Advantest Corporation (6857.T) Q2 2026 Earnings Call

0:00 Thank you very much for joining Adventist Corporation's financial briefing despite your busy schedule. 本日の弊社出席者をご紹介いたします。 I would like to introduce today's speakers. ご覧のスライドの左側から、グループCEOのダグラス・ラフィーバ、グループCEOの津久井光一、CCROのサンジーブ・モーハン、そしてCFOの高田久子、以上の4名です。 From the left side of the slide on the screen, Mr. Douglas Lefever, Group CEO, Mr. Koichi Tsukui, Group COO, Mr. Sanjeev Mohan, CCRO, and Ms. Hisako Takada, CFO. I'm Senba from the IR department, serving as the moderator of today's session. I 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.

1:18 Please note that today's financial briefing is being recorded for the purpose of accurate record keeping and distribution on our corporate websites. Now, Douglas will present the summary. Doug, please go ahead.

1:46 Thank you, Simba-san. Hi everybody, this is Doug. Thank you everyone for joining us today. Let me begin with a brief summary. The AI-related semiconductor market is experiencing a period of high growth that can now be described as a mega-cycle, surpassing what is generally considered a super-cycle. AI 関連半導体市場は、スーパーサイクルを超えるメガサイクルとも呼べる高成長局面にあり、GPUに加え、カスタムASIC、CPU、高性能メモリへ需要が拡大しています。 Structural growth in the tester market is driven by increasing semiconductor unit volumes along with increasing test content and test insertion with each new generation.

2:47 In our second quarter of our fiscal 2026, we delivered record quarterly sales and profits. The Q2 of FY2026 has updated the past best with sales and profits.

3:12 Now, let me first briefly talk about the tester market.

3:15 For 2026, we are maintaining the tester market size forecast ranges we announced in July.

3:32 We expect the SOC tester market to reach approximately 11.5 billion US dollars, near the upper end of our forecast range, driven by increasing volumes and growing complexity of AI-related high-performance semiconductors.

3:46 SOC tester市場はAI向け高性能半導体の複雑化、水量増加を背景に予測レンジ上限に近い115億米ドル程度を見込みます。

3:59 We expect the memory market to be around the midpoint of our forecast range of 2.5 to 3 billion US dollars, as we expect solid investment to continue across a broad range of memory applications.

4:10 The increasing complexity of high-performance semiconductors continues to drive test demand.

4:26 and we expect favorable conditions for the tester market to continue into 2027. Barring geopolitical risk and macroeconomic factors, we expect supply constraints in semiconductors and advanced packaging to continue into 2027, with end-customer demand continuing to exceed supply.

4:43 Based on the increase in demand for tests due to the complexity of high-performance semiconductors, we believe that the test market will continue to have a favorable environment for CUI 2027. In light of the first half results and the outlook for the second half of the fiscal year, we are raising our full year fiscal year forecast.

5:25 The second half operating margin is expected to exceed 50%, about 3 percentage points above the July forecast. The FY26 operating margin forecast has also been raised to 51.9%. While factoring in the impact of higher component costs, particularly for memory semiconductors, stronger SOC tester sales and an improved product mix compared with the July forecast are expected to drive the increase in the operating margin.

5:51 Shimochi no eigyou riikiritsu wa zenkai yosou kara yaku san pointo joushou shi, gojyuppasento wo omaru mitoushi desu. To meet robust tester demand, we are further accelerating the expansion of our production capacity

6:35 We have already achieved an annual production capacity of more than 5,000 systems. Furthermore, we aim to reach our annual production capacity target of 10,000 systems well ahead of the original schedule.

6:47 SOC testers have already achieved production capacity of more than 5,000 units per year. In addition, we are aiming to achieve a large-scale production capacity of 10,000 units per year from our initial plan.

7:01 Memory testers are also accelerating the production ramp-up in line with the SOC testers. These efforts are supported by close collaboration with suppliers and a hybrid manufacturing model combining outsourced production and in-house production. By optimizing the combination of production capacity from our EMS partners and our advanced manufacturing technologies, we are enhancing flexibility in responding to demand while mitigating supply risks.

7:33 This is a hybrid production system that combines close collaboration with suppliers, external commissioning, and our own production. The production capacity of EMS partners, which are in charge of home manufacturing of electronic devices, and our own high-tech manufacturing technology are optimally combined to measure flexible response to demand and distribution of supply risks.

7:56 In addition, through cross-functional collaboration across the organization, we are further strengthening our supply capabilities while maintaining high-quality standards. Going forward, we will continue to enhance the resilience of our supply chain, enabling us to flexibly respond to fluctuations in demand and reliably meet robust demand. Coming up on November 12th, we'll host an IR fireside chat on our supply chain strategy. During the session, we will provide a more detailed discussion on our initiatives and efforts in this area. We look forward to welcoming your participation.

8:49 Next month, November 12th, we will hold an IR fireside chat on our supply chain strategy. We will introduce our efforts in more detail, so please join us.

9:04 Lastly, with respect to capital allocation, we will continue to prioritize growth investments while pursuing shareholder returns in line with our policy of achieving a cumulative total return ratio of 50% or more over the three-year period of our third midterm management plan.

9:21 And today, our board of directors has authorized an increase in interim dividend and a new share repurchase program. That concludes my summary.