Screen : FAQ (May 2023)

May 2023

SCREEN Holdings Co., Ltd.

FAQ on Earnings Presentation for FY2023/03

Q1

SPE

In the sales forecast by region for 1H of FY2024/03, the current fiscal year ending in March

2024, the ratio is increasing for China, but how will it be in 2H of the year? What is the

makeup of clients in China?

A1

We expect the ratio for China to continue to grow and the 2H situation will remain the same.

Foundries in China will significantly contribute to the increase in foundry application in the

forecast for 1H, and new clients are also emerging.

Q2

SPE

What is driving the plan to achieve a better OP margin between 1H and 2H of this fiscal

year? Also, what direction will the next medium-term management plan take?

A2

・Profitability will improve as a result of the full operation of S3-4 (the new factory building)

in 2H of the year. In addition, changes in the product mix and passing on the significant

cost increases of raw materials will also contribute to the improvement of 2H OP margin.

・We are currently discussing the next medium-term management plan internally, and would

like to speak about it in the future.

Q3

SPE

What is the reasoning behind projecting an increase in sales and profits this fiscal year with

a more weight on 2H, despite the forecasted 20% decrease in WFE for CY2023? Also,

please explain the reasons why the full operation of S3-4 has been delayed.

A3

・The reasons of increase in sales and profit this fiscal year are as follows: first, we were

unable to complete delivery to some clients as planned due to a limited production

capacity, and as the result, there is some order backlog shifted into this fiscal year;

second, as miniaturization proceeds, the importance of cleaning has been increasing and

so is our exposure - i.e. our market share and importance to manufacturers; third,

SCREEN is relatively unaffected by the downturn in memory investment.

・In 1H of this fiscal year, the full operation of S3-4 will be slightly delayed due to the lingering

impact of materials shortages. The reason for projecting more sales in 2H is that SCREEN

will be able to achieve its originally forecasted production capacity (attributable to the

facility expansion) from the later part of this fiscal year.

Q4

SPE

What is the current trend in orders?

A4

Although we don't disclose our orders, 4Q has more orders than 3Q.

Q5

SPE

What is the impact of the Japanese government's export restrictions on this fiscal year's

earnings?

A5

We understand that the proposed export restrictions will apply to cleaning and

coater/developer for cutting-edge applications for us. There are very few business inquiries

in China that will be subject to this restriction. We will carefully review the regulations

through communication with the Ministry of Economy, Trade and Industry.

Q6

SPE

Are current order trends similar to WFE forecast? Is there risk of a downturn in 2H of this

fiscal year?

1

A6

We expect orders to remain strong in 1Q. Although a WFE downturn would impact

SCREEN, we believe that we will be able to receive orders that meet our sales plan for this

fiscal year, even with the risk factored in.

Q7

SPE

Is the investment from Chinese manufacturers sustainable for next year and beyond?

A7

At the moment, we expect this trend to continue, but the supply-demand balance will

probably settle down next fiscal year.

Q8

SPE

What are your thoughts on the fact that SCREEN's market share shrunk slightly during

CY2022?

A8

We recognize that the slight loss in market share was due to the limitation in our production

capacity, making us unable to deliver equipment that we should be able to. We would like

to analyze the increase in market share of our competitors in detail and share our findings

at a later date.

Q9

SPE

What is the direction of 2H of this fiscal year's sales forecast by application?

A9

The ratio during 2H will probably be about the same as in 1H. By region, we expect a slight

increase in China.

Q10

SPE

In the sales forecast for China for this fiscal year, will the ratio of leading-edge and mature

nodes change between 1H and 2H? Also, please explain about the reason why Chinese

manufacturers (foundries, etc.) procure from your company for mature node cleaning

equipment which could be handled by local production equipment vendors?

A10

・There are basically no leading-edge nodes for either half of the year.

・We received orders for critical cleaning even at mature nodes. We believe that this is

actual production demand, rather than a sudden increase due to concerns over future

tightened export regulations.

Q11

SPE

Based on the sales forecast for 1H of this fiscal year by region, China will bring in over

¥100.0 bn. In the 3Q results explanation, 10% of the total sales of leading-edge nodes were

attributed to China, about ¥30.0 bn, which was viewed as being at risk of reduction. It seems

strange. Can you please explain?

A11

Clients in China are currently shifting their investment focus to mature nodes, and as a

result, we do not expect to see the impact that we envisaged previously.

Q12

SPE

If we say that clients in China placing orders ahead of time is due to concerns over further

tightening of regulations, is there a possibility to see a downturn in 2H of the fiscal year?

A12

We are confident in our ability to realize our plans, as they are based on orders we are

actually receiving from clients.

Q13

SPE

It was mentioned that miniaturization will increase the need of cleaning equipment, but is it

actually increasing?

A13

Yes, sales of cleaning equipment are increasing with miniaturization, and we have a real

understanding of this in terms of the number of units sold. We would like to take the

opportunity to present a detailed analysis at such occasions as SCREEN's IR Day, an event

scheduled during this fiscal year.

Q14

SPE

What is the reason behind the large sales increase to North America in the sales forecast

by region for 1H of the current fiscal year?

A14

Factories being built in the southern part of the United States is counted in the region North

America. We expect the ratio to settle down in 2H of the fiscal year.

Q15

SPE

It was mentioned that the full operation of S3-4 would enable annual sales of ¥420.0 bn, but

what is the reasoning behind the plan for sales of ¥410.0 bn for the current fiscal year?

A15

We were planning to start full operations at S3-4 at the end of FY2023/03, aiming for more

than ¥420.0 bn this fiscal year, but that was delayed due to materials shortages.