President Yoshida’s 2023 New Year’s Address (Abridged Version)

Laying the Foundations for Our Next Strides Forward

Happy New Year, everyone!

In 2022, concerns about global recession increased, and we faced various constraints and problems such as serious parts shortages, rising costs, and the tightening of U.S. export restrictions on China. Nevertheless, we achieved record performance for the second fiscal year in a row, and in the first half of FY2022, we posted record high sales and profits on a half-year basis.

That said, it seems inevitable that the economy will slow down in 2023. The global GDP growth rate is decreasing, and negative growth is forecast for the semiconductor and semiconductor test equipment markets. As we head into this major inflection point, I would like to talk about the challenges we will face this year.

1. Respond quickly and flexibly

While there are currently signs of weakness in orders, we are receiving inquiries from customers aiming to make upfront investments in anticipation of future growth, customers planning to invest in increased production capacity on the strength of government subsidies, and new entrants such as hyperscalers. With the spread of semiconductor applications, the tester market is a mosaic of areas of oversupply and undersupply.

We will strategically secure key materials and enhance our production system, aiming to achieve the goals of our 2nd mid-term business plan (MTP2), while also preparing for the next wave of demand in our upcoming MTP3 period. As tester supply and demand conditions change from moment to moment, we will respond quickly and flexibly to inventory risks by repurposing partially manufactured products and changing specifications to work around parts shortages.

2. Turn changes into opportunities

In the medium to long term, the semiconductor market will undoubtedly grow. Since semiconductors as social infrastructure need to have higher functionality and reliability, the semiconductor test market will expand further and grow at a pace that exceeds the growth rate of the global economy. I am also in no doubt that the current protectionist economic trends will eventually transform into a new form of globalization, and that humanity will continue to develop technology that delivers convenience and prosperity. We will continue to support customers around the world who seek our solutions.

Over the past three years, we have been able to capture the wave of digitalization triggered by the COVID-19 pandemic. Just like during the dot-com bust and the 2007-8 financial crisis, we have grown by turning major changes into opportunities. Unpredictable crises and paradigm shifts will inevitably occur in the future, and we will turn these changes, too, into opportunities for growth. Fortunately, many of our customers are leading companies in the semiconductor and high-tech industries, which puts us in good environment to create new solutions. We will seek to have a portfolio that matches the scale and diversity of the semiconductor industry, which continues to expand and transform, and aim to develop together with the semiconductor market as it grows into a trillion-dollar market.

3. Reinforce human resources and further inculcate corporate culture

In the ever-growing semiconductor industry, acquiring and training human resources to support our business expansion is an important management issue. I would like to review our personnel system and create a workplace that utilizes diverse human resources and enables them to generate synergies.

On the other hand, there is a certain Advantest culture that we do not want to lose as the company grows. It is characterized by open communication between employees and management, a free and open atmosphere, a spirit of challenge, a sense of ownership, an altruistic spirit and ethical integrity, and affection for one’s company and colleagues.

Our goal is to make the entire company a team by sharing our management philosophy of "enabling leading-edge technologies" and our INTEGRITY core values. We will continue to reinforce our human resources and inculcate our corporate culture as medium- to long-term investments with our 100th anniversary in view.

4. Reinforce management systems and promote ESG management

In addition to reinforcing our human resources, we will also improve our organizational capabilities. Our business environment is becoming more complex, and our management team needs to be reinforced to cope with the many changes ahead. Therefore, in January of this year, we appointed three representative directors—the Group CEO, Group COO, and Group Co-COO--to lead the company. In order to increase the speed of management decisions as our business expands, we need a system with clearer roles and responsibilities so that we can realize management that considers overall optimization. Looking ahead to 2023 and 2024, when MTP3 will be launched, we will build a strong management team to make even greater strides forward.

We will also face environmental and social issues head-on. We will set KPIs that are appropriate for Advantest, aiming to be a company that makes a tangible contribution to the environment and society.

In conclusion, going into 2023, we will continue to seek the essence of our business, and take steps to make great strides forward in the future without letting current market conditions cloud our long-range vision.

About Advantest Corporation

Advantest (TSE: 6857) is the leading manufacturer of automatic test and measurement equipment used in the design and production of semiconductors for applications including 5G communications, the Internet of Things (IoT), autonomous vehicles, high performance computing (HPC) including artificial intelligence (AI) and machine learning, and more. Its leading-edge systems and products are integrated into the most advanced semiconductor production lines in the world. The company also conducts R&D to address emerging testing challenges and applications; develops advanced test-interface solutions for wafer sort and final test; produces scanning electron microscopes essential to photomask manufacturing; and offers system-level test solutions and other test-related accessories. Founded in Tokyo in 1954, Advantest is a global company with facilities around the world and an international commitment to sustainable practices and social responsibility. More information is available at www.advantest.com.