Lasertec : 2017.08.16 InfoPresident’s message updated

I would like to express my sincere gratitude and best wishes to every shareholder.

A favorable market environment prevailed in the fiscal year ended June 2017, and Lasertec achieved all-time records in both sales and profits.

In the semiconductor industry, which is the primary market of our products, memory manufacturers made investment aggressively for the production of 3D-NAND while major foundries continued making large capital expenditures for the 10nm technology node and beyond to enable the further miniaturization of semiconductor devices amid the spread of Internet of Things (IoT), which connects various devices through the Internet, and artificial intelligence (AI) as well as due to rising demand for data servers.

Under such circumstances, our success in capturing record-high orders for semiconductor photomask inspection systems mainly from major foundries contributed to the good financial result.

In the fiscal year ended June 30, 2017, we recorded 17,369 million yen in sales (up 13.6% from the previous fiscal year), an operating profit of 4,960 million yen (up 12.0%), an ordinary profit of 4,989 million yen (up 9.0%) and a 3,554 million yen in net profit attributable to owners of parent (up 10.1%).

In the past fiscal year, we took on the reinforcement of core business and the expansion of new business. As a result, we captured 25,410 million yen in orders, and our order backlog at the end of the fiscal year reached 18,253 million yen. As we started this fiscal year with this backlog brought forward, we are on a good pace to achieve the goal of Phase 2.

In the area of semiconductor mask inspection system, we launched X810EX, a model that meets the requirement of the advanced technology nodes of 10nm through 7nm, in the first half of the fiscal year and made a great success in capturing numerous orders and recording a large number of sales and profits. We expect this and other models of semiconductor mask inspection system to be a strong driver of performance in this fiscal year as well.

In the area of flat panel display, we saw an upturn in demand for new panels as the progress was being made with inventory adjustment due to discontinued production of liquid crystal display (LCD) panels. In this fiscal year, we expect investment for shifting production from LCD to organic LED to continue. We also expect investment in production facilities of large-sized panels known as G10.5 to start in earnest. We will not miss this golden opportunity of capital expenditure growth and try to capture new orders and increase sales for our FPD photomask inspection system, CLIOS.

In the area of semiconductor wafer inspection system, which constitutes our new business, SICA88, the latest model of SiC wafer inspection & review system launched during the previous fiscal year, received good reputation and captured a high market share. We also successfully promoted other products in this area to new customers. Our effort to establish a foundation for new business is in steady progress.

In anticipation of the commercial application of extreme ultraviolet lithography (EUVL), we announced the launch of ABICS, a EUV mask blank inspection & review system that uses a light source of 13.5nm, which is the wavelength of exposure light for EUVL. We have already established a lineup of 3 products for EUVL applications - ABICS, MATRICS mask inspection system (EUV option), and BASIC EUV mask backside inspection & cleaning system. We are engaged in aggressive sales promotion of these products in time for the commercial application of EUVL, which is expected to start around 2019.

Time has come that various devices are connected through the Internet and that massive data from these devices and sensors are stored at data centers. As an advanced form of artificial intelligence known as Deep Learning (a type of machine learning) becomes widely used in the mainstream, massive data collection will become necessary for accurate learning experience. It entails the use of processors that are capable of high-speed processing of big data. For IoT, a great number of communication devices and sensors are used. At data centers where collected data are saved, a great number of memories and processors are used. All of these are produced with semiconductors or semiconductor technology.

Personal computers and smartphones have hitherto been the main applications of semiconductors, and we have seen growth in semiconductor usage in them. With the introduction of new applications such as IoT and AI, however, we expect an even more accelerated pace of growth in semiconductor usage in the years to come. Besides, the introduction of electric vehicles (EV) and self-driving technology will dramatically increase the number of sensors used onboard. Because of this trend, we believe that the semiconductor industry will continue to grow in the long run.

China is about to become one of the major production centers for this fast-growing semiconductor industry. According to the July 2017 forecast of SEMI (an international electronics industry organization with membership consisting mainly of the suppliers of semiconductor production equipment and materials), China will become the second largest market of semiconductor production equipment (which includes inspection and metrology equipment) in the world after Korea in 2018. Backed by the Chinese government, this market is expected to grow rapidly. In this background, we established a subsidiary in Shanghai, China, in June 2017 to further strengthen our support capabilities there. We are planning to expand on-site support bases in China from now on.