Financial Review

Consolidated Financial Results of FY2021 Q1 (April 1, 2021 through June 30, 2021)

Overview of Business Results

July 28, 2021(in billion yen)
  Three months ended June 30, 2020 Three months ended June 30, 2021 As compared to the corresponding period of the previous fiscal year increase (decrease)
Orders received 61.5 161.2 2.6 times
Net sales 66.7 97.1 45.5%
Operating income 13.5 26.1 94.1%
Income before income taxes 12.9 25.7 99.6%
Net income 10.6 19.3 83.4%

During Advantest's first quarter ended June 30, 2021, the global economic outlook remained uncertain, as the emergence of COVID-19 variants prolonged the pandemic, with no clear end in sight. On the other hand, in China, the United States, Europe, and other places, vaccine rollouts have propelled economies out of the historic recession caused by the response to the pandemic, and aggressive economic stimulus and relief measures undertaken by governments have helped overall economic activity to begin returning to normal.

In the semiconductor market, the acceleration of digitalization in industry and in all areas of life has boosted demand for semiconductors used in data centers, PCs, and AI applications. Competition among 5G smartphone manufacturers has stimulated demand for related semiconductors and called forth responses to higher functionality requirements. In addition, as final demand recovers amid the lifting of COVID-19-related restrictions, semiconductor shortages have become palpable in the automotive industry and other sectors. Furthermore, on top of trends such as inventory buildups amidst expectations of a "post-Covid" recovery, players throughout the semiconductor market have become more eager to invest in production capacity enhancements and advanced technology.

Amidst these circumstances, Advantest has endeavored to capture the expanding demand for semiconductor test from every angle by utilizing its broad product portfolio, which is one of its strengths as a solutions provider. In addition, Advantest has put the greatest emphasis on stable procurement of parts despite tight semiconductor and electronic component supply conditions, to ensure its ability to meet the ongoing robust demand for test equipment.

As a result, orders received were (Y) 161.2 billion (2.6 times increase in comparison to the corresponding period of the previous fiscal year), significantly exceeding its previous record high for quarterly orders. Sales were (Y) 97.1 billion (45.5% increase in comparison to the corresponding period of the previous fiscal year), which reached another record high in this quarter. In terms of profit, operating income was (Y) 26.1 billion (94.1% increase in comparison to the corresponding period of the previous fiscal year), income before income taxes was (Y) 25.7 billion (99.6% increase in comparison to the corresponding period of the previous fiscal year), and net income was (Y) 19.3 billion (83.4% increase in comparison to the corresponding period of the previous fiscal year). Average currency exchange rates in the period were 1 USD to 109 JPY (108 JPY in the corresponding period of the previous fiscal year), and 1 EUR to 131 JPY (118 JPY in the corresponding period of the previous fiscal year). The percentage of net sales to overseas customers was 97.0% (96.7% in the corresponding period of the previous fiscal year).

Semiconductor and Component Test System Segment

(in billion yen)
  Three months ended June 30, 2020 Three months ended June 30, 2021 As compared to the corresponding period of the previous fiscal year increase (decrease)
Orders received 42.4 116.2 2.7 times
Net sales 42.3 67.3 59.2%
Segment income 11.8 24.4 2.1 times

In this segment, demand for SoC semiconductor test equipment increased overall, mainly driven by the move to higher-end smartphones and improving market conditions in the automotive and industrial equipment sectors. In particular, application processors and HPC devices have become more complex thanks to miniaturization, and this has been a strong demand driver for Advantest's products. The increasing tendency among customers to advance-order our products also contributed to the increase in orders for SoC semiconductor test equipment. Demand for memory semiconductor test equipment remained roughly flat with the corresponding period of the previous fiscal year, as last year's favorable market environment continued.

Mechatronics System Segment

(in billion yen)
  Three months ended June 30, 2020 Three months ended June 30, 2021 As compared to the corresponding period of the previous fiscal year increase (decrease)
Orders received 8.5 14.0 64.9%
Net sales 8.9 11.5 29.1%
Segment income (loss) 0.2 2.0 10.9 times

In this segment, demand for device interfaces and test handlers for memory semiconductor test equipment was robust, correlated with high levels of demand for the said equipment. In addition, thanks to the increasing adoption of EUV lithography technology, demand for our nanotechnology products was also strong.

Services, Support and Others Segment

(in billion yen)
  Three months ended June 30, 2020 Three months ended June 30, 2021 As compared to the corresponding period of the previous fiscal year increase (decrease)
Orders received 10.9 31.0 2.9 times
Net sales 15.9 18.4 15.5%
Segment income 3.7 3.2 (12.6%)

In this segment, orders for system-level test products increased, mainly due to the mainstreaming of high-spec SSDs and the strength of the server and PC markets. Here, too, some advance-order trends fed an increase in orders. In addition, as our installed base increased, demand for field services was also strong. On the other hand, a decline in the favorability of our sales mix impacted profitability.

Overview of Financial Condition

Total assets at June 30, 2021 amounted to (Y) 428.2 billion, an increase of (Y) 5.5 billion compared to March 31, 2021, primarily due to increases of (Y) 7.4 billion in inventory, and (Y) 2.3 billion in trade and other receivables, offset by a decrease of (Y) 4.1 billion in cash and cash equivalents. The amount of total liabilities was (Y) 143.2 billion, an increase of (Y) 0.9 billion compared to March 31, 2021, primarily due to an increase of (Y) 3.4 billion in other financial liabilities mainly resulting from an increase of deposits received and an increase of (Y) 2.2 billion in other current liabilities primarily due to an increase of advance receipt, offset by a decrease of (Y) 4.9 billion in trade and other payables. Total equity was (Y) 285.0 billion. Ratio of equity attributable to owners of the parent was 66.6%, an increase of 0.3 percentage points from March 31, 2021.