President Yoshida’s 2024 New Year’s Address (Abridged Version)

Capture the Rising Tide of AI to Soar High This Year

I would like to wish all of you a happy New Year, while at the same time, expressing my deepest sympathy to those affected by the January 1 earthquake on the northwest coast of Japan.

Last year, countries began tightening their fiscal and monetary policies, and the global economy progressively slowed down. The semiconductor industry is also adjusting to the rebound from the spike in demand triggered by the Covid-19 restrictions, and although Advantest achieved record-high sales profits for three consecutive years through FY2022, in FY2023 we are facing our first year of adjustments in a while, as predicted at the beginning of the fiscal year.

According to market forecast data, macroeconomic stagnation will continue in 2024, but the semiconductor and semiconductor test equipment markets will enter a new upcycle. The key driver will be generative AI, with many new orders already received for HBM (High Bandwidth Memory) testers. In the future, we can expect replacement demand not only for devices used in data centers but also for PCs and smartphones with AI functions, enabling the potential recovery of the SoC tester demand. Furthermore, we have already launched several projects with major cloud companies working on the development of AI semiconductors. We expect a wave of growth to arrive starting this year through to next year.

This year marks the 70th anniversary of our company's founding and the first year of our third medium-term management plan (MTP3). It looks as if we'll be off to a good start.

This year's zodiac sign is the dragon. Dragons have different significance in the East than they do in the West. To emulate the Eastern dragon, a symbol of strength and good fortune, I would like to make this a year when Advantest soars high by capturing the rising tide of generative AI.

Chinese mythology speaks of the "nine sons of the dragon," who all had very different appearances and characteristics. Although they were unable to become dragons like their father, they are said to have lived successful lives by making use of their individuality and strengths. The Chinese proverb "The dragon has nine sons, none of which are alike," signifies respect for diversity. Similarly, our INTEGRITY core values consist of nine different words. We will use them as the driving force for further growth.

As the semiconductor market is expected to double in size to $1 trillion by around 2030, semiconductors will continue to evolve, with shipments growing and quality improving. Semiconductor test plays an important role in supporting semiconductor innovation, and the semiconductor test market is expected to grow as fast or faster than the semiconductor market. Advantest will continue to contribute to global development by ensuring semiconductor quality with test solutions for leading-edge devices, in line with our Mission and Purpose. To this end, we will leverage our strong customer base and diverse product portfolio, hone our global customer support capabilities, and operate our business sustainably.

Although we believe that the business environment in 2024 will be relatively favorable, there are still various global risks lingering. We will focus on four management issues this year:

1. Management Structure & Delegation of Authority

With the aim of speeding up management, we will review our management structure and business execution style and continue to further delegate authority this year.

2. Better Inventory Management & Supply Chain Management

Demand will continue to fluctuate. We will implement the lessons learned from our supply chain management missteps during this downturn and apply them to the next wave of demand.

3. Human Capital Management & Employee Engagement

Our future success depends on the performance of each and every employee. We will continue to provide an environment where employees with various strengths and individual characteristics can develop their skills and maximize their potential.

4. Sustainability

We will publish a new sustainability action plan in conjunction with the launch of MTP3. As the semiconductor market grows and our company develops, the expectations and the demands placed on us by society will only increase. We will set KPIs that are appropriate for our company and apply our best efforts to achieving them.

Advantest will celebrate our 70th anniversary this year. Let's use this milestone to inspire new efforts as we move toward our 100th anniversary, facing the future together.

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.

Note: All information supplied in this release is correct at the time of publication, but may be subject to change.