on China market as well. Thank you very much. Let me answer to your question. This is Kawai. First of all, WFE market, as you just said, what you said is correct. Compared with this year, next calendar year, you can see increasing trend of WFE market. At present, We are receiving new inquiries. Some requests for delivery could be put forward to this year. But as for this year, maybe $150 billion or more and going toward $170 billion next year. That's how we understand the trend of WFP market. Your second question is, The composition. First of all, last year composition, as Kawamoto said earlier in his presentation, DRAM and NAND accounted for 35%, and LOGIC accounted for 65%. calendar 2025 but this year DRAM and NAND accounts for 40% and logic accounts for about 60% so memory proportion is expected to grow slightly that's how we view the composition for this calendar year for China composition For 2025, China accounted for about the high 30%. Non-China accounted for low 60% level. For this year, China accounts for the meat 30% and non-China accounts for meat 60% level. Are there any changes from the three months ago in terms of application? Over the past three months, so maybe AI server inquiries... have been added over the past three months, and there are some requests for pulling forward orders. So AI cyber demand is still very strong. Is that the logic? Yes, that's correct. Thank you very much. That's all from me. Mr. Yoshida, thank you very much for your question. Next question is from Tamura-san from Mogan Sunday MUFG Research Japan. Tamura-san, please. Yes, this is Sandra from Morgan Stanley. Thank you very much. Thank you very much. So this should be the final year of your mid-term management plan. Three trillion yen is your target, and I can see the plan for this first year. And sales of the... Second half should be stronger, so I think you can achieve ¥3 trillion. I would like to know the confidence level and your expectation for this fiscal year. An operating profit margin, your target is 35%, as well as I can see the figure of the first half of this fiscal year. It might be difficult for you to achieve 35% of OPM. What are the reasons why you failed to achieve the 55%? But what sort of the time span you have to achieve the 35% of OPM, including fiscal 2028? Thank you very much. For our mid-term management plan, our sales target is $3 trillion or more. OPM of 35% or more, ROE of 30% or more. So these are target, and this year is the target year, as you said in your question. As I said in my presentation, As for the sales, as you correctly said, the second half sales is more than the first half sales, and actually the next fiscal year sales will be more than this year, so our targets in the mid-term management plan for sales and ROE, we are steadily progressing toward the targets of mid-term management plan. As you pointed out, the operating profit margin So we try our best effort to achieve our target and getting closer to the target level of OPM. We still continue this effort. However, we understand the achievement of OPM is one of the challenging factors of life. For example, when we produced Midtown Management Plant, foreign exchange has been drastically changed. Because of that, fixed costs have been changing by 70 billion yen. In FY2026-27, the foreign exchange rate is about 146 to 160 yen to the dollar. That's the reason why fixed costs are increasing. So one of the reasons is the impact of the foreign exchange. The other one is the labor cost. That's about 10 to 9 to 10% increase. And logistics costs in fiscal 2027 increased by 10%. So the traveling expenses and transportation expenses are also increasing. So because of this rapid change in foreign exchange and inflation factors, are impacting the operating profit margin. From when we produced the mid-term management plan, the fixed cost to sales ratio has been increasing. But we are taking actions to do some more improvement. As I said earlier, inflation is the trend, and we need to take a proactive action against inflation and soaring costs of the materials and parts in addition to price increase. And we must enhance the productivity, and at the same time we will launch new models to the market by using those countermeasures within two years to come. We try to achieve 50% or higher gross profit margin. That's what we are doing right now. In addition, we are receiving inquiries from our customers. So this fiscal year and next fiscal year, we are going to steadily improve operating profit margin so that we can achieve high level of the operating profit margin. Thank you very much for your very detailed explanation. That's all from me. Thank you very much. Thank you very much, Ms. Tamura, for your question. Next question is from Mr. Shimamoto of Okasan Securities. Thank you very much. I am Shimamoto of Oka Sound Securities. Can you hear me? Yes, we can hear you. Thank you. I have a question regarding share of H system. So you disclosed the annual share of your products. Compared to this last year, H in share declined by 5 percentage point. Last year, why did you reduce your market share? And you may see some increasing, 25% or higher growth is expected. But when I look at WFE, expected to increase 25%. So maybe you may not incorporate the share increase with that level of WFE market growth. So could you let me know your actions to increase your market share? When you look at process share for etching, our share is increasing significantly. That's how we analyze the situation. However, when we convert it to cells, when you look at the share, convert it to share cells, actually, Tokyo Electron itself is 0.9% negative. Etching has a strong contribution to that. Customer mix in terms of market share is another reason. And regulations are also impacting our performance. Customers start with purchasing the American tool vendors tools first and maybe the customer try to buy Tokyo Electronics tools in this fiscal year rather than last year. So two years ago, our etching share grew very rapidly, significantly. So timing of delivery was another factor. Also customer mix and also regulation impacts. Those three factors were major reasons to the result of the share. On the other hand, as I said earlier, the process share, when it comes to process share, So our company is now waiting for the future growth, especially in conductor H. We are winning PORs. You can see some positive information. Interconnect process and capacitor process, we maintain our share, and that will contribute to the future DRAM and logic growth. And we can see more opportunities. And also GAA, gas chemical etching. There are some business opportunities for gas chemical etching. Thank you very much. So if possible, could you let me know your target for share in this year? For that question, so we need to closely watch the customer investment trend. We haven't disclosed information about this year's share. I'm sorry for that. I understand. Thank you very much. Mr. Shimamoto, thank you very much for your question. Next question is from Mr. Nakamura of Goldman Sachs Japan. Mr. Nakamura, please. Thank you very much. Thank you very much. Regarding profitability, So for this fiscal year and onward, I want to get your take. So gross profit margin for the first half of this fiscal year, you showed us 45% level. So sales increased rapidly, but your prospect of gross profit margin is rather weak, maybe because of impact of inflation. labor costs or inflation. That's what you said earlier. In addition to those, are there any other reasons, including product mix, to lower your focus of gross profit margin? As for the second half of this year, you said the sales will be increasing further more. So second half of this year or next fiscal year. So what do you think about profitability? Thank you for your question. As I said earlier, The fixed costs are increasing. That's what I said before. The exchange rate and inflation, as well as logistical, traveling costs, those things are increasing. And we are taking appropriate action for price rise. When it comes to the productivity enhancement, at present, what is important for customer is how we can improve the productivity. So the throughput of process tool or yield enhancement. So we must expand our services to improve the throughput and yield. At the same time, we should introduce the new products So this is how we can improve gross profit. So one year or two years, maybe we try to achieve gross profit margin of 50% or more by taking solid actions. Thank you very much. So within two years, you are going to achieve GPM of 50% or more. That's what you said. But GPM 50%, at that stage, what is the level of the operating profit margin when you can achieve 50% of gross profit margin? That means management plan target. Also, depending on top line, when the gross profit margin goes up, then I think we can improve situation. Therefore, we will make solid effort to achieve 35% of OPM. That's the intention that we have right now. Thank you very much, Mr. Nakamura, for your question. Next question is from Mr. Hiragawa of BOA Securities. thank you very much I have a question regarding the lead time of your products at present the lead time of your product is 4 to 6 months in average 5 months is that correct understanding and first half of this fiscal year you already receive orders and about 90% of those orders are now waiting for the shipment is that correct understanding thank you very much. The lead time of our products are getting shorter. Rather than five months, depending on products, needless to say, might be three months or four months. We are trying to shorten the lead time of products. We must do that because we receive a huge amount of inquiries. For the first half of this fiscal year, Yes, this rather high level of confidence for the figures for first half of this year. Yes, we do have the high level of confidence. So your competitors. Just show us the first half, the first quarter, but you are giving us the prospect of the first half of this year. So maybe five months to go, maybe you have the high level of confidence because you already received orders from the customer. Is that correct understanding? We are very glad that our earnings drew a lot of attention. And we are trying to explain the market trend as much as possible. So there should be no major change within six months to go. And we try to look ahead. So rather than one quarter, I try to show you our outlook of six months to go. Thank you very much. Thank you very much, Mr. Hiragawa, for your question. Next question is from Yoshioka-san from Nomura Securities. I am Yoshioka of Nomura Securities. I have a question regarding page 16, so the revenue driver for fiscal 2027. Starting from quarter developer, so why 50% or more? So your share is rather high from the very beginning, but you are outperforming market significantly, and maybe you are very strong along with the exposure system, as you said in your presentation. But once again, I'd like to know the reason why you can see this kind of drastic growth for quarter developer, and what is the level of confidence? That's one thing. And on the same page, advanced packaging, FY2027, you said 120 billion yen increase in sales as expected. So what is the contributing factors to improve your sales out of 120 billion yen? If there are some major drivers, could you share your idea with us, please? So Kota developer, regarding Kota developer, let me explain. This is Kawaii. As you said, in principle, EUV-related demand and EUV multi-patterning. And for all exposure systems. have quarter developer ranging from high end to the general purpose quarter developer quarter developer essential for lithography process so we have incorporate all those needs or demands so the investment for device scaling and investment for capacity enhancement everything will help us to increase our sales so this area is growing very rapidly and 50% or more year-over-year growth. As for advanced packaging, Mr. Yatsuda will give you the answer. So let me explain advanced packaging. This is Yatsuda advanced packaging. So the advanced logic and HBM, those two are the drivers. We are receiving very strong inquiries in those two areas. Just like the front end category, the quarter developer, etching and cleaning. These areas, we receive the very strong inquiries for the advanced packaging. For quarter developer, not only resist, but also other coating films exist and receive many orders. And laser tool, welfare bonder, and HBM, temporary bonder and debonder. We receive quite a few inquiries in those areas. These are the major drivers for advanced packaging, and we expect a huge growth of our sales. Thank you very much. One follow-up question for bonder. So how much sales do you expect for bonders, please, if you have any figures for that? As for bonder, we don't have a quantitative value we can disclose, but just for information, in last fiscal year, total sales is about 30 billion yen. We can expect the huge increase. As I said three months ago, From this year onwards to 2030, five years to come, so about 500 billion yen sales on the laser tool, bonder to bonder, the bondings related to that, we are expecting 500 billion yen cumulatively. That means about 100 billion for each year. So this year or next year, we can exceed that level. Thank you very much for your explanation. I understand. It's very clear. Thank you very much, Mr. Yoshioka, for your question. Next question is from Mr. Nakano Myo of Jefferies Securities. Thank you. I am Nakano Myo from Jefferies, Japan. Can you hear me? Yes, I can hear you. Thank you very much. Just for confirmation, You said first half of this fiscal year. You just gave us the outlook for the first half, but you didn't disclose your outlook for the second half of this year. That means second half of this fiscal year, you cannot come up with clear figures, especially the figure for second half might change depending on the movement of the leading customers, and you also take account of the situation in Middle East. So based on your inquiries, you said the sales in second half is stronger than the first half of this year. Is that correct understanding? Right. So we do receive inquiries, very strong inquiries. And for second half of this fiscal year, actually our inquiry is increasing very rapidly to fill our shipment for second half of this year. However, we think about the yield enhancement of customer and also they have very limited clean room space and lack of the labor force. And there are also geopolitical factors or macroeconomy trends So in the future, we need to think about energy supply, cash flow. When the CapEx will be growing furthermore, we need to consider various factors, not only for this fiscal year, but we need to continuously watch the situation under those business environment. We try to come up with high confidence figure. And there are many in factors outside of a market and the actually semiconductors importance increasing so semiconductor market is affected by the outside of the market itself so that's the reason why we are going to disclose the focus within six months to go that is more accurate and realistic actually inquiries are very strong right now so from this year and next year the range of the market size 150 to 170 billion dollars Thank you very much. I have one follow-up question for the first half of this fiscal year. So the shipment increased by 40%, therefore you will outperform the WFE market. Maybe same for the second half of this year, fiscal year as well. But once again, this fiscal year, are you going to outperform the WFE market growth? And what are the factors to help you to do that? So we are focusing on our color competence, the cutting edge area. So AI server, related high-end area devices, we can see the growing trend. That's the reason why we can have the high level of revenue better than the average. Thank you very much. Yes. Thank you very much. Mr. Nakano-myo, thank you very much for your question. Next question is from Mr. Phan from Florida Securities. Question. Major foundries like TSMC have announced silicon photonics service for customers. How do you see this market opportunity and what product and POR does Cal have for silicon photonics related processes? The second question, field solution review by 16.3% in fiscal 2026, what were the main drivers? And in fiscal 2027, will field solution growth accelerate further in line with new equipment growth, guided at plus 41% in first half of the fiscal year? The first question is regarding silicon photonics, the Tokyo Electron's POR and product portfolio. When it comes to the silicon photonics in our company, the flat panel related applications, we do have the product using glass substrate, the etching for flat panel. So those technologies that we have, And also, CMOS image center, we developed the technologies. Maybe we can use those technologies as well for silicon photonics applications. About the fuel solution, 16% growth. Actually, utilization rate of the customer service has been increasing. Therefore, the parts revenue is increasing, and also support revenue is growing as well. Along with the demand increase for semiconductor, utilization rate of customer service is increasing, resulting in the growth of fuel solution sales. Thank you very much. Thank you very much for your question. So next question is from Mr. Yamamoto of Mizuho Securities. Are you ready? Mr. Yamamoto from Mizuho Securities. About your pricing strategy, may I ask some questions? So by and large, you are working hard by buying equipment. So maybe quota developer should be the easy area for you to improve or increase pricing. So now 50% or more growth is expected in this fiscal year for quota developer. When it comes to the amount, maybe... 50% increase. However, I think those revenue are recorded in second half of this year. Have you increased your price by about 10%? So you said earlier more than 50% within two years to come. So maybe you are now preparing for the price increase for the new orders to come. So 50% increase for quarter developed, and you said you are going to exceed the 50% of the gross profit margin within two years to come. Does that mean you are going to raise price of the quarter developer? So for all products, very similarly, The fixed costs are increasing throughout the product range, therefore we must be fair. We try to maintain fairness and we should have a good consensus with our customers. And we are going to raise price when it's necessary. So we don't pick up any particular products for increasing price. That's not our strategy. This is the price increase along with the soaring cost. And also, if we can contribute to the customer's productivity, we can provide high value, then we can increase the price for those products. And depending on the timing of the machine model, Maybe not only quota developer, etcher and film deposition system as well as cleaning system. We are taking very similar approach for different products. So 5% percentage increase for the gross profit margin. So that's because of cost increase. Then in the past, you didn't exceed 50% for gross profit margin. So you are now passing the cost increase to the prices, but it's so difficult for you to increase gross profit margin by 5 percentage point. So maybe productivity enhancement when you... add more value to their product. So that is the major driver or pricing for new product. Is that correct understanding? Yes, we need to keep good balance among those three factors. Productivity enhancement, contribution to the yield enhancement by providing high value added product, new product, surcharge and price increase. Thank you very much. That's all from me. Thank you very much. Mr. Yamamoto for your question. Second question from Mr. Shimamoto of Okasan Securities. Mr. Shimamoto. I am Shimamoto from Okasan Securities. So first off of this fiscal year, what is your plan for sales? Actually, your sales growth rate is rather high. So what is the driver? Are there any special driver to increase your sales in the first half of the year? Some deferred sales recognition or some orders increased? Whose delivery is pulled forward? Are there such special factors in this first half of this year? There are no special factors, just the AI servers. Almost every week, our customers ask us to pull forward the delivery date. So there is a kind of escalation having positive impact of our business and we are taking appropriate action to meet customer needs. So there are no such special factors. Rather, instead, rather than first half of this year, customer want more products in the second half of this fiscal year. So current trend of the demand will support us to increase ourselves. One more question. So next year, for next year, so this kind of growth rate, do you think this level of growth rate continue in next year? How much expectation do you have? $150 to $170 billion is this WFP market size. So this is the quantitative expression of our forecast. But there are more positive factors to improve the WFP market. AI implementation will be accelerated. So the race for... Race for investment to AI will be getting more and more severe and NAND. HBM is now having higher priority. However, NAND shortage might get more and more severe. Then the customer may further increase investment to NAND. Then physical AI R&D investment will be accelerating. So these are the positive factors to drive the market furthermore. And there must be the business opportunity and we try to capture those business opportunities properly. Thank you very much. Thank you very much. So now we receive the first question. So there are two more questions. So Mr. Shibano from Citigroup Global Market. I am Shibano from Citigroup Global Market, Japan. Thank you very much, earlier. You talked about the current management. midterm management plan but next fiscal year you are going to start the new midterm management plan so in March there are some changes in the leadership team because of the changes in officers so now you are going to prepare the next midterm management plan as far as Mr. Kawai is concerned what sort of focus area you have in your mind to be incorporated into the next midterm management plan which is the area which requires the higher enhancement. Thank you very much. Our vision is a company filled with dreams and vitality that contribute to technological innovation in semiconductors. So in the future, the growing area includes patterning, device scaling, and heterogeneous integration. So these are the major drivers to drive the technology innovation of semiconductors. The front-end process to contribute to the device sharing, that's where we are going to enhance our share. In addition, advanced packaging area, which require HEDL genius integration. In our company, bonder-divander, laser lift-off technology, and device pullovers. So these are the products of our company for advanced packaging. That's where we want to address the market properly. And some must be improved rather more. In that sense, film deposition application need to be increased. That's another area we need to work on. So current product lineup, we need to enhance share. Now HR market is rather big and we must improve our share in HR market. In addition, advanced packaging area as well as served available market should be expanded. This is how we can enhance the offline along with the growing WFE market. And we are going to launch high value added products. So this is how we try to take actions. And in principle, this ongoing mid-term management plan, this is not our final goal. So through aggressive business and proactive management, we are going to pursue low-cost profit margin. And our sales is growing furthermore, and we need to take or catch the business opportunities as much as possible. Thank you very much. Thank you very much, Mr. Shibano, for your question. The last question is from Queen Sun of Japan. So has your 2027 visibility become higher than previously? As you don't usually get WP estimation for a year out previously, is $170 billion the base case for 2027, is that kind of covered by customer commitment already? Rather than customer commitment, a bit too much to say so we have the very close communication path and we are hearing from our customers maybe this is the value what we can achieve on the other hand As you know, there are issues in this trade of homes. We must pay close attention to the development of the Middle East. As far as customer's plan is concerned, I think $170 billion level of W3 market is achievable when I look at current customer's investment plan. Thank you very much for your question. We have received some more questions, but it is time for us to close this conference. We will follow up the questions we couldn't answer today on our website in a few days. Lastly, we'd like to continuously improve our R&D activities based on your precious feedback, so we'd like to appreciate your kind cooperation in filling out the questionnaire survey before you exit WebEx. Thank you very much for taking time to join this conference despite your busy schedule today. Thank you very much.