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Junko Oike: Thank you very much for joining Advantest Corporation's Financial Briefing for Fiscal 2024 despite your busy schedule. I'd like to introduce attendees on our side today; Mr. Douglas Lefever, Representative Director, Senior Executive Officer and Group CEO; Mr. Tsukui, Representative Director, Senior Executive Officer, President and Group COO; Mr. Nakahara, Senior Executive Officer, CCRO and Executive Vice President of Sales Group; Ms. Takada, commencing in April, Ms. Takada joined Advantest as Senior Executive Officer and CFO. And I am Oike of IR Department, Corporate Strategy Group, serving as a moderator of today's session. In this financial briefing, Mr. Lefever will first report the financial summary. After that, Ms. Takada will report financial results for fiscal 2024. And then Mr. Lefever will present the third midterm management plan progress and fiscal 2025 outlook before entertaining questions from the audience. We plan to close this session at 5:30 p.m. Japan time. In today's financial briefing, we will use English-Japanese simultaneous interpretation. [Operator Instructions] Today's presentation materials are posted on TDNet and our website. The audience joining us through telephone line is kindly requested to download the materials. Before we begin, we'd like to remind you that today's briefing contains forward-looking statements, all of which are subject to risks and uncertainties that may cause our actual results to be different from those in such forward-looking statements. Now firstly, Mr. Lefever will present a brief summary, including fiscal '24 results and fiscal '25 outlook. Doug, please go ahead.
Douglas Lefever: Hello, everyone. I'm happy to welcome you all to our call. Let me start by providing an overview of today's presentation. Our FY 2024 sales, operating income and net income all posted record highs on a full year basis, really great performance. Tester demand for AI-related high-performance semiconductors continued to perform strongly throughout the fiscal year due to increasing complexity of semiconductors. In order to meet such strong demand, we executed timely procurement, enhanced supply capabilities which were achieved through long-term agreements and diversification of our supply chain for core parts. These are the main factors that contributed to our very strong results. We expect high level of tester demand to continue in FY 2025 driven by AI-related SoC semiconductors. And at this time, we do not see any major direct impact from tariffs. We are actively monitoring developments which could potentially weigh on our business outlook for FY '25. Now I will hand over to our new CFO, Hisako Takada, who joined Advantest on April 1. Takada-san has an outstanding track record of achievements in her career in investment banks and operating companies. We are delighted to welcome her to our company. Mihashi-san did a great, great job and will now be able to focus on his role as Chief Strategy Officer. Takada-san, please go ahead.
Hisako Takada: Thank you for the introduction. I'm Hisako Takada. It is my pleasure to be here. In FY 2024, amid strong tester investments from customers for AI-related applications, we have been striving to enhance our procurement of materials and product supply capabilities. The depreciation of the yen against U.S. dollar also served as a tailwind, resulting in record-high sales. In terms of profitability, in addition to the increase in sales, improvement in the product mix has led to record-high operating profit and net profit. Full year sales exceeded the guidance issued in January 2025 by approximately JPY40 billion, mainly due to greater-than-expected delivery of products to customers, particularly SoC testers. Core operating income that excludes one-off items was JPY249.7 billion and the core operating income margin was 32%, both of which significantly exceeded our guidance. When including the onetime items such as an impairment loss, our operating margin and net profit did fall below guidance. But with these write-downs, the company goes into FY '25 with a very clean balance sheet. Also noteworthy is the effective tax rate which rose to approximately 28%, higher than expected due to impairment losses which are not deductible for tax purposes. Combining our year-end dividend forecast of JPY20 and the interim dividend of JPY19 already paid out, our annual dividend forecast is JPY39. This slide shows our annual sales trend comparison by segment and by region. By business segment, HPC/AI-related applications drove the SoC testers. With regards to memory testers, sales grew for high-performance DRAM, particularly HBM. On the other hand, demand for semiconductors for applications other than AI has remained soft throughout the fiscal year. By region, there was a notable growth in sales to Taiwan. This is mainly due to strengthened quality assurance requirements for high-end SoC semiconductors from several U.S. fabless companies, resulting in increased sales to the related foundries and OSATs. For high-performance DRAM applications, sales to Korea increased. Sales to China accounted for approximately 22% of total sales. Next, I will give a summary of the quarterly results. Our fourth quarter results are shown on this slide. Details of performance will be explained in the subsequent slides. Our fourth quarter sales results reached a record high on a quarterly basis. I will now explain the breakdown of each segment. I'll start with Semiconductor and Test -- Component Test Systems. Please take a look at the right-hand side of this page. SoC testers sales were JPY148.8 billion, an increase of JPY35.8 billion Q-on-Q. Amidst the continuing robust demand for HPC/AI-related tester demand, we achieved significantly higher sales compared to the previous quarter. Memory tester sales were JPY35.1 billion, a decrease of JPY19.5 billion due to the progress in product delivery in the previous quarter. Next, Mechatronics Systems. Sales of device interface products decreased in tandem with lower sales of memory testers. Lastly, Services, Support and Others. In addition to the stable booking of service sales, system level test sales for high-end SoC applications increased. This slide shows Q4 sales by ship to region. For Taiwan, sales increased significantly quarter-on-quarter primarily driven by SoC testers. For South Korea, sales of memory testers and related device interfaces as well as SoC testers declined. Next, I will explain quarterly sales, gross profit and operating income. Gross margin increased by approximately 5% quarter-on-quarter as a result of product mix improvement. SG&A, including the total of other income and expenses, has increased by JPY25.6 billion quarter-on-quarter and the operating income margin was 27.6%. This is mainly due to the booking of impairment loss of approximately JPY24.1 billion [ph] for a portion of goodwill and intangible assets of other expenses. This impairment loss is related to Essai's socket business which we acquired in FY 2019. Softness in sales for a major customer and delays in expanding sales to new customers were taken into consideration for the booking of this impairment loss. With this impairment loss, the value of goodwill and intangible assets related to the acquisition of Essai have been reduced to 0. Next, R&D expenses and cash flow. In the -- you can see the R&D, capital expenditure and depreciation on this slide. We executed investment and development initiatives to grow our business further. On the right-hand side, you can see our cash flow status. In the fourth quarter, there were cash outflows due to our investment in Technoprobe, FormFactor and Micronics Japan. On the other hand, amidst high levels of sales and profits, operating cash flow and free cash flow increased significantly. Operating cash flow and free cash flow for FY '24 reached a record high, as did sales and profits. Finally, balance sheet for the period ended March 31, 2025. Cash and cash equivalents were JPY262.5 billion and inventory assets were JPY209.7 billion as of the end of March. We will continue to work on cash allocation and balance sheet management while optimally balancing growth investment and capital efficiency. This concludes my presentation. Now, I will hand over to Doug.
Douglas Lefever: Thank you, Takada-san. Now let me give you an update of our midterm plan. In the third midterm management plan, we have defined and executed 4 strategies to expand the value we provide to stakeholders over the mid- to long term while maintaining the strong position we have built. We believe that in the first year, we have a good start, both in terms of financial performance and in the execution of these strategies. In the next 2 slides, you can see the summary of our first year's progress. First, in our core market, key growth opportunities arise from increasing production volumes and advancing performance of semiconductors and growing semiconductor complexity. In FY 2024, we succeeded in preserving a majority share in the semiconductor tester market by expanding products with strong customer appeal that address changes in technology in our test trends as well as through key customer and regional strategies. I will give market share details later in the presentation. In FY 2024, we launched several new key test solutions such as a new power supply for HPC applications and several new memory test systems to address next-generation memory devices. We are also aggressively implementing R&D investment and marketing initiatives, addressing the future developments in semiconductor technology. With regard to our strategy of expanding adjacently and developing new businesses, as shown on Slide -- Page 15, we were able to make progress in our automation of test initiatives. With the launch of SiConic, a groundbreaking automated silicon validation solution, we will continue to expand our business opportunities. Furthermore, we have established successful partnerships with 3 probe card manufacturers necessary to develop a high-performance test solution. In order to strengthen our test engineering service capability, we acquired Salland Engineering, a company based in the Netherlands. Continuing on, in FY 2024, we have reinforced our capabilities to respond to robust test demand by enhancing our supply chain management. This has resulted in our record-high sales booking. In order to drive our operational excellence initiatives, we are also working towards proactive execution through IT investments and improving employee engagement to strengthen our human capital. Lastly, let me touch on the enhancement of our sustainability initiatives. Advantest's long-term management goal is to expand the value we provide to stakeholders in a well-balanced and multifaceted manner. In FY 2024, we renewed our basic policy and action plan on sustainability and establish new midterm KPIs. This page is from our midterm management plan presentation and illustrates Advantest's holistic view of the back-end test flow. Due to increasing device complexity and the associated test challenges, we continue to add the necessary pieces to drive automation of test through the distributed back-end test flow while maintaining the ATE test cells as our core. Again, this is something we showed in our midterm management plan last year and remains a focus for the company. Now for some remarks on our midterm plan financial progress. As this slide shows, results for the first year of our third midterm plan exceeded target figures for all management metrics which are set as 3-year averages for the duration of the management plan. As the increasing test content for AI devices has significantly boosted the demand for testing, we have gradually enhanced our product supply capabilities, resulting in a substantial increase in sales of associated products. Although the underlying trend towards increasing semiconductor complexity remains intact, we do perceive that external uncertainties surrounding our business environment are growing and the situation remains unpredictable. We plan on updating our MTP 3 financial targets and model in October which would be halfway through the midterm plan. Especially with the current geopolitical environment and concentration in HPC, we felt it best to wait another 6 months to get more clarity for the second half of our 3-year plan. Next, let's take a look at our ATE market share. As for the calendar year 2024, the semiconductor test market size is estimated to reach approximately US$4.1 billion for SoC testers and US$1.9 billion for memory testers, totaling around US$6 billion. This exceeds the recent market size peak of approximately US$5.6 million [ph] recorded in 2021. For calendar year 2024, we estimate that the target market size grew by about 36% year-over-year. While semiconductors such as automotive and industrial equipment remained soft, demand for AI-related semiconductors, including HPC devices for data centers and high-performance DRAM, have driven the growth in semiconductor market. The test demand for AI-related high-performance semiconductors also contributed to the expanding test market significantly. Amidst the market expansion, Advantest's overall market share estimate is approximately 58%. In the SoC market, we estimate that our market share was down by about 3 percentage points. While we continue to maintain strong share in the high-end SoC market which is our main focus, the growing presence of local suppliers, especially from China, in the low-end market has weighed on our overall share. On the other hand, in the memory test market, we have secured a market share exceeding 60%, maintaining our competitive edge with industry-leading customers in the rapidly growing high-performance semiconductor sector. As we look into 2025, the semiconductor market is expected to continue to be driven mainly by AI-related demand. In addition to the growth of semiconductor unit volume, increasing device complexity, including the adoption of advanced packaging, is driving increased test content. On the other hand, the business environment is increasingly uncertain due to ongoing geopolitical risks and the risk of rapid exchange rate fluctuations. For calendar 2025, under such a business environment, we will maintain our January outlook that the market size for the semiconductor market will expand for 2 consecutive years. While recovery of tester demand for automotive and industrial equipment is expected to take more time, we do expect AI-related tester demand to remain at a high level. So now let me give you our FY '25 forecast. As shown on this slide, our FY '25 forecast is as follows: sales of JPY755 billion, operating income of JPY242 billion, income before tax of JPY240 billion, net income of JPY179 billion and a basic earnings per share of JPY243.96. The exchange rate assumption are JPY140 for the U.S. dollar and JPY155 to the euro. The latest forecast for the impact of exchange rate fluctuations on our operating profit for FY '25 is an increase of JPY1.9 billion for every JPY1 depreciation against the U.S. dollar and a decrease of JPY0.3 million against the euro. On a constant currency basis, our FY 2025 sales are estimated to grow slightly year-over-year. We expect high level of demand to be continued in FY '25 driven by AI-related SoC semiconductors. The gross profit for -- the gross profit margin for the full year is expected to be around 58%, a high level as in FY 2024 and we expect solid EPS growth. Next, I will explain the details of the sales forecast but first, I wanted to share this slide. It shows the trend in our annual sales alongside our core market size which now not only includes existing ATE market but also other markets such as SLT, consumables and data infrastructure which we have expanded into. In order to present comparable sales growth, we have applied an exchange rate of JPY140 per dollar to convert annual sales from FY '21 through FY '24. So stripping the exchange rate impact, you can see that FY '25 sales are expected to increase compared to the previous fiscal year. Meanwhile, our core market is also expected to grow further driven by rising demand as a result of the increasing complexity of semiconductors, among other factors. In other words, we remain at a growth trajectory. Now let's look at our different business segments, starting with Semiconductor and Component Test Systems. SoC sales are expected to be comparable to the last fiscal year, sustaining a high level. While recovery in tester demand for automotive, industrial equipment is expected to take more time, AI-related tester demand remains elevated against a background of increasing complexity and growing production volume of semiconductors. Also, FY 2025 is a major HPC transition year for traditional players and also for ASIC and cloud service providers as they are bringing up several new devices that will translate to sales in 2026. On the memory side, our FY 2025 memory sales are expected to remain elevated, particularly for AI-related high-performance DRAM. We also expect demand for the next-generation memory to come along. Next, in our Mechatronics System sales, similar to testers, we anticipate continued high demand, particularly centered around device interfacing products despite limited visibility to device transitions. In our last segment of Service, Support and Others, we expect to generate steady sales growth. For our support services, firm demand is likely due to the steady growth of our installed base. In the SLT business, sales are expected to be flat year-over-year, although smartphone demands remain uncertain. Here in SLT, we are continuing our efforts to expand mid- to long-term sales growth. In areas such as HPC, the increasing complexity of semiconductors and high reliability requirements are driving up demand for SLT, burn-in and high-quality device interfaces. Next, I want to mention about production capacity. Over the last 2 years, we have reached the point where we can fully meet all customer demand through measures such as timely materials procurement and capacity expansion. As we look ahead, in anticipation for a continued rise in complexity and the resulting increase in demand over the mid- to long term, we will work on expanding our production capacity even further. Through the transformation of our supply chain capabilities, we ensure the growth and reliance of our business while simultaneously supporting the timely launch of high-performance semiconductors, thereby providing great value to our stakeholders in the medium to long term. Lastly, I'd like to address our shareholder returns. Our shareholder return policy aims for a cumulative total return ratio of 50% or more over the 3 years of the third midterm management plan. Having conducted a share repurchase last fiscal year, we will again plan to enhance shareholder returns and capital efficiency through a repurchase program of up to JPY70 billion. Under this program, the total number of shares to be repurchased will be up to 19 million over a 5-month period from May to September 2025. Please note that the EPS forecast for FY 2025 shown on Page 19 on this slide does not reflect the impact of the share repurchase program. Okay. So this concludes my presentation. Thank you for your attention.
A - Junko Oike: Morgan Stanley MUFG Securities, Wadaki-san, please go ahead.
Tetsuya Wadaki: Well, congratulations on a very strong performance. In March and April, I've spoken with investors about questions and discussions. I've spoken with more than 100 investors about your company and it seems that the greatest interest from investors about your company has to do with high-end servers yield issue which is causing "special demand." And investors are afraid that this "special demand" may level off from July onward. And so if possible, I'd like to know if the yield-related special demand for high-end servers, would that come off? Are you concerned? Can you quantify, give any quantitative suggestion? Maybe you could give the split between the first half and second half revenue split? And if revenue is not going to go down, maybe you can give some supporting evidence for how demand can be supported despite the concerns about the special demand.
Unidentified Company Representative: Wadaki-san, thank you for your questions. So I believe that there were 2 parts to your question, one is special demand, whether your guidance includes the special demand. And you would also secondly like to know the split between the first half and second half sales.
Douglas Lefever: Yes. Thank you, Wadaki-san. Thank you for the question. This is Doug. So first of all, certainly, there's always going to be certain devices that go through different yield profiles and that will definitely affect the amount of test capacity needed. But generally speaking, there's no anomalies that we see currently right now that would affect the overall demand for test capacity. Most of the demand that we see is a continuous demand leading from the AI HPC devices that are either currently at a peak ramp or transitioning to the next-generation devices. And that's both on the traditional GPU players as well as the upcoming custom ASIC and CSP players. So generally, we are not seeing anything that's a onetime yield effect. In fact, we're seeing more complexity leading to more test content either in test times or additional insertions. As far as the first half versus the second half guidance, usually, we don't have as much visibility into the second half just because most of the visibility we have is 6 months out. But we do see a stronger first half right now as we stand at this point in the year.
Tetsuya Wadaki: So it's not that you are seeing -- so you're going to see a little bit of a decline from the -- in the second half compared to the first half. Can you quantify that level?
Unidentified Company Representative: What kind of decline -- Nakahara will take that question.
Makoto Nakahara: So as Doug just explained, there might be -- in comparison, first and half, the first half is going to be a little bit higher and it won't be a huge gap. And with regards to the gap, as Doug just explained, for the second half, there is -- we don't have full visibility. There might be some uncertainties. So we can't have a full read through for the second half. But when it comes to generation upgrades or device transitions, I am informed of strong demand. It's just that there is some uncertainty which is why we expect a bit of a moderation in the second half but we don't see a big gap.
Douglas Lefever: Yes. One more thing to add, Wadaki-san, a lot of it is visibility driven. And there is a chance that our customers want to put test capacity in towards the latter part of our fiscal year in preparation for next-generation device ramp. So that's an area where things can fluctuate either from our fourth quarter into the first quarter of 2026. It just depends on the timing of the ramp.
Junko Oike: Next question, please, Goldman Sachs, Nakamura-san, please go ahead.
Shuhei Nakamura: My question -- I just wanted to double-click on your guidance for fiscal March '26. It looks like even on a constant currency basis, your revenue is only slightly up. But in terms of your calendar '25 TAM outlook, you are still expecting a healthy growth. So I just wanted to understand what kind of assumption you have made into your revenue guidance for March '26. Is it mainly concern on perhaps lower market share or lower test times? Or you mentioned increasingly unvisible [ph] sort of environment for the macro environment. So are you being conservative, especially into the second half of the fiscal year?
Douglas Lefever: Yes. Thank you, Nakamura-san. Yes, I think the assumptions are that even at the midpoint, if you look at our SoC numbers and the account for foreign exchange changes, we do intend to pick up some market share. On the memory side, the expectation is to remain relatively flat. As to the point about conservatism, I think everybody right now, including us, are kind of watching the macro economy and trying to judge what effects it may have down the road. And so we are taking a cautious approach, particularly beyond what we can see in the first half.
Shuhei Nakamura: That's very clear. A quick follow-up. Is your fiscal March '26 guidance based on the midpoint of the calendar '25 tester TAM? And also, you mentioned the visibility is very low. But are you seeing any changes in the customer behavior after the announcement of the U.S. tariffs and the increasing macro uncertainty?
Douglas Lefever: Yes. The guidance is essentially at that midpoint. So I think the number should -- you can kind of back calculate from our numbers in the slides and the midpoint. As to customer behavior right now, no, we're not really seeing any behavioral changes from our large customers with respect to tariff and trade concerns. And we've listened closely to other earnings calls recently from our customers and peers. And I think that the message has been consistently sent from those companies. And we see the same thing, no real effect from tariffs as of yet. Especially directly, there's very, very small levels. The concern would be if there's any kind of macro level effects indirectly that would come through global -- deglobal recession. But even there, the HPC/AI area seems to be not fully immune but somewhat protected from some of these geopolitical systems.
Junko Oike: Thank you, Nakamura-san. Next, CLSA, Yoshida-san, please go ahead.
Yu Yoshida: So it sounds like you're communicating with your customers very closely. So could you please share your insights on the SoC and memory tester market size towards calendar 2026, if you have, as well as the supplementary information such as the test intensity outlook and opportunities in new test solutions such as die-level testing?
Douglas Lefever: Thank you, Yoshida-san. I'll try -- we don't guide on '26. The only thing I'll say is that we're optimistic about '26 for a couple of reasons. One is there's going to be next-generation HPC devices from traditional players. In addition to that, the cloud service providers and their custom ASIC partners are releasing lots of devices during this year that we expect to ramp in '26. And so I think that's going to be an additive piece to the overall TAM. And then the associated DRAM, particularly in HBM, that corresponds to those devices should give some kind of an uplift. So I can't give any numbers except to say that we're fairly optimistic about '26 at this point. Test intensity is a difficult one. I've been trying to get people not to talk about test intensity so much more. Test dollars, just because the ASPs of the semiconductors, can have sharp upticks and that can throw the test intensity percentages out of whack sometimes. But from a test content perspective, we still see a really nice growth trajectory in that respect. Additional product lines like our die-level prober, we think, are going to be also additive to our overall business, both from an overall stand-alone standpoint but also more importantly, from the strategic ability to address the test challenges that are going to be required for advanced 3D packaging. So those things go together along with our tester and our service environment and an important part of the company's strategy.
Yu Yoshida: Just for a brief clarification, you said that 2026 is quite optimistic. Is that meaning that year can be another growth year as a total market and also for your company as well?
Douglas Lefever: We hope so. For sure, we hope so. I should say that even on the '25 midpoint, there is really a lot of internal discussion around this which was -- we were -- without some of the macro effects going on right now in the world with tariffs especially, things -- with the test content increasing, we're trending us up towards the higher end of that TAM. But given the uncertainties that kind of offset that and so we felt more comfortable keeping the midpoint. So honestly, we felt like '25 is also a potential nice year but we don't know what the future holds with respect to the macro environment right now.
Junko Oike: Yoshida-san, thank you very much. Next, Macquarie, Damian Thong -- Damian, please go ahead.
Damian Thong: Maybe a follow-up on your engagement with customers. And you talked about your -- that you benefit from launch of new products from your customers. Can you maybe speak a little bit about the pipeline of especially ASIC products? Like can you characterize, for instance, how many more customers or how many more design starts would you be exposed to -- ASIC designs you'd be exposed to and how you see that trending in the next couple of years?
Douglas Lefever: Yes. Thank you, Damian. Junko-san told me to speak more slowly. So I'm sorry for everyone. So I'll go a little slower. I can't talk about individual company devices or releases. The only thing I can say is there's a very robust list of devices that are being brought out from our hyperscale customers either by themselves or with their custom ASIC partners. I will also say that the amount of custom ASIC providers has also expanded. So there's new players in that market as well. And as a company, we're very well positioned both at the hyperscale community as well as those existing custom ASIC and new players in the custom ASIC market.
Damian Thong: Could you -- would it be possible for you to say -- maybe to get your confidence as to whether you can increase your market share when those devices are launched? Obviously, your SoC tester market share is heavily anchored to, I think, a big GPU customer. But with the ASIC side, will your market share tend to go higher?
Douglas Lefever: Yes, we expect our market share to go higher as those devices come out. We're very well positioned with our 93000 platform at nearly all of those accounts.
Junko Oike: Damian, thank you. Next, UBS, Yasui-san, please go ahead.
Kenji Yasui: My question is overlapping the previous -- the question from Damian Thong. Once again, the custom ASIC, could you elaborate the growth rate for this year? You have like an assumption TAM for this year SoC tester market. GPU or custom ASIC which one contribute more to the growth this year? And if you can manage to describe like '26, '27 like long-term trajectory. It's tough to estimate but in terms of SoC tester which is going to be the higher driver for the SoC market? This is the first question.
Douglas Lefever: Okay. So for '25, I think that's an easy answer. That will be more of the traditional market for us. And as I said before, there's a lot of new devices in the custom ASIC world that are being brought out that we expect to ramp into 2026. As for the split between the "traditional" and the custom ASIC, we can't yet speculate. We do think the custom ASIC area is going to be very large for us. I think there's a lot of discussion around whether for the inferencing, if the traditional players will be displaced by the specific workloads of the custom ASIC. And we're under the assumption that with the growth that both are going to coexist. And we're very fortunate that we are well positioned, both in that traditional and that newcomer space. But I apologize, I can't speculate the split between traditional GPU and custom ASIC at this point. Maybe next year, I could give a better idea.
Kenji Yasui: But at least custom ASIC demand is going to grow this year, at least?
Douglas Lefever: Yes, a little bit this year but the larger ramps are most likely going to happen in 2026. And I can point you to just the companies in that custom ASIC who have cited the serviceable market for them. And you can kind of back calculate the level of test requirements that they'll need and it's fairly large when you run that calculation.
Kenji Yasui: And then the second question is really the GP margin. In the March quarter, 60% is very high. So is it sustainable if your demand for SoC tester is remaining at the level of like JPY148 billion to the JPY150 billion-ish level? Or is there any like a special item was included in the March quarter?
Douglas Lefever: It's a blend. I mean our SoC testers always have a higher gross margin. So that was a higher mix in the fourth quarter. We also had upgrades that we were able to install. And upgrades are always a higher profit than the full systems. And so there was some uplift from that. Sustaining 60% probably is going to be difficult and it will fluctuate quarter-by-quarter based on the product mix. I don't want to call that the high because we were always working on increasing our margins but we had some kind of like alignment of things that happened in the fourth quarter that really helped us on the gross profit side.
Junko Oike: Yasui-san, thank you. Next, BofA, Hirakawa-san, please go ahead.
Mikio Hirakawa: One question for the kind of near-term visibility. You mentioned that you have good visibility in the first half, March '26 and second half is not that much. But in the first half, do you see any skew in demand in SoC and memory testers either in the June quarter or September quarter. Or are you expecting the similar quarters in June quarter and September quarter? That is my question.
Douglas Lefever: Yes. I'll try to answer and then maybe I'll ask Mak to help me. But pretty much, the demand is consistent. And so it's a matter of planning out our production cycle with the long-term forecast that our customers give us. So we work closely with them to make sure we're managing our production capacity with their demand. And so that leads to less lumpiness because we're working together to keep that as a consistent volume. And so I think that's kind of at a high level. I don't know, Mak, maybe you had some...
Makoto Nakahara: As Doug just explained, in the first quarter and the second quarter, we expect an almost flattish trend, firstly, because in the first quarter, we already have a good level of bookings and a good pipeline. And given those statuses, we can see that it will be even or flat. And as for the second half, we don't have full clarity yet. In FY '24, we saw sequential increase quarter by -- quarter-on-quarter in the second -- in the fiscal '24. By Q4, we had good capacity in place and so we didn't struggle too much with shipment and delivery. So in the second -- first and second quarter, we expect a flattish trend.
Junko Oike: Hirakawa-san, thank you. Next, Jefferies, Nakanomyo-san, please go ahead.
Masahiro Nakanomyo: This is Nakanomyo from Jefferies. Can you hear me?
Unidentified Company Representative: Yes.
Masahiro Nakanomyo: My question is about PS5000. In the equity market, investors are talking about replacement demand for PS5000. And the investors think that, that has made good contributions to your earnings but maybe investors are concerned that it may peak out from now onwards. So as for incremental -- given the incremental complexity increase, is that going to be a constant trend and like once PS5000 diffuses in -- among customers, could it peak out? Is that what you -- is that a fair assumption? Because that's what many investors believe.
Unidentified Company Representative: Nakanomyo-san, let me just clarify your question. So with regards to PS5000 -- in 2024, we launched PS5000. And so you assume that PS5000 has already populated the market. Therefore, for the -- going forward, there will not be incremental deliveries or demands of PS5000. And so are you asking us that we expect a peak out as well?
Masahiro Nakanomyo: Even if PS5000 peaks out, will there be an increase in other modules? So how should we think -- how should I think about the overall demand?
Unidentified Company Representative: In the stock market, the market -- people understand that PS5000 is a standard module for the exascale of V93000. So if the PS5000 is already installed fully, whether this is peak out for the demand for PS5000, even the next-generation customer device is rolled out [ph].
Douglas Lefever: Just first to clarify, the PS5000 is our standard digital module that ships with all of our exascale platforms. So any new mid-level or high-level digital application requires us to ship PS5000. We always design our digital instruments and power supply instruments so that they have some longevity. And the PS5000 certainly has a long life because of the data rates and the vector memory within that instrument. So first of all, there's no need for there to be a technical inflection point in the near term that would create a new digital instrument. But most of our sales are forecasted into the future to be provided by the entire systems which would be digital instruments, power supply, sometimes mixed-signal instruments or RF instruments. So we see it as a benefit to have a common uniform digital instrument with a long lifetime because it lends itself to many different applications. Hopefully, that helps. Maybe Mak, try...
Makoto Nakahara: Well, let me add a comment or two. In 2024, well, the pace of ramp-up was really fast when it comes to launching exascale and PS5000. Well, our customers back then, like foundries and OSATs, they were suffering from low utilization rate. So there were many new device launches and so we booked sales. But now at customer sites, our systems utilization rate is almost full. And as new devices launched at customer sites which is what we expect, we are not really concerned about slowdown of PS5000. Rather, we expect that high level of utilization is going to encourage them to place new orders.
Masahiro Nakanomyo: Do you think that in 2026, this trend will still continue? There won't be much change?
Makoto Nakahara: Well, when it comes to logic devices, if I look at new development and how complexity will continue, I hope that will be the case. But then the question mark for us is external factors like economic impacts from macro. But when it comes to technology factors, there will be -- we'll have new modules as well. So we think this trend can be intact.
Junko Oike: Nakanomyo-san, thank you very much. We are almost close to the end of the hour, so we'll take one final question. Tokai Tokyo Intelligence Lab, Kamisaki-san, please go ahead.
Shouichirou Kamisaki: I'm Kamisaki from Tokyo Tokai Lab. My question has to do with market share. In '24, your market share was 59% and followed by 56% market share in the following year for SoC testers and you mentioned the reason is emergence of local suppliers. How is your market share in the high-end segment? For memory tester segment, will there be emergence of local suppliers as well?
Unidentified Company Representative: Question towards first one is the risk in -- a risk in high-performance computing area in SoC or competitive environment. The second question is in memory tester market segment competition, are there any risk on the local supplier.
Unidentified Company Representative: First, with regards to logic, as Doug mentioned, it was down by 3 percentage points compared to '23. Well, for us, the core market is high-end market. And for that segment of the market, we believe we have gained market share. But as you may be aware, in China -- made-in-China ATE is emerging. And the local Chinese suppliers are now in the -- targeting the low-end segment and Chinese customers are now tending to buy local Chinese testers. And so I believe that there is some business that's going to the local players but that's not a core market for us. Again, our target is the segment of the market that benefits from rising complexity. With regards to memory testers, Korea and China, there are local players, maybe just of single-digit market share each. But similarly, we don't think that a large part of market share is going to them because customers are demanding high-end testers because of the market shifting to a more high-end segment overall.
Junko Oike: Kamisaki-san, thank you very much. We have other questions in the queue but we would like to conclude the session. Thank you very much for joining Advantest FY '24 financial briefing despite your busy schedule. Thank you very much.