Thank you for joining despite the busy schedules, because now time has come. We would like to start Ibiden's March 26th full year results briefing. Let me introduce who's here. President and CEO, Koji Kawashima. Senior Executive Officer from Corporate Planning, Shinji Miyazaki, and GM of Corporate Planning, Yasuhito Hirose. I am from Corporate Planning's IR group. I will be your MC for today. My name is Kitaoka. First, President Kawashima will present for about 20 minutes. Afterwards, we will have a Q&A session for approximately 40 minutes. We have to conclude by 10:45 A.M. Japan time. Presentation materials will be shared on screen during the explanation. As previously informed, they are also available on our company website, so please refer to them as needed. Please also note that this briefing session will be recorded for documentation purposes. We would like to start the presentation. Mr. Kawashima, over to you. Good morning, everyone. I am President and CEO, Koji Kawashima from Ibiden. I will present Ibiden's financial results for fiscal year 2025. I will talk about the materials. We'll refer to the presentation, and please refer to the presentation as needed. First are the consolidated results of fiscal 2025. Net sales was JPY 416.2 billion. OP was JPY 62 billion. We were able to see higher sales and profits year-over-year. Especially regarding electronics, since last year, OP went up by 70%. Looking at the breakdown, overall, the product mix became better, and also sales prices improved. That led to the electronics business recording greater profit. As for the ceramics business, as you can see, both sales and profits went down respectively due to the automotive-related markets that were sluggish, especially the slowdown with respect to EV had an impact. Also for internal combustion ICE, it wasn't growing that much, and that led to lower orders as well as sales and profits. For the others business, we saw brisk trends. Since last year, we have been seeing both net sales and operating profit go up slightly. For net profit, it was JPY 63.7 billion, which was the highest ever profits that we were able to record. 1 factor was due to, of course, profit growth from our businesses, but due to the gains on sales of strategic stocks such as Toyota Industries, which is included. That had boosted our net profit. From gains on sales of strategic stocks, and even if you take that factor out, when you look at net income coming from our businesses, year-over-year, we were able to record higher income. Next, I'd like to talk about the forecast of fiscal 2026 and beyond. Regarding the performance outlook, there are some uncertainties due to the risks in the Middle East. We believe that the risks are going to be minor at this point in time. However, the situation remains highly uncertain, so these risks have not been incorporated into our performance forecasts at this time. For net sales and operating profit, first, net sales is expected to be JPY 230 billion the first half and JPY 270 billion the second half. In the second half, JPY 220.7 billion the second half of 2025 was the highest ever. For first half of 2026 and the second half of 2026, we are going to renew our record highs respectively. For operating profit, JPY 30 billion for the first half and JPY 52 billion for the second half is what we're expecting. The second half will be JPY 13.2 billion, plus 19 is 19.3% in OPM, and this is expected to be the highest ever. Also for net profit, JPY 23 billion for the first half and JPY 35 billion for the second half is what we're expecting. The net profit margins are expected to be 10% and 13% respectively. JPY 150 against the dollar as well as JPY 180 against the euro are the FX assumptions we have. Next, I'd like to talk about full year expectations on the next slide and talk about some details. These are our forecasts for net profit. Net sales and operating profit for the full year, JPY 500 billion in net sales and JPY 80 billion operating profit, with an OP margin of 18%. That is our projection. Especially what's going to grow substantially is the electronics segment due to two main reasons. One is due to expansion of capacity, especially Ono. From 2025 October, we have started to ramp up capacity there. For fiscal 2025, the ramp up was in line with plan. with plan. However, capacity wise, there was a slight slowdown. Therefore, in fiscal 2026, we would like to ensure that we ramp up the capacity steadily so that we can bring it up to full capacity. That will be one driver of our expectations. The other factor is product mix, mainly around AI. It will be transitioning to next generation and the products will go up to higher added value products. That will be another factor that is likely to boost operating profits. For the ceramics business, on the other hand, fiscal 2026 is going to be another year that's going to be quite tough. That is our view. For sales as well as operating profit, we are expecting both of them to go down. For the other business, we are expecting similar levels as last year. For net profit, for fiscal 2026, we're expecting JPY 58 billion. For fiscal 2025 or year-over-year, it is expected to go down. If you take out the it is expected to go down. If you take out the external reasons, on a net profit basis, we are actually expecting profit growth. For net sales and operating profit, we are both expecting record highs. Next, I'd like to go into each segment. First is the Electronics Segment. Net sales is expected to be JPY 330 billion for fiscal 2026. On October 31st, we made a disclosure and it will be higher by JPY 220 billion. The split is shown here and when you look at it, for general purpose servers and switch ASIC packages and AI servers, which are mainly GPUs and ASICs, these businesses are likely to grow significantly that are going to boost our entire performance. On the right is the operating profit waterfall chart. Compared to the JPY 57 billion disclosure on October 31st, we are expecting now JPY 75 billion. The The biggest impact coming from ASPs and product mix. For AI products and products for general purpose servers due to generational change and higher added value and increasing ASP due to these factors, we are expecting operating profit to grow. Costs are a negative impact due to the ramp up that have went up slightly and maintenance related parts have went up in cost slightly, and that is why cost increase is expected to have a negative impact on operating profit. Next is our midterm forecast. Up until fiscal 2030, we show our forecast for net sales and operating profit. Previously, we were talking about our forecast for fiscal year 2030, but we have decided to revise it upward, which is centered around the electronics business that is expanding substantially. At the beginning of February, we made an announcement of additional investments, which is JPY 500 billion for Ono and Gama. Those were the announcements we made. By investing JPY 500 billion towards fiscal 2030, we would like to increase sales by JPY 500 billion. By fiscal 2030, we would like to reach net sales worth JPY 1 trillion. It will be driven by the electronics business. Meanwhile, for the ceramics business and others business, we do expect steady growth, but we expect the magnitude of growth to be steady and smaller. For operating profit on the other hand, for fiscal 2030, we are expecting JPY 300 billion in OP with an OP margin of 30%, which will also be driven by the electronics segment. Due to the new additional investments we announced, we would like to ensure that we execute well so that we can leverage on our investments so that we can reach over JPY 1 trillion of net sales and reach an operating profit of over JPY 300 billion or an OP margin of 30%. Moving on to cash allocation and capital investment. Towards the left, from fiscal year 2026 to 2018, you can see the cash flow [Non-English content] We would like to maintain the demand and accommodate the conversion in the products so that we can continue to achieve sales and profit. Whereas for EV product, NEV, there is a product that we're starting to ramp up from last year. With this product at the core, this year, we would like to make it our profit positive. We added at this time the nuclear power graph on the right. For data centers, we believe more power will be necessary, and graphite product is another category of products that we would like to grow. Already in the U.S. with Kairos Power, we have a long-term supply contract in place. We believe this will be a potential area for growth. This will be another focus areas for us going forward. This is regarding our R&D activities. For the cost, the expense against our sales, our guideline is about 7% investment in R&D. You can see NEV area. We are now mass producing battery safety components, but there are other safety products. We would like to develop these products as well. We actually are working with Chinese customer. For specialized substrate field, we are using a printed circuit board. We take advantage of technologies in also for power devices as well, and power module, which will be very effective for power devices going forward. For new field, biotechnology as well as shifting towards GX, trying to reduce CO2, along with academia, university, as well as with government, we are exploring this new field. This is the final page. Let me explain about return to our shareholders. In fiscal year 2025, year-end dividend is expected to be JPY 15, which means that a total of JPY 50 will be paid out for full fiscal year 2025. 20% payout ratio, the feed is not coming through. For fiscal year 2026, plus JPY 5, which means that it will be JPY 35 annually. Payout ratio will be 17%. With that, I would like to conclude my presentation. We would like to move on to Q&A. To facilitate everyone's understanding, we will first call on sell-side analysts who are familiar with the key topics of interest among institutional investors. If you wish to ask a question, please click the raise hand button at the bottom of your screen. When the moderator calls your name, please state your company name and your name before asking your question. To allow as many participants as possible to ask questions, each person will be limited to one turn with a maximum of two questions per turn. As for numbers, we will provide supplementary explanations during individual IR meetings, so please focus on asking questions regarding market perspectives and business strategies. For institutional investors, we will follow up with you as much as possible as time allows. We will not be using the chat function, so please use the Q&A box to forward your questions. Now we would like to start the Q&A session. First person is Takayama -san from Goldman Sachs Securities. Thank you for the presentation and thank you for taking my question. My first question is about slide nine where you talk about your midterm outlook on net sales and operating profit for fiscal 2027 and fiscal 2030. What kind of customer mix are you expecting for the largest GPU customer and the number one and number two players in CPUs? For new customers, which may include ASIC players, how is the mix likely to change? Can you give us an idea of how that's going to lead up to fiscal 2030? taking my question. My first question is about slide nine where you talk about your midterm outlook on net sales and operating profit for fiscal 2027 and fiscal 2030. What kind of customer mix are you expecting for the largest GPU customer and the number one and number two players in CPUs? For new customers, which may include ASIC players, how is the mix likely to change? Can you give us an idea of how that's going to lead up to fiscal 2030? taking my question. My first question is about slide nine where you talk about your midterm outlook on net sales and operating profit for fiscal 2027 and fiscal 2030. What kind of customer mix are you expecting for the largest GPU customer and the number one and number two players in CPUs? For new customers, which may include ASIC players, how is the mix likely to change? Can you give us an idea of how that's going to lead up to fiscal 2030? taking my question. My first question is about slide nine where you talk about your midterm outlook on net sales and operating profit for fiscal 2027 and fiscal 2030. What kind of customer mix are you expecting for the largest GPU customer and the number one and number two players in CPUs? For new customers, which may include ASIC players, how is the mix likely to change? Can you give us an idea of how that's going to lead up to fiscal 2030? taking my question. My first question is about slide nine where you talk about your midterm outlook on net sales and operating profit for fiscal 2027 and fiscal 2030. What kind of customer mix are you expecting for the largest GPU customer and the number one and number two players in CPUs? For new customers, which may include ASIC players, how is the mix likely to change? Can you give us an idea of how that's going to lead up to fiscal 2030? For the profitability improvement, I think it has been revised upwards quite a lot. Is that going to be driven by mix or is that going to be driven by ASP increase? Decided ASPs for the future, been locked in at a mix or is that going to be driven by ASP increase? Decided ASPs for the future, been locked in at a higher level. What has changed in the past several months? What is the reason why? Can you talk about why you're expecting more improvement in profitability over the longer term? Thank you. Thank you for your question. Regarding product mix, for fiscal 2025, and also, it's about the same for fiscal 2026. For fiscal 2026, we expect that about 50% is going to come from mainly GPU AI products. For the rest, 35%-40% is likely to come from CPU customers mainly, and the rest will be ASIC related. That's the image we have. Going to FY 2030, we believe the split is going to be about the same with GPU customers being about more than 50% and customer centers, mainly CPU, are likely to be 30% and the rest other customers. That's the split we're anticipating. Regarding our view on mix, OP, whether it's going to be driven by ASP or mix, it's actually both, we believe. I didn't really talk about the Philippines earlier in the presentation, but for Ibiden Philippines, we actually took an impairment. Therefore, the organization now is more leaner, and we could compete better, meaning in the CPU area, that is. In the Philippines, those are the types of products we are going to concentrate. As for Japan, higher value add products are going to be made. Product mix wise, we are going to see higher added value products. There are generational changes in the products as well for GPU. With the transition to next generation, the value add will be higher. Also for ASPs, material prices are increasing in cost and therefore ASPs have to go up. That's one thing, but even so, our view is that compared to the price erosions we were initially anticipating, we have been able to manage to maintain the ASPs instead. Due to a combination of these factors, we have been revising up our expectations. Thank you for that. For the midterm forecast, how much visibility do you have so far? Before talking about fiscal 2027, we were talking about contracts regarding ASIC as well as EMIB-T. That is why you decided to invest into the factories. How much resolution do you have now? Well, that's a difficult question. For fiscal 2027, as you rightly said, including contracts, we have gained quite clear visibility now. Beyond that, it's based off our demand forecast, so you never know what's going to happen yet. According to the information we're getting from customers and their demand for fiscal 2030 and its visibility, as long as we are able to ramp up our capacity well, we do believe we should be able to achieve these numbers. Thank you. My second question is regarding capacity. First, I wanted to confirm about the JPY 500 billion investment. We're able to reach the sales and profit targets for fiscal 2030, and you were saying you are still short, but are you going to need to invest more in order to reach your net sales and profits targets for fiscal 2030? If that's the case, where and when do you need to make decisions on making additional investments going forward to ramp up capacity? For net sales and operating profit for fiscal 2030, as long as we are able to execute on the JPY 500 billion investments, we will be able to meet these numbers. We talked about this when we were discussing demand, but the actual demand we're getting is higher than these numbers. At some point in time, although that's very hard to anticipate, but we have demand that's higher than capacity. Around 2028 and 2029, customers are saying they want more capacity. To be honest, they're saying they want additional capacity even tomorrow. Having said that, as mentioned earlier, we have headcount issues, resource issues, as well as timing issues as well. Up until 2028, more than our current plan, it will be hard to increase capacity more than we already have decided on. We believe that it's going to probably be fiscal 2029 or beyond when we can expand capacity even more. According to the slides, it says, "AI server, ASIC is going to go up by four to five times," but your capacity is only going to go up by 2.8 times. In order to fill the gap, around fiscal 2029 or fiscal 2030, you will need to make a decision on expanding capacity even more, and you probably need to make that decision around 2027. Is that fair to say? Also for fair to say? Also for net sales and profits and your expectations for fiscal 2030, if you make the additional investments and make that decision, you could actually grow your numbers even more, right? Well, for additional capacity, including with our customers, we have already started to consider, but we haven't been able to make a firm decision yet due to various reasons. We do need to make a decision as soon as possible at around the 2026 or 2027 timeframe. That's how we feel. Okay. I see. If that's the case, if we have additional capacity in 2030, are we able to increase sales even more compared to the targets we have for FY 2030? I think we need to be cautious about that because are we going to have enough talent or personnel w hich is a big challenge we're facing right now. [Non-English content] For materials, is that not going to be an issue? [Non-English content] For materials. [Non-English content] For glass, for example. [Non-English content] It is in a tough situation right now. However, from fiscal 2027 and beyond, we have been hearing that capacity is going to increase, so I think we'll be fine. [Non-English content] Thank you. Thank you very much. [Non-English content] [Non-English content] Naito-san from Citigroup Securities. [Non-English content] Thank you. you. This is Naito from Citigroup Securities. Thank you for this opportunity. [Non-English content] I also have two questions. [Non-English content] First of all. [Non-English content] ASP— [Non-English content] —selling price going forward. price going forward. You mentioned about being able to maintain ASP and also materials as well. You are passing that over. [Non-English content] We, I think, you will be able to maintain and increase ASP for some of the product. Is it right to say that you will be able to do more than that? Your capacity is limited, which means that ASIC, GPU, perhaps within Ibiden, you're fighting for capacity. I was wondering that included, can there be an upside on sales? [Non-English content] Thank you very much for that question. [Non-English content] For ASP. [Non-English content] Due to product mix, of course, price can go up, and also by quarter or by six months or by annually, there will be a price negotiation. However, we have been able to maintain. That's the background, also passing through the material price increase. Our policy is that, are we going to increase the price because our situation allows so, and thereby achieve higher sales? That is not the mindset because we want to have a long-term relationship with the customers. Randomly, we don't want to increase the price beyond the standard zone. We want to work in a reasonable price level based on the discussion with our customer, and that eventually will lead to our long term business continuity. Okay, thank you very much. Your second question. My second question, package substrate. You've shown a roadmap and with this evolution, I would like to understand more about the competitive landscape. Every year the size of the substrate is expanding and the quantity is increasing and things are becoming more complex. I'm sure there are Taiwanese manufacturers as well as Japanese manufacturers. How do you compete against them? Will your high market share continue? [Non-English content] Yes. First of all, interposer. Let me talk about this type of product first. The size of the substrate expands and the total amount increases. There is an impact on yield. We are struggling as well. This year, the new product that we will be launching, compared to our mass production product, the yield will come down quite significantly. This will be a challenge. Going forward, we will have component embedded type of substrates in this sense. We believe that our technical advantage can be maintained. Perhaps, our share will be very close to 100 this year, and next year we will have new generation type of product, with which we can maintain our share of close to 100%. After six months, perhaps Taiwanese manufacturers will start to launch their product and take away maybe 20%-30%. For silicon bridge type, this is to embed in the package. For EMIB, the connection is inside the substrate. Which company has the capability to produce this type of substrate? It's really only us. We believe that our competitiveness can be maintained through years running up to fiscal year 2030. Okay, thank you very much. [Non-English content] From Morgan Stanley, Sato-san is next. [Non-English content] This is Sato from Morgan Stanley. [Non-English content] Thank you very much for the presentation. [Non-English content] What happens to your personnel? How are you going to obtain enough resources? For CapEx worth JPY 500 billion, how much is going to be asked to be burdened by the customer? How are you going to procure the JPY 500 billion? Also, for EMIB-T— Is it only going to be able to be made at Gama? Are you going to be able to make it at existing EMIB factories? From 2027, you were saying that mass production is going to start. By leveraging existing factories, can you accelerate the production? Can you talk about that possibility? That's my first question. [Non-English content] Thank you. [Non-English content] [Non-English content] Like mentioned earlier, we were initially expecting operation from October, which has happened, but it hasn't been able to achieve our capacity plans, unfortunately, due to some trouble we faced regarding capacity. The ramp up was a little hard ever since the start of operations in 2025. For this fiscal year, we have been making improvements already, so the expansion is steadily underway. Ultimately we expect the utilization rates to reach 90%. For the first half of 2026, we believe utilization rates are only going to reach a little bit over 80%. For Ono, there are some shortages, so we would like to ensure that we ramp up the capacity so that utilization rates can reach more than 90% in the second half. For Chuo, we expect utilization rates to go up to 90% from 80%. Ogaki will be maintained at 100%. Currently, we're planning regarding the first half sales and profits for the first half, we should be able to reach those levels by well executing on our current plans. My additional question is for Chuo factory, a specific customer's line. As demand is continuing to increase, are you going to maintain that line for that given customer, or are you going to start being more flexible in reallocating or releasing that capacity for other customers accordingly? For Chuo factory, we need to be able to do EMIB there. Therefore, so EMIB needs to make good use of this line, so I don't think the allocation is going to change substantially. Okay. Thank you very much. [Non-English content] [Non-English content] [Non-English content] [Non-English content] [Non-English content] [Non-English content] [Non-English content] [Non-English content] [Non-English content] [Non-English content] To play. Okay. Thank you. [Non-English content] Akizuki -san from Nomura Securities. [Non-English content] This is Akizuki from Nomura Securities. Thank you. [Non-English content] Thank you very much. [Non-English content] Thank you. [Non-English content] As we have reached the time, we would like to conclude the Q&A session. [Non-English content] For the questions that you have forwarded to the Q&A box. [Non-English content] I think it has been well covered by annual questions. [Non-English content] For those questions we have missed. [Non-English content] We would like to follow up with you during one-on-one meetings going forward. [Non-English content] This concludes Ibiden full year results briefing for fiscal 2025. [Non-English content] We have a questionnaire that we would like you to fill out that will appear on the screen after this briefing. [Non-English content] In order to make our IR activities even better, we hope that you could take the time to respond. Thank you very much for joining today.