2017 New Year's Address from President Shinichiro Kuroe (abridged)

Towards a Year of Positive Results

TOKYO, Japan, January 5, 2017 – Shinichiro Kuroe, president and CEO of Advantest Corporation (TSE: 6857), recently delivered a New Year's address to employees, outlining the company's major goals for 2017:

Happy New Year! I believe this is going to be a great year for Advantest.

In 2016, the Leave victory in Britain’s “Brexit” referendum, followed by the victory of Donald J. Trump in the US presidential election, and other shocks unforeseen by many around the world, created a sense of upheaval worldwide.

2017 promises further surprises, from a potential turn to protectionism in the US, to the details of Brexit, and the results of general elections in Germany and France. Economically and politically, there is more uncertainty around the future than ever.

However, the OECD predicts that individual countries’ fiscal policies will increase the global GDP growth rate in 2017, and growth is also expected in the semiconductor industry, so despite the uncertainty around global politics and the global economy, we should continue to enjoy a good business environment in 2017.

We must take advantage of the favorable prevailing winds to grasp the major changes in the market and find business opportunities. This is not an announcement of a new policy. I believe our existing practices of market research, system planning, development, conquering tough benchmarks, and product introduction will generate bountiful results in 2017.

The memory tester market is poised to achieve a scale beyond our predictions. In the high-speed memory test market, our most competitive products are being extended into product series, which should enable us to monopolize the market.

In the NAND market, in addition to 3D NAND ramps and SSD demand growth, the shape of our business reach is about to change drastically with the emergence of new devices using the new UFS and PCIe protocols. We will establish a system level test method for these new devices and introduce new products to the NAND front-end and back-end test markets.

In this exciting time of movement in the memory business, Advantest guarantees the superlative performance of our solutions with worldwide support from our SE and FS teams as well as the sales division and business groups. These and other decisive advantages will put us ahead of the competition in 2017.

In the SoC test world, Chinese smartphone sales and investment in base stations are still in a growth phase. However, the Chinese smartphone business has undergone a dramatic shake-up, so it is essential for Advantest to secure the business of the new players in this sector.

It is imperative for us to always be aware of changes in the market, and develop appropriate customer strategies, while also defining test methods for IoT devices and modules and proposing new test solutions. We must decide how to test the controllers, sensor chips and RF chips that comprise IoT modules, and how to secure connectivity with networks, so as to make proposals optimized for the individual functions of each module developed by each customer.

It is the same for our FA, DI and nanotechnology businesses. Through marketing, system planning, and overcoming technical issues, we will find new business areas that can be converted into “blue ocean.”

Advantest changed our dividend payout policy last year. Whereas we previously adhered to a policy of "consistent distributions and a payout ratio of 20% or more,” our new policy is “a semi-annual payout ratio of 30%.” For shareholders, this means their share of our profits will increase, but on the other hand, no dividends will be paid out when we post a loss. Our employees now also recognize that we have a greater responsibility to our shareholders than ever to turn a profit in every period.

I am confident this will be a year when Advantest enjoys a strong following wind: a year of generating results.

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