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- 00:44:19.0 Thank you for the presentation.
My first question is about IAB. I apologize for going over a topic that has been previously covered. Q1 was very strong, but could you talk about whether there were volume discounts, or other unusual behaviors that you do not normally see? Also, for IAB, you had said that Japan, Americas, Europe and other regions apart from China were also strong, and that the investment appetite for automation in China appears to be spreading to other regions. Is this simply a function of where we are in the cycle or are there initiatives that you are implementing to encourage demand for automation outside of China?
- 00:44:56.5 (Takeda) Please allow me to respond.
The first thing I will say is that we are seeing a structural change in investments. Smartphone-related investments had been the overwhelming growth driver to date but we are now seeing more diversification in the sources of growth, such as investment for data centers, EVs, and OLED. These structural changes in capex are having a meaningful impact. Therefore, even if smartphone investments run their course, demand from semiconductors should remain firm. We see this as a major trend and our sales force is actively pursuing this opportunity.
Secondly, China as a region is significant. The national government project to build out the homegrown semiconductor industry is already widely known, but we are now seeing very large-scale investments being made by the government itself, in particular for EVs as well as semiconductors.
Thirdly, there is another interesting trend that is currently unfolding. Our four focus industries includes the food & beverage industry. We are starting to see a structural change in the form of Chinese food makers now investing in European equipment, reflecting consumers’ heightened concerns about food safety. This structural change is creating new industry opportunities. Our IAB marketing efforts are successfully tapping into these new opportunities. Not only are our capabilities improving but we are evolving to meet this new demand.
(Nitto) Also, there were no unusual or one-off items in Q1.
(Takeda) From that standpoint, the success we are having fundamentally reflects our ability to capture the opportunities created by underlying structural changes.
(Nitto) We have seen these trends already rapidly spreading throughout Japan, Korea and other parts of Asia, as well as Europe, as highlighted by Mr. Takeda. The US perhaps is lagging in this respect, although we have less of a presence in the US. However, the trends we see in Asia are also coming through in Europe as well.
- 00:47:24.9 Thank you.
My second question is about the Other segment. This has been quite a wild child business for you. When I look at the data book, you appear to have roughly broken even in Q1. I believe you are seeing improvements at the backlight business on the back of restructuring measures implemented last fiscal year. I have heard some talk that you are considering restructuring measures for the MEMS business.
Can you talk about the sales and profitability for the four major product categories in this segment, please? Also, to the extent that you can, could you provide more color on MEMS restructuring initiatives?
- 00:48:12.3 (Oue) Roughly speaking, the backlight business accounts for around 35% of sales, environmental solutions is around 40%, electronics is around 20% and remaining 5% or so is micro devices. In terms of optimizing initiatives, we have already implemented significant measures for the backlight business in last fiscal year and are now seeing a steady recovery in profitability. However, the restructuring in the MEMS business is still a work in progress. This year, we will be disciplined about optimizing the business, in order to improve profitability from next fiscal year.
- 00:49:13.5 Could you give me a better sense for the profitability of the backlight business now? Are you now close to breaking even? Is it fair to say that the environmental products and electronics businesses are in the black, the backlight business is slightly in the red and MEMS is operating at a modest loss?
- 00:49:27.4 On a full-year basis, we believe the backlight business will be profitable. Otherwise, your assumptions are generally in the ballpark. The operating environment for some parts of the environmental products business, such as the PV inverter business, is not that good but we are improving market share and the power storage application is doing very well, so the environmental products business is profitable.
- 00:49:59.2 Thank you.
- 00:50:01.5 The person in the middle section please.