FY2008 Financial Announcement meeting Q&A

Since the DRAM market has not completely emerged from its slump, we expect orders for semiconductor production equipment during that period to remain at the same level as during the period from January to March. In terms of applications, the percentage of Logic will grow in relation to sluggish investments in DRAM and NAND flash memory. Orders for FPD production equipment during the April to June period are expected to shrink by 50% compared to the January to March period from the busy, previous two quarters. Total orders are expected to be around 120 billion yen.

We have a decent amount of information available, so we think that our estimate of 26 billion yen in operating income for the first half of the fiscal year is accurate. For the second half, meanwhile, we predict that operating income will double that of the first half, increasing to 58 billion yen; this is based on our assumption that orders will recover in the period from July to September and thereafter, thereby boosting sales.

Since profits will decrease, we expect that free cash flows for the current fiscal year will decrease slightly compared to the previous fiscal year.

After giving ample consideration to the question of how we should realize returns for shareholders, we decided to not engage in the share buy-back at this moment. In the near future, we will develop specific capital-related policies and shareholder return plans after carefully examining the degree of funds needed for development and acquisitions aimed at ensuring future growth.

In South Korea, semiconductor manufacturers have been curtailing their investments since last year, but we anticipate that they will resume active investments this year.

Due to strong orders during the previous two quarters, order backlog stood at 127.1 billion yen at the end of March 2008. Some order backlog is for deliveries scheduled more than a year later, because customers in all regions orderd at the same period, and the tenth-generation equipments are new product for us. For these reasons, net sales for the fiscal year ending March 2009 are expected to be 90 billion yen. The balance between those sales and order backlog at the end of March 2008 will be reported as sales for the fiscal year ending March 2010.

First, the SiC epitaxial equipment has been developed jointly by Kyoto University, Rohm, and Tokyo Electron. During the fiscal year ended March 2008, we were confident that we could establish mass-production technology for SiC wafers. Given the future growth strategy of automobile manufacturers centered on hybrid cars, and other factors, demand for SiC devices is expected to grow substantially in the years to come because of their high pressure resistance and low loss capability.
Another new TEL business concerns the modification of equipment to enhance energy efficiency. Since energy conservation measures have not been implemented for the old 200-mm equipment that is operating at customers' sites, we will reduce the volume of CO2 emitted by TEL equipment by reducing the amount of power consumed and chemical substances used.

After the current new businesses are begun, we expect them to be worth 50 billion yen within three years and 100 billion yen within five years time. While RLSA*1 is expected to be commercialized within one year, it will take several years to put GCIB*2 technology to practical use. The GCIB technology was acquired from U.S.-based Epion Corporation, and it is currently in the process of being redeveloped as semiconductor production equipment. We think that the period from its acquisition to commercialization will be about three to five years.