Renesas Electronics Corporation

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01:35 Once again, hello, this is Shibata, CEO of the company. Last year we had a fire and to summarize that and also the progress of the -- our mid to long term business strategy is what we explained in the progress update, which is held by annually, and that is -- the next session is scheduled for next month.

So for today, I would like to – we’d like to focus on the full year results for fiscal 2021, which ended in December 2021. 02:10 Now, as you have -- many of you, I believe, have already seen the presentation.

On a non-GAAP basis, revenue was slightly below JPY1 trillion, and operating profit was slightly over JPY300 billion. So that was the number for last fiscal year.

And the demand continues to be strong and robust and we see that fine continuing and for fiscal 2022 in the first quarter quite a favorable and steady expansion is projected for the first quarter, and the numbers already presented there. 02:56 So with that, on an ongoing basis, the situation remains not really bad at all for us.

And all those questions that we have been received from you regarding at which point we'll see an inflection of demand? We will continue to carefully keep an eye on that.

And if we see any signs of changes, we will be ready to take actions as necessary. That's going to be the plan for this year.

03:26 So, the detailed numbers will be saying by Mr. Shinkai, our CFO.

So please bear with us. Shinkai-san, please, the floor is yours.

3:37 All right. I'm Shinkai, the CFO.

I would now like to begin the fourth quarter and the full year results presentation for the fiscal year ended December 2021. Based on the material posted on our IR website, please go on to page 4 of the presentation.

03:52 For the fourth quarter, if you look at the middle dark column in the middle of the table, revenue was JPY314.4 billion, operating gross margin was 54.3%, operating profit margin -- our operating profit was JPY98.7 billion and the profit margin was JPY31.4 billion and the profit attributable to the owners of parent was JPY80.9 billion and EBITDA was JPY119.4 billion. As for the comparison with the forecast.

If you look at the third column from -- if you look at the far right column, I think you can refer to them. I'll give you some explanation later.

04:34 And also for the -- full year numbers are presented on the next dark column, third from the right. And also Celeno’s acquisition which was just completed in the end of the fourth quarter.

That's not included in the PL, only the BS that is consolidated for fiscal 2021. That's the accounting treatment for that acquisition.

04:55 Next page please. This is the revenue trend on a quarterly basis.

The fourth quarter is represented on the far right. Overall, the revenues – achieved an increase of -- achieved an increase of 64.1% year on year and 21.7% on a quarter one quarter basis.

If we exclude Dialog on a year on year basis, 34.0% and the 8.7 – 8.0% on Q-on-Q. And as for automotive and industrial infrastructure and IoT business, the numbers are presented already here.

If we exclude the Dialog contribution, automotive year on year was a 37% increase and Q-on-Q 8.1% and industrial IoT and infrastructure year on year 38.9% and on a Q-on-Q 9.1% increase. 05:55 Now moving to page 6.

The fourth quarter operating margin -- gross margin, operating margin and revenues are summarized here. We have presented it together with the segment results.

The company total on the far right. Let me begin with that.

The box on the upper right shows the changes from the forecast. As for revenue, there was a 5.5% in terms of the median level, there was increase of JPY11 billion.

The ForEx impact was about 40% and also the remainder came from the changes from the automotive and in the industrial, infrastructure and IoT business. 06:48 For automotive, if the ForEx impact is excluded, there was a slight under performance compared to the forecast, because there were some adjustment from the customer demand towards the end of the year.

As for Industrial infrastructure and IoT, there was a significant increase compared to the forecast. PC and mobile related demands and also the former Dialog products, there was a strong demand for them.

So we were able to front load and ship those products that were completed before in advance. And there will be some adjustments in the quarter, this current quarter.

07:27 And as for the gross margin, 1.3% increase compared to the forecast and the product mix as well as the production recovery were the major driver behind this improvement and 80% was the contribution for this. And also for the operating expenses, there was a decrease compared to the forecast.

R& D SG&A on a same proportion made a reduction compared to the forecast. We achieved a reduction compared to the forecast.

07:59 And on a quarter-on-quarter basis, on bottom right. In terms of gross margin, there was a reduction of 0.9 percentage points, and this is mainly due to the consolidation of Dialog that impact this -- accounts for the bulk of this.

And also if you look at the segment results on the right hand side. As for the revenues, the breakdown was already provided earlier.

As for the gross margin and also operating margin, for industrial, infrastructure an IoT Q-on-Q, if you look at the numbers Q-on-Q, you’ll see that there are some changes there, and that's mostly due to the consolidation impact from Dialog. 08:39 Page 7, please.

This is the in-house inventory trends. On the far right, if you look at the company total, the DOI overall on a Q-on-Q basis, we achieved a reduction, but if you look at the left hand side, there was a slight increase in automotive and a reduction in industrial and infrastructure IoT business.

So, overall, in terms of actual amount, there was an increase, and this is due mainly to the PPA impact from Dialog and the addition of Celeno. If you exclude those impact, there are three major impacts, because of the front loading of some inventory, including both work in progress, as well as finished goods.

And also for the backend production increasing than forecast and also for finished goods. 09:34 For automotive, as I mentioned earlier, the timing difference, because of the timing there are back orders that was the impact.

So, therefore, both work in progress and also for finished goods, as we mentioned during last -- compared to the last presentation, there was a slight increase in the inventory level that we hold in-house. And this is the sales channel inventory, the far right shows, again, the company total.

And just for your information, for the channel inventory the Dialog portion is not included here. And we'll try to include the numbers after completing the integration in the first half of this year.

10:16 The company total WOI on a Q-on-Q basis achieved a reduction. And if you look at the segment results on the left hand side, automotive, compared to the initial assumption, there was a slight increase.

This is due to the OEM production adjustments. As for Industrial infrastructure and IoT, there was a reduction compared to our initial expectation due to the decrease in inventory and also the changes in demand.

Those are the 2 factors behind this decrease in WOI. If you look at the actual amount, the inventory -- it may look as though this is flat or slight increase, but in some transactions, in some trade flows because of in the actual amount there is -- there seems to be a slight increase.

And shipment EBIT introduction will be continued in certain basis going forward. So if you look at the actual amount, there might be some times where we see a slight increase in the inventory actual amount.

11:17 Now moving on to the next page, which is about the utilization rate for the front end on an input basis. Fourth quarter utilization rate was almost came in in-line with our expectation at 84%.

On a Q-on-Q there was a slight decrease, which is due to the number of actual days of operation. 11:39 Please turn to page 10.

This is the order trend. We are looking at the order backlog based on the client, we have been showing the quarterly trend.

And as we have been communicating to date, for the long term orders we are trying to take on those long term and except for Dialog, that was completed in the third quarter and for the Dialog portion, we are completing those transactions in Q4. So going forward the order backlog will be coming down.

12:18 Also, on the hand side, you can see the total order and the order backlog. On the far right, you can see two bars.

The bar on the left, the gray portion is the fixed order which is equivalent to the graph on the left. And then we have now received the order, but based on the contract, we have some order that's been committed by the clients, that's represented by the commitment bar.

12:47 And on top of that we have orders that happens in the fiscal year. So on top of that, we have that order in FY22.

On the right hand side you can see the total. So it shows the total demand.

And most of that will be the revenue for this fiscal year. 13:09 And on the other hand.

If you look at the bottom, you can see that there will be some order backlog at the end of FY22. As part of this we will still be on our books as the order backlog get the end of the fiscal year.

So what this means is that, when we work on the long term orders that we started to do from last year, if we do not take those actions, the order backlog graph will be coming down in the future. So that is our projection.

13:41 Please turn to page 11. And this is EBITDA and free cash flow.

In Q4 EBITDA was JPY 119.4 billion. For the full year, it was JPY375.4 billion.

On the right hand side you can see the free cash flow. Our opening cash flow was JPY111.2 billion, free cash was JPY95.3 billion.

Free cash for the full year was JPY259.1 billion. 14:08 Next page please.

So this is the forecast for the first quarter or FY22. Please look at the dark blue column in the middle.

For revenue, the forecast midpoint is JPY336 billion. Q-on-Q as the column -- columns on the right, we are expecting 6.9% of growth Q-on-Q.

And as for gross margin, we are looking at 55.5% Q-on-Q. The improvement will be 1.2 percentage points.

And for OP we're expecting a 34.5% gross margin. On Q-on-Q there is an improvement of 3.1 percentage point.

14:56 Next page please. This is the revenue and demand forecast for Q1 and FY22.

As for the forecast for sell in, we have the Q-on-Q and year-on-year numbers that coincides with the previous slides. Q-on-Q is 6.9% for auto, that was double digit plus in mid-teens.

On the other hand, and for Industrial/Infrastructure and IoT, it's a single plus as it's a low single digit. As I communicated earlier some of the orders have been pushed forward to the previous quarter, so there will be a rebound.

15:38 And for the sell-through forecast, we see similar trend for industrial, infrastructure, IoT Q-on-Q basis it will be an increase of single digit rebound. And for the other segment, we and expecting an increase in double digit.

15:54 Next page, please. This is the breakdown of revenue for Dialog.

The grey portion is the legacy business that’s in effect have been sold, licensed main PMIC business. As scheduled, in Q4 it was completed.

16:19 Next, I would like to highlight the few pieces in the appendix. Please turn to page 19.

This is a balance sheet, as I said at the outset with the acquisition of Celeno it is reflected in the balance sheet. It's about JPY35 billion impact, which is included in the goodwill.

16:42 And for PPA, in Q1 this year we will complete that. And at that point the PPA will be reflected there for Dialog.

And for Celeno, it will be completed in Q2 and thereafter it will be reflected. 17:00 Page 21, please.

This is a reconciliation between GAAP and Non-GAAP. So from this time, we have change the categories to say.

We have the recurring item and the non-recurring items. Now for the non-recurring items we for impact in others.

17:24 Next page please. So this is the visualized in the graph.

So in the middle you can see Dialog and Celeno related. This will be reflected in Q1, Q2 respectively after we complete the innovation process.

17:45 Next, page 24. This is the status of our CapEx.

For Q1 in a decision making basis, we're looking at roughly JPY40 billion as CapEx plan. And out of that, the light blue part is really half of that for ramp up investment.

And we will utilizing subsidy from . 18:18 That will conclude my presentation.

Thank you very much.

19:31 Hello, this Fujiwara from Citigroup Securities. Can you hear me?

19:37 Alright. So two questions.

So please allow me to ask them. One point of confirmation at the outset.

On Page of the presentation on the right hand side you have the total demand on this slide for -- the fixed portion is about TWD1.2 billion according to what I see here. And on top of that you have the commitment and also the orders coming in in 2022, which appears to look TWD2 trillion in total.

And there's a backlog of about TWD500 billion according to what I see here. So according to your view, I think has total revenue TWD1.0 trillion is that your projection basically?

I that what is shown in here? The actual direction is okay, but TWD1.25 billion -- trillion appears to be too bullish.

But that basic direction is correct. Okay.

So let me dive down into that TWD1.5 trillion. Let's say that hypothetically that TWD1.5 is correct.

Then this TWD1.5 trillion, if you wanted to sell that, do you have the capacity available to sustain that sales? And also if TWD1.5 trillion, if you wanted to do that, if you exclude the consolidation impact of Dialog, I think mid-30 some percentage increase was already achieved in 2021 and then in 2022 excluding Dialog I think 10% or Y-o-Y increase I think is projected or planned for fiscal 2022.

And I think that is a high level by international comparison. So practically do you think that is possible?

Can you give us a direction about that?

21:20 All right. So in order to avoid misunderstanding, TWD1.5 trillion I think is too bullish.

So I think that is too much. So I don't think we can expects that.

So TWD1.5 trillion if you talk about the supply based on that, then I don't think that is feasible for us and that is not our plan either. And as a basic direction, since last year and for this year as well on a continual basis we are expecting a significantly large growth, and that is true.

And the supply to our company for that portion according to what we can already see today, I think we have by and large secured those supply for us. What I mean by and large is that, roughly speaking, there are two points here.

22:16 Although the size is not that significant yet foundry and OSAT and some raw materials, those suppliers mainly – when I think about them on an ongoing basis the supply increase or allocation increase are still being requested and some portion of that is included here in these numbers. And also, this continues to be the trend for the last two to three years.

Omicron and the COVID-19 impact still remains, and we still have that impact here and there. So what is happening, and we don't have any certainty as to when and where the supply could be suspended.

So those were the two factors. So TWD1.5 trillion I think is too much, but on a comparison with last year, I think we can expect a steady growth on a continual basis.

And the materials and the supply for that and the capacity to achieve that in house as well as outsourcing the capacity for that, I think by and large have been secured. That's what I wanted to say here.

That's all from me. Thank you.

23:31 Okay. Thank you very much.

So one follow-up question on that. So the - you are -- you said that you are continuously requesting some allocation increase to some partners, but divide that for first quarter.

If you look at the full year of fiscal 2022, I think this I think the lowest level. So should we continue -- should we expect the sequential increase over the quarter's, coming quarters?

23:53 The annual guidance is not provided this time around. So I don't want to repeat this interaction.

I think it's difficult for me to repeat this interaction, but as of this point, how should I put it? We are not expecting significant volatility, so favorable sequential curve is projected.

That's what I'm saying. Thank you.

24:16 Thank you very much for that. I understood.

24:35 This is Hirakawa-san from BofA Securities. Thank you for this opportunity to ask my question.

My first question is last year semiconductor sales increased by 35% and it was over 30%. And I think the increase in the content per vehicle and also fulfilling the inventory, how would you break down that growth?

There is a concern that there is too much semiconductor there in the market. So that's the background of my question.

And on top of that going forward, look at the auto production and also the automotive semiconductor growth and also what kind of gap should we expect between to the tow given the content per vertical vehicle increasing? So that's my first question.

25:28 We have Mr. Kataoka, so I’ll ask him to take that question later, but before that let me offer you a few words.

Looking at the contact per vehicle increasing, if I make a very conservative or solid comment, I guess we will obviously see a major change in the number. But intuitively, looking at the risk in the business trend, the contents impact is getting bigger than before.

So that's my first end impression. So I think this is coming from two factors.

One is that, I think you are also still getting this impression and this maybe a consensus, but recently if you look at entry class vehicles, the ADAS equipment is very robust compared to before. So what's installed is actually as good as for the premium luxury cars, so that's one impact.

26:36 And also, the second factor is the shift to EV as you all know. We are seeing that impact.

So that’s the one major impact. And the second factor that that I’d like to highlight is looking at the US OEMs.

They have been quite vocal and open about this by there has been a lot of constraint on supply, the manufacturing and sales. And already had to prioritize what they want to do.

So they have been quite selective. And our clients are client based, I think it's prioritizing the vehicles that's higher in price so the electronic contents and the semiconductor content that's higher in these premium cost.

And I think the OEMs are increasing the production of those high end cars. In that sense compared to previous trend, looking at the most recent trend, the semiconductor content per vehicle growth is becoming greater.

So that's my another impression. 27:45 Let’s go ahead over to Mr.

Kataoka from further details.

27:52 Yes. I’m Kataoka from the Automotive Solution Business Unit.

Last year we have seen various data points and looking at the auto production increase, that was about 33% last year. And the content growth, we have various data points, but it’s considered to have grown by8% to 15% and some are saying it 20%.

So it’s a wide range. And as Mr.

Shibata mentioned earlier, there is a constraint on the auto production. So the OEMs are shifting their focus on the high value added cars, which means that they are using more semiconductors.

And I think the contents growth may exceed that 8% to 15%, that I just said. So in sum, the production growth and the content growth put together, we may see of growth of around 20% or more.

But as you pointed out, our growth is at 35% so where this is coming from is that on top of racing in the market the inventory at the OEM and Tire 1 is at historical low last year. And even today, that's been the case.

As I think of building up on the inventory level. So that is the delta we're seeing.

29:25 And clearly our inventory level is building up for sure. So we are paying close attention to that growth OEMs and Tier 1.

We are closely coordinating with them to monitor the situation. But if you just look at the OEMs, the inventory of finished goods is at historical low and that’s what we can say from the general data.

And for this year, the production unit, again there are various data points, but what we have on hand is, some data points suggest more than 10% growth. And the contents growth as last year they will be strong.

So in sum, for auto altogether, we can expect a high growth, but I said that, the early production volume will be impacted by semiconductors and other components. So if the oil production does not grow by over 1 as I said, then in total there could be some adversity.

So that's something that we need to closely monitor going forward.

30:38 I have another follow-up question. You said that you are closely monitoring the inventory level, how about the backlog?

How about the clients inventory level? Are they at a healthy level?

Can you share to the extent possible? How closely are you watching those inventory levels?

Can you help assure me with the inventory level that you're monitoring at the client base?

31:03 Kataoka-san, would you like to answer.

31:07 Okay. I'll take the questions.

This is Kataoka. So we don't see a surprisingly level and a micro level different companies.

When we talk and based on the discussion and also where we can get the actual figures, we are monitoring the trend. And also, we are also watching the macro data points, in particular, the trend of the inventory level t's something that we are closely monitoring.

As I try to say the absolute value of the amount of the inventory is high or low, but to the previous level, we're trying to see where we are today in the cycle also reflecting the financial data. 31:54 So, when we take a comprehensive macro view we can see if the current level is okay or if it is alarming, so that's how we are to view the trend.

So I will be repeating you myself, but last year about 2/3 of the revenue or increase in revenue I think was okay. But 1/3 of the revenue growth regardless of it was additional or not, I think it was a built up in the inventory.

So that is my view. 32:27 On the other hand, for this year looking at the auto production compared to last year the projection by many is that, that is going to go grow quite significantly compared to last year, so if everything was smoothly, then we should not see the situation as a major concern.

So looking at the OEMs production plans and also the third-party production plant versus our plans. If we see the underperformance in the actual numbers, then we may have to be rethink our strategy.

Thank you. Operator 33:04 Thank very much for that Now, the next question is from Daiwa Securities, Sugiura-san.

Please begin your question after unmute yourself.

33:22 Hello, this is Sugiura from Daiwa Securities. Thank you for appointment me.

I have a question regarding the demand first. 2022 ABU and IIBU.

For market growth, which is expected to achieve a higher rate of growth? In Q1, I believe IIBUs because of the reaction of the shipment that was made in advance.

I think the growth rate for the Q1 is lower with IIBU. On a full year basis for automotive versus IIBU, which can expect a higher rate of growth?

And if possible, can you also comment on the demand trend by application? And also due to this product portfolio, is there any element where you can achieve a higher growth and the market average?

Can you comment on that as well?

34:17 As Regarding the revenue growth, I think ABU is expected to achieve a higher rate of growth compared to IIBU for this year. For IIBU mainly as a strategy intentionally all those efforts for diversification.

I think those was carefully and successfully taken. And I think that is already manifesting itself.

And on the other hand, because we have diversified to some extent already, those cloud data center applications which can achieve a high rate of growth compared against those portfolio where we have a high debt on. I think relatively speaking, the growth rate will be smaller, because that's a necessity and that's inevitable.

35:15 When it comes to automotive, we are expecting a huge rate of growth this year after those years of performance. Of course, the details will be added by Kataoka later if there's anything else that he can comment on, but for application ADAS EV related applications are expected to achieve a high rate of growth according to our projection.

But in our case, especially the third generation SOC as well as 40 nano-micro MCU, because of the insight we have acquired in the past are now being deployed. So I think that is manifesting itself in terms of huge sales growth.

36:08 Of course, it's very difficult to define properly what SOC is, but I think compared to market average and compared to our competitors, I think this is an area where we are seeing a larger rate of growth, higher rate of growth. That’s all from myself.

Kataoka-san, do you have anything to add?

36:26 Yes. For automotive electrification and then also xEV electrification as well as ADAS and gateway, those applications are going to increase in number.

And this is going to be a standard feature for all cars which used to be an optional choice in the past by MCUs and SOC in our case is therefore expected to increase significantly, in some cases triple or double compared to last year because in total, I think we can expect a significant growth for those applications going forward. That’s all from me.

Thank you.

37:04My second question. On page 10 of the presentation, I have a question as well for this stage.

Regarding the backlog, the backlog growth Q1, Q2 and Q3 that remained very high, but in the Q4, the growth rate has slowdown quite significantly. So for your order efforts, your long term efforts, I think this has a – had a positive effect on the fourth quarter, but your long term effort for order taking, how did this traffic into the backlog level?

And I just wanted to know if this is -- if this change is a slowdown, is a trend change or not?

37:47 Thank you very much for asking that question. This is a matter that I think it is very important that you understand.

So that's the reason why we give drafted graphs here. But once step before that I would like to mention that each company are taking different measures in this area, like a U.S.

company – a particular US company they have already included some fixed orders for next year already in this year's number. And European companies do not do any effort like that at all.

38:22 What we have done is that, for the full year of this year, all those orders for this year those were -- we try to finalize them and fix them first and foremost. So we are not talking about next year, basically at all.

So last year -- in the middle of the last year -- since the middle of last year, we thought that we have to fix these orders otherwise, we won't be able to catch up with the supply and many different plans. So for the demand for fiscal 2022, we requested customers to fix those orders.

Those requests were given to customers. Accordingly, all those grey portions here except for some little portion, which is a mixture of some many things, but basically those are the orders to be delivered in fiscal 2022 and nothing beyond that are basically included.

39:16 So we started this effort in the middle of last year and started to increase significantly in the early part, but then in the fourth quarter, the fiscal 2022 orders were already secured and already issued. So therefore, as Mr.

Shinkai mentioned, our activity to secure our orders is already finished. And then as we have informed you the last time, the Dialog efforts was somewhat related.

So therefore, those are not included here. So flattened out here was a natural outcome as a result of our planned efforts.

Therefore, this gray portion is expected to come down going forward. This is what we wanted to convey to you, and that's the reason why we prepare this diagram.

And at the risk repeating myself, beyond this, outside of this framework in writing the non-cancelable orders have been agreed and that accounts for a sizable portion, which is represented by the commitments in the middle section there. But the reason why we have done this is because based on the request of customers they wanted to use a conventional EDI system for order placement.

So for the orders beyond that for the future, they didn't like that kind of operation. Some customers resisted that idea.

So for those customers, we said it's okay. So we admitted that.

So outside of that system, we decided to agree on the order taking and order placement. So when the deadline becomes closer on the EDI system, the orders are going to come in.

And those already committed, but in terms of our system, it is not recognized as orders yet. 41:02 And the top row – top section here, the orders in fiscal 2022.

Those are from new customers and long tail customers and other -- and due to other reasons those are not really finalized yet as an intentional decision. So that was decided by RSI rather.

So for those customers just like before, certain lead time will be set for taking those orders, just like before. So those middle portion is commitments.

In total, those numbers are already fixed and as we move forward, this will translate into and be blended into the gray portion. And then at the top of that, the total amount of that is already not fixed and that's the reason why this is expressed in gradation colors.

That's the rationale behind this graph. 41:58 So, therefore as time goes on the grey bar will come down in terms of the size, and therefore to offset that slightly the commitment portion and the orders in fiscal 2022 will blend in to the grey portion and for that portion the amount will come down.

And then on the right hand side, the dark blue that will be translated into the revenues that is represented by the dark blue part. Now, as for the order from fiscal ’23 onwards.

Although we have received some questions already, because the overall market is still difficult to make a proper forecast, so we would like to spend some more time. So towards the middle of this year, we will have to consider whether to repeat the same practice or give more flexibility, shorten the timeframe or extend the lead time.

I think we will have to decide on the most appropriate selection and respond to customers. 43:06 I hope this answered your question.

43:08 Thank you. I have a follow-up question on that.

On the other hand, the production lead time is getting longer, and also the demand for – and supplier for semiconductor remains to be very tight. So therefore, the shortening lead time I think in practicality is very difficult, according to my view.

So if that is the case then, certainly the fixed orders will translate into revenues and then will be delivered, but once the new orders for fiscal 2023 becomes -- kicks in, I think the backlog coming down was difficult to understand. I think the backlog will not come down that much.

So can you comment on that part as well?

43:56 Right. Towards the mid of the year, it depends on the efforts that we conduct and that will take towards the middle of the year.

So are we going to repeat the same process and the efforts as last year, then the gray bar may go up.

44:10 Okay. Understood.

Thank you.

44:15 Then the lead time itself, I don't think we have seen a significant extension of the lead time in my perception. So the semiconductor device manufacturing lead time or after taking the orders towards the shipment -- that lead time because the demand is so strong, it's getting longer, of course, but when it comes to the semiconductor production equipment after order placement until that is delivered to us that lead time is also getting longer and longer.

That is true. 44:48 But when it comes to capacity -- production capacity such as raw material, foundry and all sorts, the production capacity -- how to allocate those capacity actually.

Each company for the allocation beyond next year is not really finalized. I think most of the companies have not finalized their allocation plan at all, in our case rather towards the middle of this year, we are going to finalize allocation plan.

We receive that kind of proposal, of course, some major companies I think are talking about this in second half of this year. So that means there are flexibility for us and room for us to make changes, so we can wait until then.

So we are trapped and then decide on the actions for next fiscal year and beyond. Thank you.

45:40 All right. Thank you very much.

45:59 Hello. This is from Nikkei.

Can you hear me.

46:01 Yes. We can hear you.

46:00 Thank you for this opportunity. My first question is looking at the bottom profit, I think there was a change in accounting period, and I think you have renewed the previous record high.

I think there were so much changes in the market, but in achieving eh record high profit how would you assess the reform that you have conducted to achieve this. And based on that for this year, what is going to be the focus of your strategy?

Are there any initiatives that you are prioritizing and focusing on for this year?

46:47 Well, it's hard to say one thing has contributed to this, we have come up with products that's more needed by the clients. So to a certain extent we were able to offer it at an appropriate value and price So that sales strategy is starting to make progress and bare fruit.

So I think that's one contribution that we were able to enjoy, and it's difficult to express this, but I think the biggest thing and something that’s really reflecting into result was, how should I put this? So even if I say something really nice and rosy, it's difficult for us to see what's going to happen in the future.

And with the uncertainties, we have to have multiple scenarios on our hand. 47:59 And in accordance with the changes in the projection and the market, we have to decide we are going to go to the right path or the left path.

I hope we are going to step on the breaker axel. And I think compared to before, we have been able to make the decisions very quickly.

And I've been able to execute those decisions. And so I think that's a one big factor that helped us.

Also in the market where demand is very strong like we are seeing right now the products in high demand and we have taken initiative to increase the product where the demand is strong. 48:39 And also when the demand comes out, we take the opposite initiative.

Also from ramping up the production, and also procuring raw material allocation negotiation with the OSAT and foundry for securing the allocation, all though with those corporate activities have been conducted based on the changes in the projection in the market. And I think we have been able to move with agility much better than before.

And what we are going to focus on this year? To answer that question looking at just the single year like I have received lot of question and I have referred to slide 10 to answer that.

And for the demand, I believe we have done what we need to do to an extent and for executing the delivery to the customers, we know what we need to do. So it's just executing those plans.

So in that sense for the year how are we going to switch your gears. 50:03 So from a mid-term perspective or in September last year, we updated the target, but we want to try to upgrade that to the next level or the level thereafter, so that we can achieve a leap.

So we want to prepare ourselves to be able to achieve such big leap in the future. So that will be a tuck-in acquisition or investment.

And will we continue to explore those opportunities. And also regarding production capacity, we will reconsider what we're doing right now is the right strategy, we will continue to review and revisit the strategies in place.

50:48 And also looking at the business model, we will look at where the source of the value proposition is coming from, is it okay for us to continue as an extension of the existing business? Or should we dig deeper to take accessory actions to enhance our value proposition.

That is also something that we will continue to contemplate on. And as I always communicate with the analysts, soon we have behind the competitors, but we will also like to take actions in regards to shareholder return.

So those are going to be the focus for this year. And to the extent possible from strategy, I want to have a longer trend perspective to refine our long term strategy.

51:39 Thank you very much. I have another question Looking at the Q4 that just ended, for IIBU I think there was a growth that was controlled by Dilog.

But looking at Q1 for IIBU, looking at the different applications will there be any change in that trend? What is going to be the driver?

You can elaborate on that.

52:19 While looking at the sequential trend, I wonder how relevant that communication is, and I always question myself on that point. But as I commented earlier, some of the positive factors like catching up of the production and if we reach the future demand then the negative impact appears in the following quarter.

So it's like a next picture. I wonder if it makes a sense for me to talk about the sequential trend, but looking at the long term trend, this year the strong area is for industrial, particularly for factory automation.

Although something that's easy for you to imagine. In those kind of factors, I think this has started to become strong from last year.

And I think that will continue to show strength. 53:14 And also for PC, mobile computing is slightly lagging behind that, the supply is starting to catch up.

But this year the printer demand I think will be quite high for this year. Versus that for PC and mobile computing compared to last year, I think we will see a significant slowdown.

But as we discussed in the last result presentation, the rate of slowdown is becoming more moderate. So it's going to be a moderate growth is what I say.

And also, on the same note, for home electronics like AC, I thought that there will be some weakness. But at this point, it has not weekend as we had anticipated.

So, PC, Home electronics for those there will be some slowdown, but it will be slightly stronger. So the slowdown will be more moderate.

And where we can see some bullishness is cloud data center. So some -- the NPU vendors for the platform upgrade will be subject to the upgrade.

But already, for DDR5 compatible has been seeing risk growth in this year. And also next year as well I think there will be another growth to another level.

So this trend is coming from and also cloud and data center. So those are the factors which are quite strong in demand for PC and consumers.

There will be some slowdown, but compared to before, notably speaking, it will be quite strong. So that's the view I see in front of us.

55:28 Thank you.

55:51 Hello. I have two questions.

The first, your market share seems to have increased according to my simulation, but of course, there is an impact of the mega factory fire. So it may have come down and then rose again.

So do you have any sense of actual growth in your market share in some of your products? So can you comment on that point first?

And my second question is about, after the new year the industry seems to have accepted the shortage of the semiconductors. And therefore, the semiconductor market is not likely to collapse.

So as a way of your negotiation, when it comes to price negotiation, are you seeing some favorability in your position, or what about cancellations product mix, I think are you lowering customers towards the products that you are producing? So in terms of your contract negotiation, are there any favorable conditions that are expected for this year in terms of your negotiation with the contract with customers.

57:06 Well, the background of your question, I believe I have a good understanding on why you came up with that question, but I think it's very difficult for me to comment on them. So how should I put it?

In that context I would say that tailwind is likely to continue this year. That's how I see it.

Sorry. Can I stop here?

All right thank you. If I comment on too much, you will come back to me like a boomerang.

So I -- the tailwind continues. I wasn't really able to hear your first question.

57:50 Your market share.

57:50 All right. Market share.

Our market share at this point of time. I think we should not be over reacting to that.

So I think we should comment on them after the third party numbers become available, but as at this point, those products and areas that we wanted to grow are beginning to show an increase. That's what we sense.

Especially as I mentioned earlier in the case of automotive, strategic products if you will, those are very made clear and those are again, at a risk of repeating myself, these are enjoying a strong growth. And I think those will be reflected in numbers.

And in the case of industrial infrastructure and IoT, because we have a wide set of product, so it's very difficult to generalize things. But from ourselves who are conducting this business the original Renesas products, the former Renesas, such as MCU and SOC and BMIC.

After 2013 we have a suffered a reduction in market share constantly, of course that was helpless. But we -- because we did this intentionally from an outside persons point of view, I think it looks as though we have suffered a gradual decline.

59:23 But in these areas we have been able to successfully change the trajectory of those market share of those products. I don't want to say -- make any bullish comments and made a mistake afterwards.

So after the third party numbers become available, which is expected in 2 to 3 months, if my comment is supported by those numbers, I think I can make further comments. But at this point, I would like to restate my comments at this juncture.

Thank you.

60:11 Thank you very much for your time today and thank you for all of your questions. Like you the numbers are growing quite steadily, and some of you may feel that is going to continue and is it going to be the right forecast?

And on that point we are continuing to monitor the trend. So should there be any changes in our perspective and interpretation?

We will show that as quickly as possible. At this point in time we are not concerned over this trend.

And another point that I like to highlight is that, making this year the turning point, we want to strive for further growth, so we want to transform ourselves see further growth. In March we will update you the progress on the strategy.

At that point we will not be at that point to say so, but during the course of the year and when we reflect on this year, I'm hoping that we can comment that in the near future we will be able to try to strive for further growth. But the next month, we will offer you more details on how we are making progress and our midterm plan.

So once again, thank you very much for your time today despite your busy schedule.