Advantest Corporation

Hello, everyone. This is Fujita speaking.

I would now like to walk you through the financial results for fiscal year 2020 second quarter. Please refer to Page 4 of the presentation material.

This is a summary of the results. First of all, we would like to express our deep gratitude to all of our business partners and other related parties and to our own employees for their efforts to support our business amidst with the COVID-19 pandemic.

A quick look back at our forecast three months ago, given the intensifying conflict between the United States and China and inductive COVID-19, we expected orders for a second quarter to decrease from the first quarter. However, inquiries for SoC testers were stronger than expected and second quarter orders ultimately exceeded the first quarter.

Quarter-over-quarter sales and profits came in higher than expected and exceeded the first quarter results, compared to a year ago while sales increased profits declined because of smaller contribution of products with high gross profit margin in our sales mix as well as the Advantest's foreign exchange losses. I will explain orders, sales and profits in detail from the next slide.

Please turn to the next page. This is ordered by segment.

First, in Semiconductor & Component Test Systems. Orders increased by 5.6% from the previous quarter to ¥44.8 billion.

Orders for SoC testers were ¥35.8 billion, an increase of ¥10.8 billion quarter-on-quarter. Tighter U.S.

regulations on a major Chinese smartphone maker are having ripple effects such as increased inventory build-up and active jostling by competitors seeking to take advantage of the situation. Inquiries for testers for application processors, image sensors and display driver increased more than expected.

Demand for high performance computing testers was also strong. In memory testers, server-related demand was robust throughout the first half of calendar year 2020, but has now softened, resulting in a quarter-on-quarter decrease in orders of ¥8.5 billion.

In the Mechatronics System, orders increased by 7.7% quarter-on-quarter to ¥9.2 billion. Orders for EUV-related nanotechnology process increased and services support and others, orders declined by 6% quarter-on-quarter to ¥10.2 billion.

System level test orders increased compensating for a seasonal decreasing annual maintenance contract renewals and the orders were roughly flat quarter-on-quarter. Please turn to the next page.

Here you can see sales by segment. Sales of semiconductor and component test systems segment totaled ¥47.5 billion, up 12.4% quarter-on-quarter.

Sales of SoC testers for smartphone applications increased, both DRAM and non-volatile memory tester sales increased. Sales of Mechatronics Systems segment went up by 29.5% from the first quarter to reach ¥11.5 billion.

We have seen increasing sales across the entire segment. Services, report and others saw its sales increased by 15.4% quarter-on-quarter to ¥18.3 billion.

SoC system level 10% sales were steady. The next stage shows quarterly orders and sales by region.

First on orders by region. In South Korea, indicated in pink, smartphone related orders increased.

In Taiwan, triggered by a U.S.-China conflict, orders declined due to test capacity adjustments at OSATs. Now on sales by region as shown in the graph on the right.

In South Korea, in addition to increase sales of SoC testers related to smartphones, sales of memory testers also increased against the backdrop of high orders received in the previous quarters. In the Americas, system level test sales increased.

Please turn to the next stage. Page 8 shows operating income and other related items in the second quarter.

Gross margin consists 53.9% as sales mix fluctuations caused a quarter-on-quarter decline. SG&A expenses, including total other income and expenses amounted to ¥24.2 billion.

Operating income totaled ¥17.4 billion with the operating margin at 22.6%. The operating income for the second quarter increased a gain of approximately ¥2.5 billion from the transfer of Advantest's probe card business.

Please go to the next page. Here you can see R&D and other expenses.

R&D expenses were ¥10.7 billion in the second quarter, representing 13.8% as a percentage of sales. Capital investments totaled ¥3.2 billion and depreciation and amortization costs ¥2.8 billion.

As for the status of cash flow, free cash flow totaled ¥7.9 billion. Cash flow from investing activities increased due to Advantest's capital participation in PDF Solutions, Inc.

announced in July. Please move to the next page.

Here you can see the balance sheet as of the end of September. Total assets stood at ¥361.3 billion, cash and cash equivalents total ¥119 billion, down ¥7.1 billion from the end of the previous quarter.

Equity attributable to owners of the parent was ¥235.5 billion, and the ratio of equity attributable to owners of the parent was 65.2%, unchanged from the end of the previous quarter. Share repurchase completed by the end of September amounted to ¥10.9 billion or 2.09 million shares about 80% of the 2.5 million share limit set.

That's all from me. Thank you for your attention.

This is Yasuo speaking. I would like to share with you our business outlook for fiscal year 2020.

First to review the operating environment, please refer to Page 12. This is our view on semiconductor testing market for calendar year 2020.

Three months ago, Advantest forecast weaker demand for SoC testers due to tighter U.S. regulations on a major Chinese smartphone maker.

Subsequent developments were as expected, causing OSATs, our customers to prioritize test capacity adjustment. However, in the aftermath of enforcement of the new regulations, in addition to inventory build-up, other major smartphone makers have actively eyed the position occupied by the affected company.

This has stimulated smartphone related test demand pushing demand for application processor units, CMOS sensors and display driver IC testers to a higher level than expected. As supply chain reconstruction progresses within the industry, our broad customer base and diverse SoC tester product portfolio have enabled Advantest to successfully capture additional demand from customers, who are planning to increase production, covering the decline and demand for SoC testers from the affected company's supply chain.

In addition, as strong demand for high performance computing related products continues, it seems likely that OSAT will work through their testers surplus by the end of calendar year 2020. Reflecting the changes in the market, we have revised our calendar year 2020 outlook for the SoC tester market to approximately $2.7 billion.

Although Advantest market share will decrease year-on-year due to the characteristics of our customer mix. We feel that we are well placed to respond to the anticipated scenario of market growth heading into calendar year 2021.

For memory testers as forecast in July, memory demand or a data center related investment is likely to level off in the short-term, but this will also rebound in calendar year 2021, thanks to the anticipated tester market growth drivers such as DRAM, process shrinks and 3D NAND layer count increases. Please turn to page 13.

This is our full year forecast for 2020. Based on second quarter results, Advantest has raised our full year forecasts of orders received to ¥260 billion and sales to ¥275 billion operating income to ¥52.5 billion, income before income taxes to ¥50.9 billion and net income to ¥42.5 billion.

This forecast assumes exchange rates of ¥105 to $1 and ¥120 to €1 in the second half. For full year, we assume ¥160 to $1 and ¥120 to €1.

Gross profit margin is expected to decrease from 56.7% in the previous fiscal year to about 54%, and operating income merging is also expected to decrease year-on-year. In addition to the impact of changes in our product mix, this is due to our commitment to ongoing R&D investment and customer support system reinforcement, which we see as up-front investments necessary to meet the new test demands driven by customer needs for test reinforcement and highly sophisticated test methods for higher-performing semiconductor devices Please take a look at Page 14 where you can see the outlook by segment for fiscal 2020, starting with the Semiconductor & Component Test Systems segment.

Let me first discuss SoC tester business outlook for this fiscal year. Although OSAT investment in new testers is currently weak due to the tightening of U.S.

regulations on a major Chinese smartphone maker, competition among smartphone players is also understood to be stimulating demand for testers across a wide range of applications. OSATs are diverting surplus testers to different uses, in line with the restructuring of industry supply chains, and we are cooperating with their efforts.

We estimate that test capacity adjustments will turn the corner within the year. Based on these trends, we have raised our full-year sales forecast for SoC testers to ¥117.0 billion, ¥13.0 billion higher than our July forecast There are also signs of recovery in end demand for automobiles, industrial machinery, and consumer products heading into 2021.

In preparation for growing demand, we are closely watching the timing of renewed full-scale customer investment. Moving on to Page 16, which is the Memory Tester Business Outlook.

In the first half of fiscal 20, investment in data centers boomed, and demand for DRAM and 3D NAND testers was strong. As server-related memory demand has paused, tester sales are expected to be weighted towards first half.

However, with the increasing acceptance of new normal lifestyles around the world, data traffic volumes are expected to increase further. Memory demand is predicted to grow in 2021 and thereafter.

Advantest will comprehensively capture the growing demand for memory testers in response to DRAM process shrinks, the shift to LPDDR5 and DDR5, the expansion of memory demand for HPC, and increases in 3D NAND density. Let me go into Page 16 where I will discuss the outlook for Mechatronics and Services & Other Business.

In our Mechatronics segment, Advantest forecast full year sales of ¥38 billion centered on device interface products. In our Services, Support, & Other segment, we expect solid field services sales, as well as increased sales of system level test products.

Therefore, we have revised our forecast for segment sales upwards by ¥2.0 billion, to ¥63.0 billion. The growth of the two system level test business, one acquired from Astronics of U.S.

and the other being Essai of U.S. which we acquired will compensate for the decline in SoC tester sales resulting from U.S.- China conflict.

Let us move on to Page 17. This is my last slide.

To sum up, despite the significant uncertainties such as the COVID-19 pandemic, U.S.-China conflict and negative global economic growth, customers motivation to invest has not trended downwards as much as was feared. In light of our second quarter results, which exceeded our plan and our second half outlook Advantest has revised our full year orders and sales forecasts upwards by ¥20 billion and ¥16 billion respectively.

Although the impact of tighter U.S. regulations on the major Chinese smartphone maker has had a marked impact on the SoC test supply chain, supply chain restructuring is underway.

Advantest's broad customer base and diverse product portfolio enable us to capture the new demand created by this structural change in the smartphone market, and will compensate for the decline in SoC tester demand related to U.S.-China conflict. The impact of tighter U.S.

regulations is expected to turn the corner by the end of the year, and SoC test demand for automotive semiconductors and other devices is on a recovery trend. Business conditions are expected to improve in calendar year 21, although the prospects of the global economy remain uncertain.

Advantest's system level test business, which has been strengthened through M&A over the past two years is steadily growing and contributing to overall sales. Both SoC and memory devices will continue to evolve in CY21 and thereafter.

Advantest will continue to invest in R&D and strengthen our customer support system to ensure we capture the growing demand for testers driven by semiconductor performance and reliability improvements. Last but not least, I let you take this opportunity to thank our customers and business partners who supported us with our production system under the pandemic of COVID-19 and our employees who performed their duties steadily under the environment that was unfamiliar to them.

That is all. Thank you for your attention.

We would now like to move on to the Q&A session.

Thank you very much for the very detailed explanations today. Market environment is changing so rapidly and it looks very different from three months ago, around when or in which month, did you see tighter change in the market?

This is my first question.

Yes, let me answer your first question. Business environment is indeed changing so drastically.

Even after the U.S.-China friction began and God escalated, causing much confusion. Many things have been happening amidst such circumstances, it was quite recent.

In October or actually in the latter half of October, that we became confident to raise our full-year year forecast. Market dynamics are moving so fast.

As the impact of the U.S. regulation became quite significant and the conditions surrounding smartphone market became more definitive in mid September, OSAT activities started to pick-up suddenly and divert excess testers to new customers.

As a result, the reallocation of excess testers progress relatively well and we are now starting to see some additional demand by the end of the year. So, the market is changing quite significantly in your view.

So in short, it was quite recent when we observed the significant changes in the market.

Thank you. I have another question.

Under the current circumstances where difficulties against one company are helping other players to gain strengths, I assume competitive situation and customer portfolio becomes quite important. I would appreciate it if you could describe the current competitive landscape for iPhone applications, Exynos, Snapdragon other media techs as well as competition by Teradyne a memory tester business to the extent possible?

I am not able to disclose specific numbers about specific customers. But as you are all aware, I'm afraid we continue to be rather weak in North American major smartphone manufacturers for application process unit business, I must say.

However, all the other customers you just mentioned are using our testers extensively. And on top of that, we have many customers for display driver ICs and other baseband processors.

So, aside from the North America, major smartphone maker, current situations are positives to our business.

Just to clarify, as for the companies that I mentioned earlier may I understand that your market share is higher. I know that you cannot comment in detail, but any partner you can add?

Based on a number of customers, it is clear that we have markets here, but even if we excel in terms of the number of customers, size of the business also smartphone makers that I mentioned earlier is quite significant and you have a considerable impact on any more tester market share and drives the significant change in the market share each year. But in terms of the customer account, we believe we are doing better.

How about the memory test services now? Your competitor is claiming that their business is growing quite rapidly.

For the memory test your business, our peer started-off with a small market here, therefore this looks to be growing quite significantly, but our market share has been consistent somewhere between high-fifties and 60%. So, we don't have a recommendation that we were losing market share significantly.

It is certainly true that, our peer entered into the back-end business for DRAM, which was traditionally our strong hold. But we don't think that is going to change the market share dynamics overall significantly.

In the memory business, in addition to the North Americans peer, we're also competing against Korean player. Under the customer's dual sourcing policy, we have maintained the market share of around 60%, and we are no competing against a different peer over the customers with dual sourcing arrangement, but we believe that our market share is successfully maintained.

Very well, understood. Thank you.

That is all for my questions.

Mr. Wadaki, thank you very much for your questions.

Thank you for the explanation. I am Yoshida from CLSA.

My first question is. You have raised the full year guidance on orders from ¥240 billion to ¥260 billion.

To break this down by segment or by product, which business contributed to the upward revision by ¥20 billion? Also this guidance suggests your expectations with the orders in the second house to exceed the first half result.

How do you think the orders will trend in the third and fourth quarters respectively?

Orders for SoC testers and SLT are expected to increase.

I see. So, the upwards revision of ¥20 billion is attributable to SoC testers and SLT.

That is correct.

Any color you color you can add in terms of the split between the two, about half and half.

Well, clearly the contribution of SoC testers is bigger. So, rather than SLT, it is SOC, which is expected to grow significantly.

I see. And how are you projecting the order level in the third and fourth quarters in the second half respectively?

We think the orders will trend flat from the third quarter into the fourth quarter.

I see. So this ¥134 billion is split almost half and half between third and fourth quarter, is that correct?

Yes.

Thank you.

Well, there are a lot of activities taking place in the market at the moment. As we tried to look through the fourth quarter, many uncertainties still remain including second wave of COVID-19.

But we believe orders in the fourth quarter will reach the level of projected in the third quarter, so half and half between the two quarters.

SO even after taking into account the uncertainties used to predict the order to reach the third quarter level, and if things go well, is it possible that the fourth quarter will exceed third quarter?

Yes, that is correct.

My second question is concerning SLT. Along with the upward revision on orders, you raise the sales forecasts or services support in others by ¥2 billion.

I know you don't disclose the forecast on services, support and others alone, but I believe orders for SLT were very high last year. So what is your expectation this year?

Also heading into the next fiscal year, I believe demand for high performance computing is going to increase.

Can we expect the order to exceed the last year's level?

This is Mihashi speaking. Your questions are about the order expectation on SLT on the year-on-year basis.

Out of the orders for services performed and other segment overall, SLT contribution is expected to remain almost unchanged from last year. As the overall order volume increases from last year, as the orders are also steadily growing.

As for high performance computing applications, we think it accounts for roughly 20% of SoC total addressable market or return. As a supplier, advanced notes wafers to our customer will increase.

We also expect our high performance computing related orders to increase next year, compared to this year.

So may I understand that SoC orders are increasing this year from last year and expected to grow further next year?

It seems that the contribution within the overall services support and others or say almost flat year-on-year, but just singling out the order volume of SLT alone may I understand that the orders are growing this year than last year and expected to increase further next year. Mr.

Yoshihito, my apologies. I was referring to different data points.

As for orders, orders for system level test is expected to decline to some extent and fiscal year 2020 from fiscal year 2019. Please allow me to correct my earlier statement.

But within the services support another segment, sales contributions from system level test became quite high in this second quarter, which we just ended this fiscal year compared to last year. And that is expected to be the case on the full year basis as well.

So SLT sales contribution is expected to increase from last year.

I would like to ask two questions. First, when you earlier explained about SoC business and mentioned that demand is recovery slightly.

You touched upon his inventory buildup. Smartphone manufacturers other than Huawei become quite aggressive in making the investment.

Is there a risk that tester demand is inflated to the level above real demand? This is my first question.

On your first question, professional level was raised, backed by the built up inventory through mid-September or till September 15th when the tighter U.S. regulation came into effect.

And until then, OSAT were very busy. And because of a concern that after September 15th, some of our testers will become idle.

We weren't that bullish on the order outlook from the first quarter through August or early September. Investment stance was very cautious.

However, since September to date, demand is growing further. In our view, this is not inflated demand, competing over the position enjoyed by defective vendor.

We believe additional demand is coming through supported by real demand. While the idle testers will be utilized, testers are still expected to become short further down the road.

That is why we think our order volume is starting to increase. The estimate may increase some business over the same opportunities, but we don't think that this increase is due to double ordering.

I see it was very clear.

So smartphone related demand doesn't seem to be that bad at the moment. So what we shouldn't be concerned about a significant drop and the fourth quarter or next fiscal year, from the current high level.

Is that right?

Right.

And also, the device launch is scheduled towards the next fiscal year.

Back in July and August, we were concerned that surplus textures could be distributed in the secondhand market. But our concern didn't materialize fortunately.

That is because our customers would like to secure production capacity in the next generation, and therefore didn't decide to sell testers in secondhand market in our view.

Thank you for the dear clear answer. My second question is a bit early to ask I believe, but concerning tester market outlook for the next year 2021.

We're expecting market growth towards next year according to your explanation earlier. But in the case of SoC, for instance, how much growth are you foreseeing from $2.7 billion projected for this year?

I would appreciate it if you could share your views my application. Also, you project the memory testing market to grow to $1 billion this year, but what is your outlook towards next year?

This is a Sakamoto speaking. As for next year's outlook, we will put together our forecasts on time early next year based on market situations, customers' investment schedules, as well as many other sectors.

As you are aware, due to the U.S.-China tension and second wave of COVID-19 and associated uncertainties into the future, we have not been able to come up with our forecast accurately just yet. But we feel that demand is recovering towards next year related to 5G base stations whose schedules were sold due to COVID-19 smartphones.

And high performance computing and AI application on demand continues to be strong, and we are starting to see some recovery in demand for automotive applications, analog, ASICSs, automotive MCUs, industrial equipment and consumer electronics as well as the most advanced processors for smartphones or other high performance computing applications. So, it is our turn do that SoC term will go further from 2024.

For memory testers, from calendar year 2020 through 2022, well not very significant, we're still expecting some growth. Due to the introduction of EUV and miniaturization of DRAM chip count will increase.

Also, tests will become more sophisticated, leading to longer test time, and 3D NAND density will also increase. In addition, our customers are planning to expand their thoughts and reinforce their investment in memory business in China, among other factors.

So, the memory testing market is also expected to grow towards 2021. And we certainly would like to capture that growth opportunities.

My question has to do with the margin of the semiconductor testers of your company. In the first half of this fiscal year, it was about 27% or 28%.

On the average, when I derived the margin by looking at your guidance for the second half, it would be about 26%, which struck me as hitting the bottom more or less. Earlier, you gave us comments on expected demand for SoC testers next year.

As you can see grow every year. Do you see the possibility of getting back toward the previous peak levels such as 30%, which you did reach in the past?

Obviously, the development cost to your company has been increasing. But I've just seen the product mix may have been improving.

So, therefore, on a net basis, do you think you'll be able to reach the historical peak of the margin?

Are you asking whether our operating margin which was 22.6 in the second quarter and slightly over 20% in the first half, can go back to higher levels next fiscal year and thereafter?

Yes.

What I want to know is the margin for semiconductor assessors, which is a bit higher at around 27% previous peak, as far as I remember, 35% or 36%, which was recorded in the first half of one year ago, if I remember correctly, it is sales recover to the level of the previous year, we expect the margin to get back to around 35% or 36%. If you can take a look at Page 14 of the presentation material that I explained about earlier and compare the yellow portions of the bar chart of fiscal 2019 and 2020, indicating sales of SoC testers, you can see there was a drop of about ¥40 billion.

So, this is something that everyone knows already. I think it's okay for me to say this.

So, high-end SoC testers are commanding high margin and those testers are falling this much in sales. Our product families that are compensating for the gap, such as system level test products are growing significantly.

All memory testers are also filling the gap. Since that is how the product mix is, the result and fall in the gross margin is a fact that we should accept.

Now, if you ask us, what are the operating margin to recover to extremely high levels, if not truly to what it used to be, Sales of SoC testers start to grow significant again, we believe it will still go up, but cannot make any commitment, because exactly to what extent it will recover also depends on the mix of other products. At least, what we can is that, if the sales of SoC testers get back to what they were in 2019, a fair degree of improvement in the operating margins can be expected.

Now, SLT or system level test products are showing a bit lower margin for now, but this is because of the initial development cost burdens and tremendous man hours spent in production. Obviously the gross margin for a new product, such as SLT will be improved through our efforts to improve the operation of the Company.

At least, I believe that if sales testers get back to what they used to, the operating margin will improve. Although, we say, we are making upfront investment, they are really designed for generating new sales.

Incremental sales from new product families should aim for better margins than the existing products. So, you are correct in assuming that an increased share of SoC testers and sales will naturally push-up the operating margin.

I see. Thank you.

Thank you very much for the question.

Thank you very much. Hirakawa from Merrill Lynch Japan Securities, I have two questions.

My first question is about the ¥9 billion outside in orders for the second quarter, over your focused. Could you give us the background or break down.

For example, where their demands for SoC with advanced process notes or new applications for smartphones? If you can explain by referring to which applications that contributed, that will be appreciated.

Sakamoto speaking. The actual results of orders in the second quarter exceeded our forecast by slightly more than ¥8 billion in SoC testers.

Off ¥8 billion overshoot, automotive, industrial machinery and consumer products together accounted for a half, and another 40% was from display driver ICs.

Thank you. So those will add up to 90%.

Thank you. My second question is about the size of the 5G related pistol markets.

If I remember correctly, last year, it was worth $500 million. I maybe wrong, but that is what I remember.

But what is your assumption of its size this year? And how much of that will be accounted for by sales of your company?

And how do you see that market to change next year? You do not have to touch upon the estimates for yourself, or writing to share with us your estimate with the size of the 5G related digital market this year and next, and possibly your sales out of the total?

Sakamoto speaking. In terms of 5G related demand, we assumed $800 million to $1 billion was as a town.

Conflicts between U.S. and China changed the lineup of customers.

But in light of those changes, we came up with this and it's a 1 billion approximately.

Then, what has been incorporated in our estimate for 5G smartphone related demand?

In the case of SoC devices, application processor units baseband processors, RF, CMOS image sensors and display driver ICs. Definitely speaking, is expected to capture about 40% to 50% of the market for now.

And that will be for this year for fiscal year ending March 2021.

Or it's 2020 market?

Yes.

Then what about next year?

As I've been discussed base stations and smartphones, which had been stagnant under the pandemic of COVID-19 are expected to grow as we head into 2021. So the more as was said, in the competitive market, those that can enjoy higher margins will be obviously high end smartphones.

And semiconductors designed for them will probably be surprised. If that happens, then the highest sophistication is the micro services will require advanced process knows to be used and testing time to be extended.

From those two perspectives, we believe our time will become even larger.

I want to ask two more follow-up questions if I may. You mentioned 5G smartphones, does that mean that $1 billion you refer to does not include 5G base stations?

And the other question, when you look at the market in 2021. I believe the customer mix will probably be favorable to your company and therefore expect your market share to go further from 40% to 50%.

If I'm wrong in having this expectation, please let me know. What I refer to as increased base stations.

When you say 40% to 50%, is it 40% to 50% out of the smartphone market or 40% to 60% out of the $1 billion market?

It's 40% to 50% of the $1 billion market. I believe the customer mix in 2021 will help you expand your market share in that year.

As Yoshihito earlier, those who supply products to smartphone manufacturers well not everyone has them. Our product draw customer base.

However, besides application processor units and baseband processors, sales still related to smartphones increase. CMOS, image sensors and display driver ICs, among others, become mostly relevant.

Since our product portfolio is diverse enough to cover those items, we can hope for increased demand across the entire spectrum of our product.

Thank you very much. Moriyama from JP Morgan securities.

My first question has to do with the SoC tester market estimate. You raised back to the level, you originally focused it back in January.

You lower the estimate to 2.4 billion once in July, but ended up bringing it back up to 2.7 billion, which was your estimate at the beginning of this year? If you look curious numbers, though, there were issues such as U.S.

regulations over a Chinese smartphone manufacturer, the estimated size of the market roundup at the level focus in at the beginning of the year. In today's presentation there were different offsetting factors mentioned, but to put it in extreme manner, despite various negative factors.

Am I correct to understand that things got back to where they were at the beginning of this year ultimately? To look more closely as the gap left after Huawei drop off, has been being fueled by Xiaomi, VIVO and Oppo.

Are you saying it was enough to offset the gap? Or those that was not enough?

Are you saying that other obligations such as automobiles, and display driver ICs has grown more than expected and turn out to be enough to bring the market back to the originally estimated level? In other words, if I can add more, would it be fair to say that even though none of the players in your personal mix, managed to make inroads into Apple business, the size of the market has been brought back to where it was in the end.

Sakamoto speaking, we brought back our estimates from 2.4 billion to 2.7 billion, which meant that there was an increase of 300 million. The breakdown is the following, application processor units represent 214 million, CMOS image sensors 30 million, display driver ICs another 30 million, in total 300 million.

The increment from application processor units are benefiting both our growth and the growth of our peer. While we Advantest are one who benefits from the increments from CMOS image sensors and display device ICs.

CMOS image sensors and display device ICs are growing more than expected at the beginning of the year. And the extra growth is being captured by our products.

Thank you. That was very clear.

Another question on the market estimates on Slide 12. In response to a question asked earlier, you responded in qualitative terms that SoC tester market is expected to be mostly flat in 2021, while memory tester market is estimated to show growth in 2021, as part of the longer term process of moderate growth towards 2022.

The fiscal 2020 is expected to achieve a 10% year-on-year growth. If you do the math, aside from how your company defines the word moderate, the memory digital market has grown at 50% this year and experience a 50% increase in the next two years.

That will give you a 20% increase in a single year. Now, does your company see that as moderate?

Generally speaking, when you say moderate, you may associate that with levels like 5% to 6% based on the 10% growth of the digital market this year, what kind of goals for next year do you think would seem reasonable at this moment concerning the memory tester market as well?

Mihashi of corporate planning is speaking. Your question is hard to answer, but our estimate is probably a single digit growth or in other words, mid to high single digit growth is our estimate.

Are you talking about combined market SoC and memory testers? Or are you just referring to memory to store market?

We're talking about each of the two markets. So, you can also apply that to the total market.

Okay, so at this moment, you estimate is a single digit plus growth can be seen for each market? Is my understanding, correct?

Yes.