Screen Holdings Co Ltd

TSE:7735

Earnings Call Transcript

[Unknown Executive]

Good afternoon, everyone. Now we would like to start SCREEN Holdings' financial results briefing on second quarter fiscal year ending in March 2025. Now let me introduce you the speakers from our side. Toshio Hiroe, Representative Director, President and CEO.

[廣江 敏朗, executive]

This is Hiroe. Thank you very much for your kind cooperation and support.

[Unknown Executive]

And Yoichi Kondo, Representative Director and CFO.

[近藤 洋一, executive]

I'm Kondo.

[Unknown Executive]

And we also have two officers attending this meeting. Masato Goto, Senior Corporate Strategy Officer; and Akihiko Miyagawa, Senior Financial Strategy Officer. Now I'd like to invite CFO Kondo, to give us a summary of consolidated business results and forecast.

[近藤 洋一, executive]

Thank you very much. I would like to present you summary first half earnings of fiscal year ending March 2025.

First half summary. Both sales and profits increased year-over-year. We hit the record highs for first half in terms of both net sales and OP income and margin. We revised the full year earnings forecast upward driven by SPE, GA and FT. We revised the annual dividend forecast upward from JPY 233 per share to JPY 247 per share with interim dividend increased to JPY 120 per share.

SPE, both sales and profits increased year-over-year. And net sales and operating income margin hit a record high for the first half. We expect a solid performance for the second half. GA and FT first half earnings actually exceeded the forecast. The cash flow in comparison with the first quarter, second quarter operating cash flow increased significantly.

Next page. This is first half net sales, JPY 277.3 billion. OP income JPY 58.2 billion, 21% OP margin ordinary income. JPY 58.6 billion net income, JPY 38.8 billion and difference plus JPY 51 -- JPY 54.1 billion net sales, OP income JPY 19.6 billion and ordinary income JPY 19.2 billion. Net income JPY 12.4 billion. Right outside, you can see the presentation.

Composition of group sales by destination, Japan 14%; Taiwan 19%; China 40%; Korea 3%; other Asia 3%; North America 14%; Europe 7%. That is the composition of group sales by destination. 40% is recorded by China, so it remains very high.

Group sales by segment is shown in the next page. SPE 81.6%; GA 9%; FT 6.5%; and PE 2.1%, and FT was doing pretty well according to basic results.

This is earnings by segment. SPE net sales JPY 116.8 billion, OP income JPY 29.9 billion, OP margin 25.6%. GA JPY 12.8 billion, JPY 1.2 billion of OP income, OP margin 9.4%; FT net sales JPY 9.3 billion; OP income JPY 0.3 billion, OP margin 3.8%. PE net sales JPY 3 billion; OP income JPY 0.1 billion, OP margin 5.9%.

Earnings by segment. On Q-o-Q first. As to SPE, sales and profit increased. Sales to logic and post-sales actually increased. Sales to Taiwan, North America actually grew. Next GA. Sales and profit went up. Recurring business was very good. FT, sales and profits increased. Initially, we forecasted deficit but in actuality, we had profitability. PE, sales and profit decreased. Post-sales remained solid. However, the equipment sales was slow.

Year-on-year, SPE, both sales and profit increased. Sales to foundries and memory increased. Sales to China and Taiwan also increased. GA, sales increased, thanks to strong recurring business. We were -- profit remained almost flat due to higher fixed costs. FT, post-sales and profits increased. Sales to LCD and OLED also increased. PE, both sales and profits decreased. We expect recovery in equipment demand in next year.

Balance sheet on a consolidated basis. Total assets JPY 668.1 billion and cash and deposits increased, and we now accumulated profit. The equity ratio is 59.1% and the turnover is 30 days or so. And actually, note that accounts payable is under decline.

Now cash flow, we saw the recovery of cash flow and we now see that at JPY 65.6 billion of operating cash flow and reduction of the payables, not on the same level of year-on-year level. However, we could see pretty good recovery. And this is -- operating income for the 2024 first half at JPY 38.5 billion and 2025 plus JPY 23 billion and profitability plus JPY 3.5 billion, fixed costs of minus JPY 8 billion and exchange rate plus 1.4, therefore, result, JPY 52.8 billion. So we consider this very important to control fixed costs. And both SPE and FT did very good in terms of sales and capacity increase and profitability was increasing due to the SPE.

And that's all from myself. Thank you very much.

[Unknown Executive]

Thank you very much. Next, President Toshio Hiroe, will talk about business environment and outlook. Mr. Toshio Hiroe, could you please go ahead.

[廣江 敏朗, executive]

Thank you. This is Hiroe speaking. I would like to talk about business environment and outlook.

First of all, business environment. As to SPE, AI-related semiconductor is expected to drive growth. That is the current situation. And growth is expected in server, smartphone and PC demand. On a monetary basis, growth is prominent, especially for server and related investment are active. Current DRAM prices are declining slightly. However, investment in miniaturization still continues on the customer side.

Next, as far as GA is concerned, POD-related investment continues to progress steadily, mainly in Europe and U.S., especially inkjet business, so thanks to improved utilization rate of the equipment on the delivery side, recurring business is very robust. Display demand is turning up as we expected. In this term, sales and orders are expected to come mainly from OLED during this fiscal year like large scale OLED and medium- and small-sized OLED.

As for PE, for recovery in package-related investment is still slow. It will take time. So we consider that recovery have to wait until next fiscal year.

Let's talk about business outlook. So the fiscal year ending March 2025 second half and full year forecast are being revised upward. Sales and profits are going to increase year-on-year. And net sales, OP income, ordinary income, net income, all are going to hit record high for the first consecutive fiscal year as a result of upward revision of the forecast.

As to interim dividend, JPY 120 per share, that's our decision made. So it's up JPY 11 from the July forecast, and JPY 127 per share is the upward revised year-end dividend. Therefore, as a result, total annual dividend is projected to be record high, JPY 247.

I would like to talk more about SPE business overview. Market trends and outlook is the next target. So let's talk about WFE outlook. As for CY 2024, mid-single-digit growth is projected. So nothing has been changed since July meeting. In FY -- CY 2025, stronger growth is expected. So I think situation will be a little better.

As to foundry and logic, investment in leading-edge nodes is accelerating. However, partially some reassessments are anticipated. As memory business, memory is driving the WFE growth this year. It is expected to be the growth driver in CY '25. As well, we consider memory will grow more next year.

Now investment trends by application. As to foundry, investment in leading-edge nodes, including advanced packaging, is now steadily growing. Next, about logic. Investment is continuing at a certain level, although there are some reassessment and review in scale was made. As to memory investment focused on DRAM for HBM. As to NAND, investment is progressing with a growing server volume and increase in demand from hyperscalers. Hyperscalers are actually driving the growth.

As to image devices, investment remained rather low key this year with expected increase in CY 2025. Power device and others is expected to recover in CY 2025 due to the improvement in supply-demand balance.

Let's take a look at Chinese market. China, investment continued at a certain level. That's how we project. But largely, it's shifted to the factory launch phase, not huge investment. Now notice that we do have a factory launch phase, therefore investment will decline slightly.

Now composition and sales by application post-sales. By application, on Q-o-Q, foundry is on the decline, logic going on, and so actually logic is supplementing the loss by foundry. In second quarter year-on-year comparison, logic is increasing greatly. As to post-sales, first quarter, second quarter, we see the actual percentage on the increase. So from July forecast, there is an upward revision because of this situation.

This shows the composition of total sales by application -- destination, sorry. And when we see the Q-on-Q in first quarter, second quarter, the proportion of China has declined. And against that, North America, Taiwan and Europe have increased. This situation we have. And when we compare the second quarter to previous second quarter, this increase was Taiwan and also North America.

And this slide shows you the composition of equipment sales by application. And first half year-on-year comparison shows the increase of DRAM and logic. So the recovery of DRAM can be seen in the trend. And when we compare the actual from the first half to the forecast in the second half, the share of the sales to flash is projected to rise. So in the second half of the year, we can expect the investment into flash. And the previous fiscal year performance and the expectation fiscal year, as you see on the right side, the sales to logic, DRAM and flash are expected to rise. And the total volume is expected to increase.

And this is the composition of sales by destination. So in the same way, when we compare the first half year-on-year comparison, there's an increase with Taiwan and also China. And the actual from the first half and second half expectation, the sales to China is expected to decline. But compared to the July forecast, when we see the current situation or immediate situation, we can say that in the second half, the sales to China has surpassed the July forecast, and while we see the increase in the sales to Japan and South Korea. And the previous year's full year performance and this year, we expect big decrease was Taiwan. And Chinese -- China sales ratio is projected to decline, but the actual after sales volume will grow. So this is the forecast for this fiscal year.

And as to GA, recurring business is very robust. So in the first half, the sales of the post-sales ratio reached 54% and mainly with ink. They have a very strong recurring business. And in the second half, we will go back to the normal level of 50%. But we have the possibility that this strong situation with the current business may continue. So we'll pay close attention to the trend. And in order to improve the operating profit margin, we are trying to enhance this post-sales.

Next is about FT. Display demand is now turning up. So in the second half, mainly with OLED, we can expect the sales order -- sales and order to increase. And in the first half, we could turn into black. So for the full year forecast, we made upward revision. So in order to make the profit for the full year, we're trying to make a better our effort.

And this is about PE. We are struggling with PE business. Post-sales itself is strong, but package-related investment to circuit board will pick up next year and beyond. So there's a kind of a delay in the recovery of the investment. That is the impression we now have. But now we have the inquiry in Japan. So dealing with these inquiries, we'd like to increase the order received.

And on this page, you can find the business forecast, which was upwardly revised this time. So the sales is JPY 577 billion, so that is the increase of 14% over the previous year. And operating income is JPY 113.5 billion, that is the increase by 20%. And net income is JPY 80 billion, that is increase of 13.5%. So we expect the increase of sales and profit.

And about SPE, in the second half, which was announced in October, so please pay attention to October forecast, that is JPY 244 billion, and that's JPY 58.5 billion in OP income, 24% of margin. We scrutinized this outlook, forecasted into the second half. That's what we promised with you in the previous occasion. And again, the improvement of the profit in the first half and also with some visibilities we now have, we came up with these figures. So we made the upward revision for the second half forecast and also resulting in the full year focus upward revision.

And as for GA, compared to the July forecast, there's almost no change, but there's an increase with the operating income. That is because of the situation we have explained to you. And FT, I mentioned early that we turned into black in the first half. And given that, in the second half, we're going to have a JPY 2 billion of the operating income. And PE, the market condition is still severe. So we made the downward revision of JPY 500 million. And it is difficult to increase the sales with this division.

And Others, at the very bottom, from the October forecast that we have, the figure of the JPY 5.5 billion, that is an increase because of the development investment in the first half is now slightly into the second half. The purpose of which is the investment for the advanced package and SPE-related investment. So we'd like to carry out these investments in a very proactive manner.

And this is R&D expenses, CapEx and depreciation. And from the beginning of the year, we haven't changed them. And midterm management plan, we said that we're going to scrutinize our investment for future growth. And this process is going on. So investment into development and also acquiring the production property, we have been discussing them. And now we have some visibility about it. So when they are materialized, let me come back with another report to you.

Next page is analysis of operating income growth. So comparing to the previous year's performance, we have the focus for this fiscal year. So sales and capacity utilization will have JPY 36.5 billion increase, and profitability will bring JPY 2.5 billion increase. And fixed costs, we expect a negative JPY 19.5 billion and so another JPY 0.5 billion from the exchange rates. Total, JPY 113.5 billion is the forecast for the full year.

And as you can find at the bottom, as for the sales and capacity utilization, they mainly come from the SPE and FT. Mostly, they are from SPE. And as for the profitability improvement, it will come from the SPE. And increase in fixed cost will come from SPE, Holding's new businesses and GA. But most of this will be with SPE. So the labor cost, depreciation, amortization, R&D expenses increase, and we would like to make closed investment without increases of these costs.

And this is about the dividend. As I mentioned earlier, and you can see the comparison to July, so in October announcement, we have JPY 120 per share dividend. And year-end dividend payment will be JPY 127. So the total annual dividend will be JPY 247. So this is the forecast, but record high figure. And in order to achieve this, we'd like to continue to make effort.

And this is the page about ESG-related initiatives. But please go through this. And let me introduce one topic out of these, that is about the transfer of shares subsidiary in this SPE business. As far as announced on October 16, there's a transfer of shares of a subsidiary, Laser Systems & Solutions of Europe in France. The shares of this company is transferred to Sumitomo Heavy Industries. The announcement -- and so the contract was concluded October 10. And amount of transfer is not disclosed. And this is already incorporated into the financial forecast, as I mentioned earlier.

And this company, Laser Systems & Solutions, produces the annealing equipment for the laser equipment. And Sumitomo Heavy Industries laser annealing equipment has a synergy with this company's product. So -- and we decided that this will result in a win-win relationship and decided to transfer the shares to Sumitomo Heavy Industries. And we have the technology of flash lamp anneal. So we'd like to make efforts so that our flash anneal will be adopted by the layers as much as possible.

That's all for me. Thank you very much for your attention.

[Unknown Executive]

So President Hiroe, thank you very much for the presentation. I would like to go into the Q&A session.

[Operator]

First person, CLSA Securities, Yoshida-san, please.

[Yu Yoshida, analyst]

First of all, the SPE for the second quarter, the sales to China was lower than anticipated, and SPE sales, as example, are unachieved. However, the OP margin was pretty good. But post-sales was pretty good. So could you please explain the situation about the upward revision of the OP income and OP margin? As in equipment, this will be better. However, in the second half, I think there was some reduction in comparison with the first half. So could you please explain about that.

[廣江 敏朗, executive]

This is Hiroe speaking. Let me explain. In the second quarter, the sales actually is a little bit different from July forecast because some customers sale -- some delivery time was shifted to the second half. So that was reflected. So that's the reason for the difference. And in comparison with July forecast, OP margin was improved because post-sales ratio was -- post sales -- the share of the post sales improved more than we anticipated. So that contributed to our profit.

Another point I would like to mention, in the first quarter, we were talking about some evaluations that was shifted to the second quarter and that might be shifted to the second half. I think that was already communicated to you. So in the second quarter, we could not match the timing with the customer. So finally, the sales slided o the second half. So this is the reason why the upward revision in comparison with the July forecast.

Another point, SPE-related development cost, we could not use as planned. Then development cost will be used in the second half, and that we actually consumed in the second half of the year. So that is a major factor for the upper revision of the earnings in the first half.

As to the second half, the China product mix will be unchanged. Percentage is -- will be unchanged. However, product mix in China is actually changing. The percentage of existing customers is increasing. And the percentage of new customers are on the decline. So we try to check the customers and market. We actually examine the numbers. So the number we presented this time is pretty appropriate and correct numbers.

[Yu Yoshida, analyst]

Another question, so WFE, so you said that mid single-digit growth. So I think it's a little bit better figure from the IR Day presentation. So what kind of application do you think about when you take a look at upward? And on IR Day, you were talking about the 2-digit increase, and you changed information. So do you consider still 2-digit growth can be anticipated? So how are you thinking about the next year situation?

[廣江 敏朗, executive]

So as to WFE, calendar year 2024, that will be unchanged. As to calendar year 2025, we have rather a bit optimistic view because DRAM will recover pretty well. I already commented on that. As to flash memory, that will also recover. So we are pretty good at the foundry. We also consider the recovery in the foundry business. In the logic, the customer refrained from investment for logic, so we can subtract that number. Then finally, we came up with that number we did for us. As to DRAM, plus 15%, flash plus 15%, and foundry plus 5% or so, logic minus 15%, that's how we forecast. And mid-one-digit percent number is a result of that calculation.

Well, as to next year's forecast, next year forecast is unchanged. So somewhat second half sales is revised upward. Now next year's plan is to be evaluated and examined more in detail But WFE will be strong. That's how we see the situation. So next year's forecast is not changed.

[Yu Yoshida, analyst]

So the actual number has not changed?

[廣江 敏朗, executive]

Yes, that's right. So the similar percentage growth can be anticipated right now.

[Yu Yoshida, analyst]

So growth ratio is not changed?

[廣江 敏朗, executive]

Yes, that is right.

[Operator]

Next is Shimamoto-san from Okasan Securities.

[Shimamoto Takashi, analyst]

I am Shimamoto from Okasan Securities. I have a question about the WFE, how to think about next year. One is about China. So about the front-end process, there is a kind of slowing down in China. But with you, that is not a cause of the concern. So I want to know about how do you look the -- what would you have about China next year?

[廣江 敏朗, executive]

So the question about China, we also expect that will slow down. I have been talking about China in the same way. And this fiscal year, we had a better-than-expected situation. But next year and onward, the situation will go back to normal. I think adjustment will be made in that way. And at the bottom of this WFE page, you can find now there's a phase to start the new factories. So they are now in the phase to enhance their production capacity. In that sense, another adjustment will take place in China.

[Shimamoto Takashi, analyst]

And I think this is a difficult question to answer, but how much negative, or how much decline do you expect, you brace yourself, I guess, for this fiscal -- for this calendar year or next year?

[廣江 敏朗, executive]

Well, we are still making the investigation into a situation. So I cannot answer your question with specific figures, but more than 30% is expected.

[Shimamoto Takashi, analyst]

Next is about DRAM. So you mentioned the price decline with DRAM. So do we have to see, it's a big change in a situation? So would you comment on the price decline of DRAM?

[廣江 敏朗, executive]

So about the DRAM price, there was the supply and demand balance in inventory took place. And the largest player in South Korea shifted their production to the commodity-type DRAM. That made a news on newspapers. So in that sense, then broadly there was a decline in the DRAM price. And from now, for the smartphones and the PCs, depending on the market situation of these, the situation, the DRAM will change. I myself think this price drop would be a temporary one.

[Operator]

Next Nakamura-san from Goldman Sachs.

[Shuhei Nakamura, analyst]

First question is about SPE business as to the production capacity. As to S3-5 startup, its current situation? And JPY 500 billion capacity is original plan. However, according to sales plan, the level has not reached that level. And what do you think about that? What is your attitude about that? And if demand further increased, to what extent you can cover -- you can actually deal with next year's demand?

[廣江 敏朗, executive]

Thank you for your question. Let me answer. SPE, S3-5 production capacity, with full capacity production is already achieved. So like JPY 500 billion level is available with our production system. Now when we think about the future costs, S3-5 in parallel, the production improvement is going for that system. While looking for the production improvement, we try to capture more orders. So the second half order placement, in value-wise, more order will be captured. We do not expose that exact number, but we are aiming at order captured at that level of more than JPY 500 billion.

[Shuhei Nakamura, analyst]

And the second question, yes, the calendar year 2025 WFE, so on IR Day one month ago here, investment is going down by some of the Korea customers. And I think you just reduced the value. However, according to your explanation, we see that the DRAM is still strong and robust. Then in the past month or two months, what kind of change have you seen from your customer side regarding the forecast because you actually changed your forecast?

[廣江 敏朗, executive]

Well, major customer are rather bearish. However, HBM-related customer investment is now active. So that's how the situation is changed to the positive way.

[Shuhei Nakamura, analyst]

Okay. In that sense, we consider a part of the customers may reduce DRAM investment, that was what you are thinking about. However, the situation is getting better for you?

[廣江 敏朗, executive]

Yes, that's how we see it currently.

[Operator]

Next let me invite Wadaki-san from Morgan Stanley MUFG Securities.

[Tetsuya Wadaki, analyst]

My question is that the high profitable business with China and when they'll decline with it next year, you may suffer from it. Of course, there's a difference between the calendar year and the fiscal year, but how do you see this decline of how profitable business in China?

[廣江 敏朗, executive]

So we have the simulation internally and when we see the profit structure, we may have the one similar to that of this second half. That's how we expect for the next fiscal year, so we come up with this forecast for the second half this time. And profitability, if we can achieve this 24% as we expect, we think we can also target the same level in next fiscal year even with the decline of the Chinese -- China sales ratio.

[Operator]

Mr. Yoshioka from Nomura Securities.

[Atsushi Yoshioka, analyst]

I am Yoshioka from Nomura Securities. I have 2 questions. So I may ask about China again. So 3 months ago, I think there are less inquiries from China. That's what you talked about. So in comparison with now and 3 months ago, how is the inquiries situation? How inquiries are changing? Could you please give us the latest information.

And also the sales in China to the second half of FY 2024, so like half on half, like first half of 2026, how do you think it will be changing? So could you please give me some more further information on the China business?

[廣江 敏朗, executive]

As to China market, we see the forecast for the second half. So we have actually scrutinized the number, and we came up with this number. So I think we will settle with these figures. So in the second half, 38% or so were China. And we thought it will be more but it's a little better finally 38%. So this is the most recent situation.

And now here ending March 2026, that do go down to 30% or so, I'm not sure how much. We have to scrutinize this. And after that, I think it will get to 30%. We consider 25% to 30%. That was leveled number for China. So we consider probably 25% to 30% is the final figure we reach that half we project.

[Atsushi Yoshioka, analyst]

Okay. So this is the second half of this year, so you changed the information, but you have more inquiries and you had three months to go. And second point, SPE OP margin or profitability. So most recently, you had upward revision because of the post sales increasing, so that's the reason you mentioned. And as to post sales, why post sales increasing? Is it any structural aspect? Can we anticipate more for the second half? And could you please elaborate on why you have the post sales increase? Do you have better results?

[廣江 敏朗, executive]

Yes. In this case, the customers, we had the kind of the similar level assumption. Then just recently, there are some inquiries, or the project for change or additional purchase order of parts. So we do not see any particular reason for increase, but we aiming at 20% of post sales this year, that's what we are aiming at. And probably, rather than the result of our effort, but thanks to the timing of the customers, we could increase the post sales.

[Operator]

Mr. Yamamoto from Mizuho Securities.

[Yoshitsugu Yamamoto, analyst]

This is Yamamoto from Mizuho Securities. Can you hear me?

[廣江 敏朗, executive]

Yes. Please go ahead.

[Yoshitsugu Yamamoto, analyst]

My first question is about SPE OP margin. So in the midterm management plan, no further increase of OP margin is not expected, so because of the increase of the fixed cost and also because of the mix. So in this time frame, the midterm management plan, we cannot expect the further increase for OP margin. So -- or do you have any expectation to achieve the better results for the OP margin?

[廣江 敏朗, executive]

So at present, as you said, the target of midterm management plan itself is almost achieved now. So we are now developing and also making the investment, including CapEx, in order to achieve this figure. That's the target of midterm management plan. And there's no change in this concept. So this is a level we want to achieve. And in the next midterm management plan period, we have the intention to achieve the higher target. That's why we are making the preceding investment for the future growth. So we are in the second and third year of the midterm management plan to carry out this investment.

[Yoshitsugu Yamamoto, analyst]

So if you can see or expect to be further improvement of the productivity such as S3-5, can you expect a greater investment in the future of growth?

[廣江 敏朗, executive]

Yes, that's what we want to do. But investment for the development, of course, requires human resource, and we have limited resources for development. So at the some point, I think that level of investment will be settled to the one we are heavily planning. And Laser Systems & Solutions share is now transferred to Sumitomo Heavy Industries.

[Yoshitsugu Yamamoto, analyst]

And when you see your business portfolio, are there any other businesses? Do you think it's better to transfer to the other companies? So do you have any other ideas to spin out or to divest part of the businesses? So what do you think of your current business portfolio?

[廣江 敏朗, executive]

So in the previous midterm management plan, we reviewed our portfolio from various angles. And in the current midterm management plan period, we have some projects related to the business portfolio review. That's what I explained to you on previous occasions. And this is related to one of these. And flash lamp anneal in evaluation with the customers, we are statistically promoting our flash lamp anneal to various customers. So we will focus our resource to the flash lamp anneal.

And as to the laser annealing, we will let Sumitomo Heavy Industries with expertise and resource to handle that. And I think that to serve the better for the future of this Laser Systems & Solutions of Europe, that's why we decided to transfer the shares of this company to Sumitomo Heavy Industries.

[Yoshitsugu Yamamoto, analyst]

And do you expect more of these kind of transform? Or we cannot expect?

[廣江 敏朗, executive]

Could you repeat your question?

[Yoshitsugu Yamamoto, analyst]

So Japanese companies do not make the official comment to review the business portfolios. But sometimes -- so there's not many cases that the company or subsidiary is transferred to other companies as a way to improve the business portfolio, but SCREEN Holdings did that. So are there any other cases you have in mind to transfer the shares of your subsidiary to other companies?

[廣江 敏朗, executive]

So other than this, all the device of the business portfolio complete, as for the ones we planned in the previous midterm management plan. So we are going to make the JPY 80 billion strategic investment from now. So we'll move on to that phase of making investment to establish the new business portfolio.

[Operator]

Nakanomyo-san from Jefferies Securities.

[Masahiro Nakanomyo, analyst]

I am Nakanomyo from Jefferies. Can you hear me?

[廣江 敏朗, executive]

Yes, I can hear you. Thank you for your questions.

[Masahiro Nakanomyo, analyst]

And first question, this is confirmation. In your presentation, the second half, in comparison with the first half, there will be more purchase order increasing. So because of the recent situation, you see this kind of condition already like China, there's a decrease in some part and stable in North America. But in Taiwan, business is active. So what is the breakdown? Can you please share with me?

[廣江 敏朗, executive]

Yes. As to purchase order, we do not disclose the number. We cannot share with you the breakdown of the purchase orders we received. But the total value of the order should be increasing, and that's how we see these recent inquiries. Talking about percentage, foundry is very strong. Share of foundry is almost 50% or so. That's how we project. And the situation will progress like this.

[Masahiro Nakanomyo, analyst]

Okay. And second question, and again about China, 42% China share will be getting down to 30% or so. I think it's about your sales, your company share of sales. When we take a look at the whole WFE, it is considered that China business will decline. So when we talk about China, you said that new companies have this investment, but existing company will continue the similar investment. But I think you have powerful players or not powerful, or you have account, which purchased a lot of accounts, which don't. So I think China's customers are not so weak. So what do you think of your China sales in comparison with the whole China market?

[廣江 敏朗, executive]

Well, it's a very difficult question and difficult issue to deal with. Rather than memory, logic is an area we have strengths. So the new customers or existing customers of the logic, from logic customers, we get a lot of purchase orders and we get a lot of inquiries. As to memory-related business, we are not really strong. However, in the memory business, I think the certain amount of projects will be received by us. However, investment trend, when we take a look at probably the memory investment will decline. That's how we see Chinese markets mix being.

[Masahiro Nakanomyo, analyst]

So is it a positive aspect for you, generally speaking?

[廣江 敏朗, executive]

What shall we say? Should we say positive or not? Yes, for us, I think it's a good direction for us, better direction when we think about our portfolio.

[Operator]

Next, let me invite to Mr. Damian Thong from Macquarie Capital Securities. And Damian-san is the last person to ask questions on this occasion.

[Damian Thong, analyst]

For next fiscal year's outlook, you said that the market condition may be a little bit weaker. Then next fiscal year, you revised your plan. So where did you see the strongest situation than expected? Is it to be China or the foundry? So compared to the 3 months ago, where did you see the strongest situation?

[廣江 敏朗, executive]

So as I answered previously, WFE forecast for the calendar year 2024, DRAM will have plus 15%, flash plus 15% and foundry was plus 5%, and logic minus 15%. So these are the situation we expect. And your question is not about WFE.

[Damian Thong, analyst]

The reason why I asked this question is that you have the big share. Especially with DRAM and memory, you have the big share. So when you see the inquiries from the customers, your sales growth is expected for the next fiscal year. Given the current market situation, do you think that your sales growth can be better than that of the market growth of the next fiscal year or next year?

[廣江 敏朗, executive]

Yes, that's how we see the situation. So better than the WFE market itself, we can achieve the greater growth. So the double-digit percent growth is expected now.

[Damian Thong, analyst]

And my last question, and new POR will be gained from now to increase the share. Do you expect there's an impact from that?

[廣江 敏朗, executive]

So we are now increasing our market share at this moment. And because of the exchange ratio in 2023, the share was almost flat. That was the result we had. But in 2024, we can expect the increase of the share.

[Unknown Executive]

And this now concludes the SCREEN Holdings' financial results briefing on second quarter of fiscal year ending March 2025. Thank you, again, for your participation despite your busy schedule. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]