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Jan 5, 2015 Topics

A Year of Action Oriented Decisively Towards Targets

TOKYO, Japan, January 5, 2015 – 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 2015:

Happy New Year, everyone!

Looking back at 2014, the year did not start promisingly. We had posted losses for three straight years (FY2011 ~ FY2013), and were discussing severe budget adjustments and devising and enacting draconian cost reductions. What’s worse, 2014 saw the tragedy of former President Matsuno’s premature death. But amid these sad upheavals, numerous employees exerted themselves to achieve our break-even target of ¥120 billion in sales, and our results have significantly improved.

Surveying our business environment, the economic recovery in the USA is continuing and the end of QE has been announced. On the other hand, the European recovery is still weak, the Japanese economy is struggling to recover from the recent sales tax hike, and the Chinese economy is seen to be shifting to a more sustainable growth rate.

Also in 2014, the semiconductor industry logged robust growth trends such as increased demand for chips for smartphones for the Chinese market, and production ramps of new devices for high-end smartphones. This boom in semiconductor demand has also imparted new vibrancy to the semiconductor production equipment market.

In 2015, the world economy faces many risks, such as the risk that QE will have unintended effects. In the semiconductor and semiconductor test equipment markets, growth is expected, but these markets are always subject to sharp fluctuations, which can be hard to predict, so it is possible that we will see a hangover from the party atmosphere of 2014. Then, although the Advantest Group’s results are improving, our market share and margins do not compare to our chief competitor’s, so we cannot slacken our efforts going into 2015.

Specific policies and goals for 2015:

  • The ASD Test & Measurement System Business Group will seek to expand sales of the new EVA100 system and ride the IoT (Internet of Things) wave to create new markets beyond the semiconductor industry.
  • In SoC, our German and Japanese R&D teams are pressing ahead with joint development projects.
  • In memory, growing sales of the T5503HS are strengthening our grip on the high-speed DRAM market.
  • In FA, we will expand sales of new test handlers that incorporate superior technologies for thermal control and accurate contact placement.
  • In DI, we should seek to win business when customers switch from manufacturing one device to another, for example, and also enter new markets with competitive probe cards.
  • In nanotechnology, I hope to see our team overcoming each successive technological hurdle they face, and making larger contributions to the bottom line.
  • Regarding production, we have shut down Gunma Factory 2 and consolidated production at the Gunma Factory, boosting efficiency. We are also ramping up production at our Cheonan factory in South Korea, and reinforcing our operations in Malaysia.

We absolutely have to maximize profits. To do that, we have to expand sales and hold down costs. Hitherto, unfortunately, when results improve, cost-awareness has faded, and costs ballooned. Sales are strongly affected by external factors and product competitiveness, but costs are within our power to manage. In 2015, we will not alter our cost-reduction policies. Rather, we will take action to sustain our break-even point of ¥120 billion in sales.

On that note, 2015 will be a year of taking action. The end of March 2015 will see the end of our corporate initiative launched in April 2012. We have already lowered the targets set by the initiative. Why? To answer that, we must analyze the three-year span of the initiative, and take action based on the results of that analysis.

The semiconductor test equipment market has entered a mature phase. Going forward, we will define new policies to achieve growth. We will then be able to judge which new markets we should enter, and new applications and areas where we can put our technologies to work. Of course, none of this will be easy. Therefore, I want you to join me in discussing the technological background for our business, what technology R&D projects we should undertake over what length of time, where our goals lie, and who among us can drive these efforts with strong leadership. Then, we’ll take action.

Our next medium-term business plan and accompanying corporate initiative will be based on these principles of taking action, and linking our actions decisively to targets.

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