2016 New Year's Address from President Shinichiro Kuroe (abridged)

Support For a Changing Market

TOKYO, Japan, January 5, 2016 – Shinichiro Kuroe, president and CEO of Advantest Corporation (TSE: 6857, NYSE: ATE), recently delivered a New Year's address to employees, outlining the company's major goals for 2016:

Happy New Year, everyone!

Looking back at 2015, our first quarter benefited from the momentum carried over from FY2014, but in the second quarter, as the Chinese smartphone market slowed down, visibility declined. In the third quarter of FY2015, orders showed signs of rebounding, but we still haven't really got traction.

In 2016, supportive monetary policy stances and declining consumer prices are expected to underpin gradual growth in the global economy, but the outlook for emerging economies is wobbly. The semiconductor market is expected to show moderate growth this year, according to the WSTS. However, the semiconductor test equipment market is predicted to continue shrinking this year, clouding the outlook for our business.

Amid challenging conditions, Advantest must take specific steps to change.

No one thinks the ATE market will grow dramatically in future, but the semiconductor market will continue to grow, and new applications will arise, amid improving semiconductor functionality and diversifying uses for ICs. Opportunities abound for Advantest to deploy our core measurement technologies in new fields.

Amid these expansion trends, with the creation of new markets in view, large-scale mergers and acquisitions continue to rearrange the landscape in the semiconductor industry and the SPE industry.

We will continue to analyze these market changes to decide which of our measurement technologies we should deploy in what sector of these changing markets, what applications we should pursue, and where to best utilize our resources. We will then act decisively on our conclusions.

Given that the SoC market outlook is not expected to improve, we need to tackle new applications and users we have not approached before, and expand our sales promotions.

Our ASD business division will launch the EVA100 Digital Solution, aiming to expand sales not only for analog and sensor device measurement, but also for devices used in IoT solutions.

Our memory business is expected to grow its revenues due to faster, higher-capacity memory devices, but there are big challenges ahead. It is important for us to put effort into differentiating our products, along with other strategies to secure our profit margin, while proposing solutions that match the market's needs, and delivering them on time.

Our FA business division will prove to the market that our new handler technologies deliver on their promise. The entire company will cooperate to ensure the success of this project.

Our DI business division will launch a new probe card. They will address all outstanding issues one by one, on schedule, to maximize profitability.

Our Field Services division is helping to support the whole Advantest Group with its stable revenues. In addition to gaining new maintenance contracts, this division will continue to increase sales by proposing new solutions and services.

Our nanotechnology business division will establish solid process flows from R&D through sales to production, and earn customer trust with reliable product quality.

Our production division will continue to work at holding inventory assets down, which will improve the health of the whole company by reducing production losses.

The sales division must contend with limited SE resources, but they will strive to develop solutions from the user's point of view, and partner with the individual business divisions to create products that sell.

Our new businesses are at various stages of planning. Some are already growing, some are just starting out, some are at the marketing stage, and some are just starting to take shape from an original idea. We have much excitement ahead as we focus on moving promising businesses to the next stage.

As we visualize where we want to be as a company in the future, and how we must change to get there, it is my goal for employees to actively seek change, at a corporate level, and also as individuals. Small steps add up to profound changes.

Note: All information supplied in this release is correct at the time of publication, but may be subject to change without warning.