Tokyo Electron Limited Q4 FY2026 earnings call

Fiscal 2026 full year business highlights: Net sales hit record high, Field Solutions sales grew, R&D centers and production logistics centers completed, won PORs in advanced domains. Business environment: WFE market expected to grow by 20% or more from 2025 for 2026 and 2027, high-end device spendings expected to grow by 30% or more. 2027 fiscal year sales growth drivers: Coater/developers expected to grow by 50% or more year-over-year, etching systems strong in dielectric etching, Advanced Packaging with growth in various products. Financial estimates: 2027 fiscal year first half net sales expected JPY 1.570 billion, gross profit JPY 715 billion, operating income JPY 431 billion; full year R&D expenses plan JPY 330 billion, CapEx plan JPY 190 billion; midterm management plan targets sales JPY 3 trillion or more, OPM 35% or more, ROE 30% or more.

Fourth quarter net sales were JPY 711.8 billion, an increase of 28.9% from the third quarter. Full-year net sales were JPY 2,443.5 billion, a 0.5% year-over-year increase, hitting a record high. Gross profit for the full year was JPY 1,107.8 billion, exceeding JPY 1 trillion for the second consecutive year, but gross profit margin was 45.3%, a 1.8 percentage point decline year-over-year. Operating income was JPY 624.9 billion, operating profit margin was 25.6%, a 3.1 percentage point drop year-over-year. Net income attributable to owners of parent was JPY 574.4 billion, a 5.6% year-over-year increase. Field Solutions sales in the fiscal year ended March 2026 were JPY 626.0 billion, an increase of 16.3% year-over-year. SPE new equipment sales by application: DRAM customers accounted for 31%, non-flat memory 10%, and non-memory 59%.

2026 - 2027 WFE market expected to grow by 20% or more from 2025, each year ranging from $150 billion to $170 billion. 2027 fiscal year first half net sales expected to grow 41% year-over-year to JPY 1.200 billion. Midterm management plan targets sales JPY 3 trillion or more, OPM 35% or more, ROE 30% or more.

Ongoing geopolitical risks, particularly concern about parts and materials shortage triggered by supply chain disruption if the blockage of the Strait of Hormuz is protracted.

Q: Regarding the outlook of the WFE market.

A: Toshiki Kawai said WFE market expected to grow 20% or more, memory proportion expected to grow slightly, China composition mid-30s percent.

Q: Regarding midterm management plan and operating profit margin.

A: Toshiki Kawai said steadily progressing toward midterm targets, operating profit margin affected by foreign exchange, labor cost, logistics cost, but taking actions to improve.

Q: Regarding share of etch system.

A: Toshiki Kawai said process share increasing, but sales share affected by customer mix, regulations, timing of delivery.

Q: Regarding profitability.

A: Toshiki Kawai said fixed costs increasing, taking actions like price rise, productivity enhancement to improve gross profit margin.

Q: Regarding lead time of products.

A: Toshiki Kawai said lead time getting shorter, first half of 2027 fiscal year orders with high confidence.

Q: Regarding revenue driver for fiscal 2027.

A: Toshiki Kawai and Koichi Yatsuda said coater/developer driven by EUV-related demand, Advanced Packaging driven by advanced logic and HBM inquiries.

Q: Regarding bonder sales.

A: No quantitative value disclosed but expecting huge increase.

Q: Regarding second half of 2027 fiscal year.

A: Toshiki Kawai said inquiries strong but need to consider various factors.

Q: Regarding silicon photonics and Field Solutions.

A: Toshiki Kawai said have technologies for silicon photonics, Field Solutions growth due to increased utilization rate of customers' fab.

Q: Regarding pricing strategy.

A: Toshiki Kawai said fair pricing, considering productivity contribution.

Q: Regarding sales in first half of 2027 fiscal year.

A: Toshiki Kawai said no special factors, just AI server demand.

Q: Regarding next midterm management plan.

A: Toshiki Kawai said focus on patterning, device scaling, heterogeneous integration, Advanced Packaging, etch market share.

Q: Regarding 2027 visibility.

A: Toshiki Kawai said $170 billion WFE market size achievable based on current customers' investment plan