© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Now it's time for us to start Tokyo Electron Finance Announcement for the First Quarter of the Fiscal Year ending on March 31, 2023. Thank you very much for joining us today despite your busy schedule. I am Yatsuda of IR department, acting as a moderator for today's session. Now I'd like to introduce today's attendees: Mr. Toshiki Kawai, Representative Director, President and CEO.
I'm Kawai. Nice to meet you, everybody.
Next, Mr. Hiroshi Kawamoto, Vice President and General Manager, Robo Business Platform Division, Finance Unit.
I am Kawamoto. Nice to meet you, everybody.
Prior to the presentations, let me explain the flow of today's conference. First of all, Mr. Kawamoto and Mr. Kawai will make presentations. After that, until 6:00 Japan time, we will have a question-and-answer session where we take questions from the audience. This meeting will use 2 channels of WebEx for the simultaneous interpretation between Japanese and English. As we explained in our e-mail, you are currently requested to use apps on PCs or mobile terminals if you plan to ask questions. But if you are not going to ask questions, you can use telephones. In addition, 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. We will post the audio content 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, Vice President and General Manager, will present the consolidated financial summary.
Good afternoon. I am Hiroshi Kawamoto of Finance Unit. This is the first time for me to attend the financial announcement. I'm very glad to meet you. Now I would like to present the consolidated financial summary of the first quarter of fiscal year ending in March 2023. In the first quarter, we generated net sales of JPY 473.6 billion, 16% decline from the previous quarter. By segment, SPE net sales were JPY 464.0 billion and FPD net sales were JPY 9.6 billion. Gross profit margin was 42.3% and operating margin was 24.8%. The net sales decreased on the quarter-on-quarter basis, partly because recognition of some revenue was pulled forward to the previous fiscal year and partly because some segment was pushed out and its revenue recognition was shifted to the second quarter, but we're making steady progress along with the guidance for the fiscal year. Profit margin also declined from the previous quarter due to several reasons, including sales decline, our ongoing active R&D investment, rapid yen depreciation and special bonus paid to our employees rewarding their efforts to achieve the previous midterm management plan ahead of the target year. Along with the guidance for this fiscal year, both net sales and profits are expected to increase towards the second half of this fiscal year. This is a graphic representation of financial summary that I showed you in the previous slide. This slide shows secondhand information. For SPE, we generated net sales of JPY 464.3 billion and achieved segment profit margin of 28.8%. Due to the impact of the sales decline as well as product mix, exchange rate and other factors, profit margin also dropped. For FPD, net sales were JPY 9.6 billion, and segment profit margin was minus 6.4%, partly because of disruption in logistics triggered by such a factor as lockdown, some revenue recognition was pushed out, which resulted in decline of net sales and negative segment profit margin in the first quarter, but we're making steady progress to achieve the guidance for this fiscal year. For the competition of net sales in the first quarter, SPE sales accounted for 98% while FPD sales accounted for 2%. This slide shows SPE sales by region. As you can see for this first year, SPE sales declined in all regions. In particular, sales to memory manufacturers in Korea and China decreased. In China, like in the previous quarter, the local Chinese customers accounted for a sizable proportion. This slide shows SPE new equipment sales by application. In the first quarter, on the right-hand side, from the bottom of this chart, sales to logic manufacturer accounted for 64%, nonvolatile memory accounted about 20% and DRAM accounted for 16%. As the sales to DRAM manufacturers declined from the previous quarter, proportion of sales to vertical manufacturer increases against the sales to the memory manufacturers. This slide shows Fuel Solutions sales. In the first quarter, sales amounted to JPY 109.5 billion, declining on the quarter-on-quarter basis due to the decrease of modifications. However, you can see the steady progress. The Parts business progressed steadily due to high utilization ratio of our customers' parts. This slide shows the balance sheet. Both assets. Total assets were JPY 1.8469 trillion. On the top, cash and cash equivalents decreased from the previous quarter to JPY 314.6 billion. This is mainly due to the payment of dividends and taxes in this first quarter, an increase of inventories as well. Accounts receivables and contract assets were JPY 426.1 billion. Inventories were JPY 557.2 billion, showing a significant rise from the previous quarter because of the increase of inventory of works-in-progress -- process and finished products, whose revenues are expected to be recognized in the second quarter onward. Liabilities and net assets. Liabilities were JPY 532.0 billion. Net assets were JPY 1.3148 trillion. As for the net assets, we have the net income, but because of the payment of the dividends, you can see the negative figure. The equity ratio was 70.4%, almost equivalent of the previous quarter. My last slide shows cash flow. The cash flow from operating activities was JPY 69.9 billion. The cash flow from investing activities was minus JPY 16.6 billion. Cash flow from financing activities was minus JPY 119.1 billion. The free cash flow was JPY 53.3 billion. So this concludes my presentation about the consolidated financial summary.
Next, Mr. Kawai, our CEO, will present business environment and financial estimates. Mr. Kawai, please.
Good afternoon. Once again, I am Kawai. Thank you so much for joining us despite your very busy schedule. Now I'd like to make a presentation about business environment and financial estimates. Let me start with the business environment. In the financial announcement in May, I said that WFE market was expected to grow by about 20%. But this time, we have revised the growth rate to 5% to 15% on the year-on-year basis. We have come up with this revision by holistically considering various factors, such as increasing interest rates address inflation, zero COVID policy, temporary decline in appetite for buying PCs and smartphone, supply constraints, disruptions in logistics and wild fluctuation of exchange rates. So this is the result of overall consolidation. On the other hand, due to expectations to the semiconductor technology innovation, driven by the progress of digital shift in the society and realization of decarbonization in society, our company's outlook remains unchanged for midterm, long-term growth of our industry. For the FPD fabrication equipment, TFT array process market, there is no change and slight increase is expected in the investment on the year-on-year basis. Next, I'd like to talk about WFE market outlook by application. As shown in the slide, we have revised our outlook. For logic foundry, we have revised the expected WFE spending growth to 10% to 20% on a year-on-year basis. And for DRAM, we currently expect WFE spending will decrease by about 5% from the previous year. For nonvolatile memory, there's no change in our outlook. The WFE spending is expected to grow by about 10% on a year-on-year basis. The investment environment is changing day by day, but in each application, technology innovation never stops, but makes steady progress. Working together with our customers and partner companies, we're striving to develop leading-edge semiconductor technologies. This slide shows business progress in the first quarter of fiscal year ending in March 2023. In May -- June -- in June 2022, we established a new midterm management plan. As the financial model, new financial model, we have set up a goal to achieve net sales of JPY 3 trillion or more, operating margin of 35% or more, an ROE of 30% or more by fiscal year ending in March 2027. Aiming to further enhance our corporate value, we have developed a new vision. The new vision is a company filled with dreams and vitality that contribute to technological innovation in semiconductors. Since the semiconductor device becomes increasingly important in the society, as a leading company to deliver SPE, we're determined to meet the customers' technological needs and provide leading-edge products and service aiming to create world-class profit, specifically operating income of JPY 1 trillion or more, an operating margin of 35% or more, 35% or more in parallel to the global shared value of achieving both digital and green. Digitalization and decarbonization will contribute to address social challenges by pursuing technology -- semiconductor technology innovation. We have set the midterm and long-term environment goals toward the realization of carbon-neutral, that is net zero GHG emission to be achieved by year 2050. We will strive to achieve carbon-neutral in Scope 1 and 2 by 2040 and eventually realize carbon-neutral in Scope 3 by 2050. In order to realize the midterm management plan goals, we are planning to invest JPY 1 trillion more in our R&D activities in 5 years to come. At present, there are various uncertainties, but I understand the expectations to our company are growing. And accordingly, we expect it to play a increasingly important role. We will pursue both short-term and longer-term profit in parallel, and we will make every effort to continually enhance our corporate value. Next, I will present the financial estimates for fiscal year ending in March 2023. As I said earlier, by taking account impacts of the macro economy, we have revised our outlook of the WFE market, but our customers' investment plans are only on the minor adjustment at present. Therefore, we have left financial estimate unchanged. We will take a close look at the market environment from now on. This slide shows the SPE new equipment sales forecast in fiscal year ending in March 2023. Again, the sales forecast remains unchanged, both in the past and second half of this fiscal year, JPY 850 billion in the first half and JPY 1 trillion in the second half of this fiscal year. On the right, you can see the quarterly breakdown of the sales forecast for the first half of this fiscal year. In the first quarter, shipment timing of some products was shifted, but there is no change in our guidance. In the second quarter, we expect record high quarterly net sales. This shows our plan for R&D expenses and CapEx. The plan remains unchanged. To achieve our new midterm management plan, we will continue proactive and active R&D investment and capital investment. My last slide shows the dividend forecast, which also remains unchanged. Based on the financial estimates for this fiscal year and payout ratio of 50%, we plan to pay full year dividend per share of JPY 1,678 which is expected to set the new record.
[Operator Instructions] The first question is from Mr. Yoshida of CLSA Securities, Japan.
I am Yoshida of CLSA Securities, Japan. First of all, for this fiscal -- this year, WFE market forecast has been revised. And you talked about macro economy changes and also impact of the exchange rate. So how much negative impact do they have each? And on Slide 15, I can see focus by application DRAM. You can -- several specific factors by logic and foundry, there's no factors for contribution. So just -- could you just explain the background of the changes of the forecast in logic and foundry as well, please?
Okay. So I am Kawai. I'd like to answer to your question. Right. So quite significant. Actually there are small minute changes for each. But for the first, so impact of exchange rate is rather big according to our understanding. In reality, the semiconductor with WFE, Japanese semiconductors proportion is about 30%. But when you look at the exchange rate, 20% has been -- there have been depreciation of 20% from last year. So WFE is also impacted significantly. The next large factor is smartphone and PCs. Temporarily, the appetite for buying PCs and smartphone has been declining. So macro economy as it is itself, the inflation and the inflation is to be addressed by each country's central bank by raising interest rates. And also, there are some geopolitical tests and zero COVID policy of China.
So over the past few years, there have been quite a strong appetite for replacing PCs and smartphone. And actually, that cycle has been completed. And on top of that, there are some uncertainty for the future outlook. There has been some decline in appetite. Because of that memory -- or because of smartphone and PC demand decline, temporarily decline, the DRAM investment has been affected. In addition, just like exchange rate, partially some components constraints to have some shift in fiscal year. So it's not as big of the exchange rate impact, but that supply constraints have also have some impact, 30% in our revision -- in our revision.
So I think the exchange rate impact is largest. Next, the -- some shift to the next year because of the supply constraint and memory customers' investment plan changes, which is a bit larger than the logic customers. So because of those reasons, we have decided to revise our forecast for WFE market.
I have follow-up question. Slide 17. So now you -- you said you are going to closely watch the environmental at the market environment. When you look at positive impact growth in 2023, so how do you see the market 2023 by application? Do you have any qualitative outlook for next year as well?
At present, so midterm and long-term digitalization and decarbonization trend and accordingly, semiconductor variation innovation is accelerated for higher speed, higher capacity, higher reliability and lower power consumption. That sort of trend remain unchanged. So we are now getting into a new phase from the previous phase, although we are repeating some slight adjustment everybody. So step by step, growth is expected for the future as well. So this is what I explained in the past. And now we are just in the middle, where you can see some momentum of adjustment, but there has been no changes for midterm, long-term outlook. As for next year, at present, it's too early for me to say something decisive for 2023 forecast. As I said earlier, macro economy trend is one thing and geopolitical impact and regulations of each country. So those things are so much microscopic, and we are not in a position to make any comment. So we need to look at all those macroeconomic factors. So at present, I tried to refrain from making specific comments for next year, but I'm sure that we can expect midterm, long-term growth because the importance in semiconductors are really highlighted by every part of the world.
Next question is from Mr. Hirakawa of BofA Securities. Mr. Hirakawa, please.
I'm Hirakawa of BoA. So I have a question for profit margin this time. So profit margin 22.8%. Also last year, the sales is almost 10. However, the gross profit margin has declined by 4 points. For sure, let me know the reason why the gross profit margin declined by 4 points from previous year.
I am Kawamoto. Let me answer to your question. So compared with last year, year-on-year basis I should say, as you pointed out, as for the net sales, almost the same was a slight increase on year-on-year basis. But when you look at we are investing a lot for the further growth. And we have midterm management plan, and we have achieved previous midterm plan, and we provided special bonus to our customers to appreciate their efforts. In addition, in factories, costs increased slightly in factories and because of yen depreciation, our subsidiaries are affected by the exchange rate difference. Because of those reasons, profit ratio has been decreases. As for the gross profit margin, the last year first quarter profit margin -- high profit margin products were sold a lot. Because of that, when you compare quarter -- first quarter between last year and this year, you can see some decline. But there are some reasons that I mentioned earlier. Thank you very much for your question. That's all from me.
I have one follow-up question. Now you talked about special bonus to your employees. As for the special bonus to employees in the first quarter, you recognize that. But second -- compared with second quarter of last year and this year's second quarter, when you compare those 2 for the goods of costs, you talked about the R&D investment. But when it comes to the cost for the goods, how much costs are to be generated or recognized in the second quarter for this fiscal year? And SG&A and R&D increases quite a lot, but how do you segregate R&D investment and the R&D expenses in cost of goods? And as for the future, so the SG&A should be a large proportion, I thought, but special bonus is incorporate. How do you incorporate special bonus to your SG&A?
Let me explain. For the special bonus, production and development departments, we are -- we recognize them in the costs of good. For the people of sales and administration, they are part of SG&A. The proportion is about 70% to 30%. So that has the impact on the cost of goods mainly. Did I answer to your question?
I'm sorry. As for the second quarter, R&D impact on the cost of goods compared with the previous year second quarter?
Are you asking about second quarter and beyond?
Yes, second quarter and beyond, I should say.
So as for the special, let me just talk a little bit more about special bonus. We commenced them in the first quarter. Therefore, there is no recognition in the second quarter. For the R&D investment, there have been some trend that the R&D costs are rather high in the second and fourth quarter. Because of that trend, I think the R&D cost in the second quarter could become high.
Next question is from Mr. Wadaki of Nomura Securities.
The first question is about the market trend, about market trends, I should say. So the environment of the industry has been deteriorating. Do you receive any cancellation of the orders from your customers?
Yes, no. No, there have been no cancellation of orders. So we are in -- our customers are under the adjustment and some customers are discussing or considering, but we haven't received any specific cancellation from the customers. Now you have the market trend. And we come up with the market trend, but we don't receive any specific cancellation. That's the reason why we just keep our financial output out for -- outlook unchanged. Now you do have the follow the guidance. So the share increase could be one of the factors. In the previous financial announcement, we discussed that, and there are some talks.
So you made a good success in the sublimation and drying. But when it comes to sublimation and drying technology, you made a great success. And do you keep this trend, the technology goal victory has been continuing?
We tried to outperform demand debt growth. That is our basic stance. So cleaning, etching system, quota developer and fill the position for each application, we have various activities. So on a continual basis, we try to outperform the market, and I think we can outperform the market growth from now on as well. In particular, the process share, we are making steady progress in evaluation of our products. So the exchange rate has some impact, WFE share is impacted by the exchange rate, and that changes every time. This time, when you look at the situation, the exchange rate is impacting our -- the WFE market. But process share itself, we are going to increase process share steadily. So we have a lot of expectation for the future.
Do you have any -- excuse me. So about you made a success in the sublimation and drying and you do have the drying technology in the quota developer and you use that technology for that sublimation and drying. Is that correct?
So now we have a kind of synergy effect. Yes, we do have some synergy effects and technology for quota developer can be utilized for other process. So multi-chamber particle generation reduction technology, for example. So 2 businesses are done in one place. So we have incorporated various know-how, and we can utilize this know-how, not only in Kyushu, we have Corporate Innovation division in our company. In that sense, for the future packaging technology, we are going to come up with the holistic approach to the future packaging technology. And we can provide new solution based on that. And 3D DRAM approach. So we try to come up with optimum solution through the discussion with our customers. As [indiscernible] said earlier, I think that is the enabling technology, marketing viewpoint and evaluation viewpoint. So we do have some synergy effects through those different factors.
Next question is from Mr. Nakamura of Goldman Sachs, Japan.
I am Nakamura of Goldman Sachs, Japan. Slide 18. Now you talk about the shipping timing has been shifted for some products. Could you let me know more details about that?
Slide 18 did you just say?
Right.
So some products the Tokyo Electron ever since this 2020 January when COVID-19 pandemic started, I acted as the head of the COVID-19 emergency taskforce. And at that time, we check the utilization of the factory and the restriction of traveling on logistics constraints.
At the same time, we do have the strong demand for semiconductor devices. We knew that. So we adopted very proactive procurement strategy to be prepared for the -- because of that, last year, in WFE, about 40% in WFE, the preparation was good enough to address the demand from the -- market demand, and that's the reason why we are able to achieve midterm management plan. And -- but various impacts prolonged. So we have the Corporate Production division September 2021 should be prepared. But now in Ukraine crisis started in February and China lockdown started in March this year, we need to take care of those problems as well. Minor adjustments well, necessary, but minor -- adjustments were limited to minor, and we agreed with our customers. But in some cases, about 2 weeks to 1 month, there has been some shift by 2 weeks to 4 weeks. So that's the reason why the shipment was shifted from quarter -- first quarter to second quarter. So in August to December, of course, we need to have me to take a close look at the macro economy trends. But as for the uncertainties within the area that we can see, I think we can make good adjustment within the visible area. In February and March, the impacts of February and March impacted the first quarter performance, but we are able to take good adjustment, and we came up with agreement with the customer, and that's the basis for today's announcement.
In that sense, from your slide, the supply constraint is a major factor. So customers didn't ask you to postpone the delivery date. Is that correct understanding?
In the first quarter well, first half of this fiscal year. I'm sorry, for this first quarter results, right, because of our slight reason, and there is no change for the customers' investment plan.
I have one follow-up question. Second quarter, shipment is expected to become high. So we -- maybe the gross profit margin should be 47% based on my calculation. So do you think you can achieve this level of gross profit margin? Could you just let me know how you feel about the gross profit margin for second quarter?
Yes, we need to take various measures, but I think we can achieve that.
Next question is from Mr. Nakanomyo of Jefferies Japan Limited.
I am Nakanomyo from Jefferies, Japan. Actually, I have a very similar question to the previous question. So second quarter, you want to calculate 47% of the gross profit margin. I think that's not high, a little bit high. But you too have this shipment for products in the second quarter. So if you add up all those shipped or tools to be shipped, do you think you can achieve this level of gross profit margin, 47% in second quarter?
Right. We -- as Kawamoto said earlier, Mr. Kawamoto said earlier, first of all the special bonus will not be generated in the second quarter. So now the yen depreciation is rather estimate --so the cost, cost in the subsidiaries are expected to grow because of yen depreciation. However, as for the exchange rate in our company, our business is based on the yen. Therefore, compared with other companies, the impact of yen depreciation is rather small compared with other companies, but we do have some impact. We are now taking actions to take out of yen depreciation. And based on that consolidation, we think we can achieve this target.
So when you say measures, both actions to care. So you try to revise the dollar-based costs. Is that what you mean?
No. Rather than that, so the fixed costs as a whole -- we try to optimize the fixed costs as much as possible by doing the optimization of fixed ports, we can take care of that.
My follow-up question. It's not the confirmative question. So what is your focus 2023? You say it's too early to talk about 2023. That's what you said earlier. However, so 2022, maybe because of the exchange rate, so maybe some of the projects or shipments planned in 2022 might be shifted to 2023. So my question is 2023, are there any declining sentiment among the customers in 2023?
In particular, so the macro economy should be the base -- and also geopolitical factors are to be considered. So we should closely look at macro economy and geopolitical factors. But as for the major changes no major changes or we don't -- the investment plan with semiconductor industry. So there have been no request for revising the investment plan at all.
Next question is from Mr. Shimamoto of Okasan Securities.
I'm Shimamoto of Okasan Securities. So you talked about the geopolitical risks. So quite recently, in China, the semiconductor production equipment, I think you are very strong in high-end SPE. So restrictions of the SPE shipment to China might be enhanced. Some people said that. Do you have any comments on that? Do you have any impact? Or do you expect some impact in the future for the restriction of the shipment of high-end SPE to China?
We don't have any product which have the direct impact, and we don't have any evidence that we are suffering from any impact. But geopolitical issues, as a company, we are not in a position to make any comments on the geopolitical issues. But I want to share the information because the semiconductor technology innovation never stops. We never stop. So our company is now trying to maintain the world-leading technology innovation capability. By having that capability, we can promote mid long-term growth. I really would like to share this idea with you most, expected this question actually.
And for China, the sales to Chinese market. For example, legacy node and leading-edge node, what is the proportion between the 2, the legacy nodes and for the leading-edge technology node?
For logic, I wonder you asking about the logic customer who are memory manufacturers?
Right, for logic.
I think the matured node is really big. The proportion of mature node is really big.
Next question is from Mr. Shibano of Citigroup Global Markets Japan.
I am Shibano from Citi. My first question is about WFE market forecast revision. I have one question. You said 20% growth in 2022. You said today, 5% to 15% growth for WFE market for 2022. So the SEMICON West early July compared with that time. So do you have any decline since early July, or what timing have you decided to revise the WFE market growth from 20% to 5% to 15%? This is my first question.
So SEMICON West in July, we reviewed the situation, right? What you say is the timing was the SEMICON West in July. So in July, we held the IR Day and in July before and after the SEMICON West. So WFE market focus is different between 20% and 5% to 15%, maybe because one of the reasons would be exchange rate and depreciation.
My second question, your factories are rather busy. That's what you said earlier. And now you haven't changed your guidance in the third -- second quarter and second half of your fiscal year, your factory remain busy, is that right understanding? And from April to June, you said shipment was delayed a little bit. But in April, May and June, but month-wise, for example, the shipment was rather difficult in April or May. Are there any changes from April to June, which had some impact on this net sales? And do you have any good momentum, positive momentum to make you achieve your guidance?
Actually our factories are very busy at present, various factors are surrounding our environment. But in the past, this is unprecedented situation, trying to achieve record high sales. That's what we are trying to achieve in second quarter. Today is August 8. So this year, the second quarter for this fiscal year, we have 1 month and 20 days to go toward the end of second quarter. And this is -- today, we make the presentation for the financial estimates. So I hope this is the positive momentum to achieve our target. So I talked about adjustment period, period of adjustments. But I myself, when I look at the situation last year, more than JPY 9 billion achieved this year JPY 100 billion, last year, JPY 90 billion this year, JPY 100 billion. Those figures were announced next year as well. There might be some changes in those figures. So because of various reasons and we consider many things, I said it's too early for us to say anything about 2023, but high-level performance trend will continue. And there are some small adjustments repeated in the future to follow the step-by-step growth in long-term. I hope this comfort you to some extent. And I hope my comments sounds positive to you.
Next question is from Mr. Hasegawa of Mitsubishi UFJ Morgan Stanley Securities.
I'm Hasegawa from Mitsubishi UFJ Morgan Stanley Securities. My first question is about first quarter. Now the shipment was shifted you said. So what is the size of the shift? And what is the status by month? Could you share your idea with us, please?
I am Kawai. Let me answer to your question. To some extent, in the Q4, the fourth quarter, some sales were recognized in Q4 by putting forward the shipment because of high demand. And we are now working with the capital market. And there are Ukraine crisis, and we did receive some demand from the customer. So we were able to shift some products ahead of the schedule pulling forward. So the things which were planned in Q1 was pulled forward to the fourth quarter of last fiscal year. And on the other hand, there is some shipments shifted to the second quarter as well.
[indiscernible] by region. When you look at components, I think components are more -- much bigger in factor. So it's not because of customer, but this is restrained by the components. So in such reason -- because of that reason, the timing is affected regardless of the region because the shipment is shifted because of the component constraint. Is my understanding correct?
Yes. As Mr. Kawai said earlier, the component supply shortage and the disruption in logistics. So those 2 are the major factors. So there is no, can I say, trend in the region. And also customer clearance another issue. So the overseas customers are mainly affected.
What is the level of size of the shift, the shipment?
So could you refer to Page 18? The new equipment sales, the first quarter actual and second quarter, we have revised the forecast. So the difference between the 2 is rather big. So over the past 1 year, by quarter, the sales has been increasing little by little, but temporarily because of the adjustment, the net sales declined. But because of that, you can see increase in the second quarter. So I think that gap is -- can be leveled off. So usually, the first half of the year should be 18% compared to last year, but 10% for the second half of the quarter -- second year.
But there is some shift in shipment. And my second question, so toward next fiscal year, so based on your this year's plan, you said that you are able to achieve this year's plan or guidance. You committed yourself to the capital market and you're determined to achieve or satisfy the guidance for next fiscal year. WFE market itself, you said it's too early for you to make some focus for WFE. But yourselves, as you said, R&D investment will be increased and also you need to secure the sources. So you need to proactively make investment. So the cost -- fixed cost increases, the net sales next fiscal year, I wonder the profit might be declined a little bit or the profit remain unchanged compared with this year. So in order to pursue midterm, longer-term growth, you don't have to worry so much about the next year performance. Could you just share your idea, please?
So midterm, short-term and longer-term profit enhancement. We try to pursue both short-term and longer-term profit increase as I said in my presentation. In our industry, what is unique to our industry is now market is very active. At the same time, technology innovation is really rapid. That's another characteristics of our industry. In particular, the high value-added critical technology should be developed by having high technology investment and strong R&D investment. So company needs to have the high capability and investment capabilities. So there are quite a few opportunities for us to grow. Because of that high-value-added next-generation equipment should be created continually so that we can obtain the opportunity to enhance the value-added. And also field solution, we can see some expanding opportunity in the field solutions business. And the process share is enhanced. We should outperform the market in terms of process share. Through those activities, we try to enhance our profit on a continual basis.
Sorry, I should keep my question more simply. So next, the net sales top line because of macro economy impact, you might have some flat net sales next year. So R&D investment is increasing. So fixed costs will be increasing. So I'm not concerned about the mid-long-term growth. But next year, year -- year ending in March 2024, you might have some negative or flat profit?
You don't have to worry about that because that's only short-term, but you try to create the profit even for the short-term next fiscal year profit. So we stick to the profit growth for the short-term and longer-term perspective and also try to invest a lot for the R&D for the future growth.
Next question, please, from Mr. Yamamoto of Mizuho Securities.
I'm Yamamoto from Mizuho Securities. My question is rather weird. So WFE market is now -- focus is reclined, but TEL's guidance remain unchanged. That means TEL's net sales remain unchanged, but other companies, your competitors' sales will be declined. Is that what you want to say? Or now TEL is also affected by the market trend by 10% because the rule doesn't affect you, that's the reason why you haven't changed your forecast. Is that correct?
So the WFE outlook, 20% -- I said in the past, 20% growth for 2022. But now you have the outlook of 5% to 15%. That's the range of the WFE market growth forecast. But 30% -- I'm sorry, the Japanese companies on the yen basis company accounts for about 30%. Then 20% -- so based on Gartner's forecast, the average should be used. Now we are in the middle of August. And now yen is appreciating, getting a bit stronger quite recently. But compared to last year, on average, the yen is depreciated by 20%. So when you think about those figures, JPY 5 billion impact is generated. That factor is rather big. In our business, the Tokyo Electrons business, we don't lose any inquiries. So that's the reason why we leave our financial estimate unchanged. Of course, when you look at the -- we do have good evidence that we won some orders. But as for the question from Mr. Yamamoto, I think that factor is rather significant. So this is how I can answer to your question. And also Tokyo Electron, other than Tokyo Electron, slightly to some extent, there might be some impact in delivery date. That's what I heard. So WFE market is now expected to grow by 5% to 15%. We have some range for our outlook. On the other hand, specifically the market trend is one thing, but we haven't received any cancellations from our customers. That's the reason why we leave the -- our financial estimate unchanged. This is how I can answer to your question.
If that's the case, exchange rates remain unchanged, then there is no change in market, so TEL plan doesn't change. Is that the correct understanding?
Right. That factor is rather big.
So since there is no more questions, this concludes today's financial announcement. So lastly, we'd like to continually improve our R&D activities based on your precious feedback. So we would appreciate your kind cooperation in fitting out the questionnaire before you exit the WebEx. Thank you very much for taking your precious time to join us in this conference despite your busy schedule. Thank you.