Lasertec : President's message updated

We achieved record-high sales and profits by focusing on the areas of leading-edge technology and emerging market that are less likely to be affected by business cycles.

Memory manufacturers restrained capital investments amid price falls due to the imbalance of supply and demand for memory devices called DRAM and NAND. Although the memory market is a major factor of semiconductor business cycle, there are also various other semiconductor devices produced for a wide range of applications. Large investments were made in the areas of leading-edge logic devices, power semiconductors (using SiC), and CMOS image sensors in the fiscal year ended June 2019. The most notable example is a major foundry who made large investment for the production of leading-edge logic devices in 7nm and 5nm technology nodes where next-generation EUV lithography^*1 is being introduced to commercial production for the first time. Seeing this technological advancement as a big business opportunity, we promoted EUV lithography-related inspection systems launched to the market. Among those systems, MATRICS X8ULTRA EUV mask inspection system made the largest contribution to the past year's growth in sales and orders.

In the fiscal year ended June 2019, we achieved the following financial results: 28,769 million yen in sales (up 35.4% year-on-year), 7,941 million yen in operating income (up 39.7% YoY), 7,834 million yen in ordinary income (up 37.3% YoY) and 5,933 million yen in net income attributable to owners of parent (up 35.9%).

As for orders in the same period, we won large orders for ABICS E120 EUV mask blank inspection and review system as well as for MATRICS X8ULTRA. As a result, we recorded 44,449 million yen in orders (up 3.7% YoY). The order backlog at the end of the fiscal year was 55,560 million yen (up 39.3% YoY).

• *1EUV lithography uses 13.5nm light, a wavelength much shorter than 193nm light used in conventional lithography, to enable the printing of much finer patterns on wafers.

We made significant progress in further enhancing competitive edge in core business and achieving large sales growth in new business among the goals of Phase 3.

MATRICS X8ULTRA semiconductor mask inspection system is a unique system unmatched by any other competing system. It is the only system capable of inspecting both conventional optical masks and next-generation EUV masks. This dual inspection capability is a highly valuable feature for leading-edge semiconductor fabs since they have just started using a small number of EUV masks, but the large majority of masks used in their production lines are optical masks. X8ULTRA enjoys good reputation among the customers thanks to its performance to meet the requirements in the leading-edge nodes of 7nm and 5nm and its dual inspection capability. It has enhanced our competitive edge in the core business of semiconductor mask inspection and at the same time attained a high market share in the new business of EUV mask inspection. Achieving large sales in the first year of EUV production, MATRICS X8ULTRA has become one of the most successful products of all time for us.

SICA88 SiC wafer inspection and review system is another product of our new business that has established a strong competitive advantage. It has successfully increased market share with good sales results.

In Phase 3, EUV-related and wafer-related inspection systems, for which we sowed the seeds of business in Phase 2 and earlier, will become ready for harvesting. We aim to make a big leap by harvesting all the fruits of new business while making core business grow.

We expect that the semiconductor industry will grow in the medium to long term despite having business cycles. This is because large volumes of high-performance semiconductors are required to enable the introduction of artificial intelligence (AI), 5G mobile communication, and advanced driver assistance system (ADAS), all of which are highly anticipated new technologies that will make our life more convenient.

The semiconductor industry is evolving ceaselessly to achieve higher speed, lower power consumption, higher integration, and lower cost through the scaling^*2 of circuit patterns, the adoption of three-dimensional structures, and the use of new production processes. Large business opportunities arise where the evolution takes place. We believe we can attain business growth faster than the average market growth by focusing on the emerging and leading-edge areas of this ever-growing semiconductor market. We are intent on making a big leap of growth by taking advantage of our expertise in advanced optical technology and by applying our ability to rapidly develop new products to the area of extreme ultraviolet (EUV) lithography, one of the most innovative technologies in the semiconductor industry. ABICS E120 EUV mask blank inspection and review system is the world's first inspection system using EUV light as its light source. It is by far the most expensive product in our product portfolio and is expected to make large contributions to sales and profits from the fiscal year ending June 2020. MATRICS X8ULTRA is expected to capture large orders and sales again in this fiscal year to drive our business growth, together with BASIC Series EUV mask backside inspection and cleaning system.

• *2Scaling means making semiconductor patterns smaller. As patterns get smaller, semiconductor devices perform better.

In the fiscal year ended June 2019, we achieved record-high sales, profits, orders, and order backlog for the third consecutive year. In the fiscal year ending June 2020, we aim to achieve a large increase in sales and profits again by harvesting the fruits of our past efforts. By doing so, we will meet the expectations of shareholders.

As a global company, Lasertec will enhance enterprise value by developing products that address the needs of customers worldwide and contribute to their success. I sincerely ask for your continued support. Thank you.

August 2019
Osamu Okabayashi
President & Representative Director