Thank you everyone for taking the precious time to attend Renesas Electronics Analyst Day. We thank you very much indeed. First, let me introduce today's speakers to you. Speakers, you are requested to put your video on. Today's session is attended by our Representative Director, President and CEO, Hidetoshi Shibata; Senior Vice President and CFO, Shuhei Shinkai; Executive Vice President and General Manager of IoT and Infrastructure Business Unit, Sailesh Chittipeddi; Senior Vice President, General Manager of Automotive Solution Business Unit, Takeshi Kataoka; Senior Vice President and Deputy General Manager of Automotive Business Unit, Vivek Bhan. Also some staff from the IR department. This is today's agenda, as you can see here. We would like to finish the entire session in about two hours and five minutes, at around 11:05, Japan Standard Time. The materials to be used for today's presentation are posted on the company's IR site. Also, the recorded video of today's session will be posted on the same site. Now, without further ado, I would like to ask Mr. Shibata to put your microphone on and begin the presentation. Once again, good morning to you. This is Shibata. First of all, well, in fact, we have more than 200 people in Ukraine, and also some collaboration partners in Ukraine. As we speak today, all these people, by and large, are staying in Ukraine and working. We hope that the peace will resume to Ukraine and to the entire world as quickly as possible. As was mentioned at the outset today, Vivek Bhan, who joined from Dialog, he's going to speak for the first time, so this is his debut. Although today is a very concise meeting, but if you have any questions, please don't hesitate to ask questions and give questions to Vivek. Also, number three, the third topic that I wanted to say at the outset, after taking office in 2016, we have made a major strategic shift. Prior to COVID-19 in 2020, we also revamped our strategy once again. At the current moment, we are focusing on the execution of the updated strategy, and I have been adamant in delivering results. I have been communicating this to you all the time, and as a result, the results are not only financial results, such as the revenues and profit. We also have to talk about the progress of the execution of the strategy that we have set as initiative for the company. We would like to explain this firmly to you today. Today, throughout today's session, we would like to talk about the progress of the execution of our strategies. At the same time, we hope that this will provide you with a good opportunity for you to deepen your understanding on the company. With that, I would like to start my part. All right. Quickly, I would like to recap on 2021. Of course, there were many things happening, so I think it's almost that we are about to forget about this, but COVID is still there. We are still seeing the continuation of COVID-19. Supply chain challenges were very much the focus throughout the year of 2021. At the same time, with abundant liquidity, massive liquidity, some capital markets and some, in some product markets, we are seeing a significant increase in demand in some cases. Another major event for last year was that the climate change target was stepped up. More than ever before, sustainability-related initiatives are now accelerating since last year. We at Renesas, as you can see at the top part here, in February of last year, we announced the acquisition of Dialog. A relatively large earthquake struck Japan, and also a fire in March. We caused a lot of inconvenience to so many people, and thereafter, we received incredible support from so many people, and as a result, we were able to recover and resume at an early date. I would like to take this opportunity to once again express my appreciation to all the efforts undertaken. As a result, as you can see from the bottom four circles there, Dialog was consolidated for the four-month period. On a year-on-year basis, we achieved a 39% sales growth on a pro forma basis compared to 2020, assuming that Dialog was there from 2020. We still achieved a 27% growth in sales, which was quite significant. We achieved EBITDA slightly to the south of JPY 400 billion, and design-in amounted to JPY 1.5 trillion. I think, the winning combo we have been heavily promoting, we have provided more than 300 solutions in the course of last year. Just a bit more about Naka factory fire. As you can see on the left-hand side, on March nineteenth, unfortunately, we caused a huge fire at the Naka plant. As a consequence, April shipment came down to nearly zero. However, as I mentioned earlier, with the incredible support that we have received from many people around the society, we... Although we have set a very aggressive target of resuming in about 100 days, completing 100% shipment by then, although we were slightly short of that target, but by July, we were slightly below 100%, but still be able to recover the shipment to that level. From August, thereafter, we were able to utilize our full, almost near full capacity, and continue shipment at that level, from there. On the right-hand side, you see the tools which were required to be replaced. The same list is posted here, which we presented back then. We also have secured some secondhand equipment. We developed—we built equipment using components from two units and then combining it into a single unit. With all these creative efforts, all the equipment that were anticipated to be replaced last year was replaced or repaired and be able to use for production. After that, based on the learnings that we have learned this time, we ensure that we have to improve our resilience and took necessary actions. As you can see on the left-hand side, this is a familiar picture to you because we have shown them several times. Automatic fire extinguisher, sensitive smoke detectors, those were installed from the second half of last year. Currently, the installation is making favorable progress, so I think by the end of this year, we will have completed all the installation of the necessary equipment and facilities. Now, what is more important for us is the human-related efforts, I believe. Sharing the learnings and visualizing the learnings, those have to be incorporated in our day-to-day activities. Of course, in that regard, we are trying to implement a mechanism that so that our factories will compete with each other. Of course, if it goes too much, it's not going to be so good, but I think a healthy competition will be quite effective to improve our resilience on a continual basis. That is the intention, and so far the progress has been favorable. We have established a dedicated team of slightly less than 10 members. For the head of this task force, we have recruited a talent from outside. We are quite serious in the undertaking these kind of initiatives going forward. Of course, all the necessary preparations were finished last year, and currently, we are in the full-scale implementation phase. Throughout this year, we will run the first cycle, and then we would like to lead it to improvement in the second year from next year onwards. Now, our company's purpose. Of course, we have shown you from time to time from before, but maybe you may have. This may have resonated to you to some extent, or some of you may have already forgotten this. We would like to make our lives easier by complementing human capabilities. That is our mission, our purpose. What this means, actually today, I would like to talk about this by revealing the different relations. It's not only limited to only four here, but as a representative initiative, we have listed up all these four initiatives that you see here. One is the winning combo that we have been talking about for many times, the solutions for customers. Verifications, for example, or the design per se, the time required for that can be reduced significantly, and that will lead to differentiations, and the customers will be able to focus on their time and resources to whatever that will differentiate themselves from the competition. Secondly, scalability focused lineup. With this, we would like to reduce the efforts and time required for software development on the part of customers, and thereby, improve the reproducibility of the software. UX, user experience, which has been pointed out as a weak point so far. We have introduced some cases to you. In any event, whatever the devices is, if it's not really good in terms of usability, people will give up using it. This is about the many different mechanisms or initiatives to make our devices more accessible and easy to use. Lastly, this is related to the other side of the coin of UX, but in order for the people to utilize our devices, the tool sets such as development tool sets or as well as drivers also apply to this, and also a higher level software tool. How to enrich these offerings are our focus today. We will not limit our activities only to offering devices. When customers utilize our devices, the necessary tools and environment will have to be improved so that we can lead it to reduce the time to market and reduce development time for customers. Later in my presentation, I'll talk about this in more detail, and some more detailed explanation will be provided during the AABU and IIBU presentations later. Now about the culture. Again, in 2020, from around 2020, I have been quite passionate in undertaking these initiatives. To be very honest with you, from 2020 until the first half of last year, only some a little limited number of people were talking about this and shouting about this, that we are going to do this. However, from around the second half of last year, we changed into and stepped into the next phase, a higher phase. At a more systematic level, we wanted to penetrate all these initiatives throughout the organization. Gradually, we are reinforcing and stepping up these efforts, and I think this will take multiple years, so it's not that we have ended all these initiatives at the end of last year. We like to digest into competency that are more easy to understand for the employees, and the human resource performance review has to be incorporated at the systematic level. Throughout, through roundtables, all these things that people thought that they have understood or taken as actions, we wanted to notify them and provide a hint that that was not really the case and remind them to do better. For those people who are joining us, we would like to define the cultures and ask them to see whether they will buy into our culture or if they are embodying those cultures themselves. We would like to embed all these things so that the human talents that are fit to our culture and talents who will promote those cultures inside the organization will be the target of our recruiting activities going forward. Also for the training. Training to our employees, we would like to do this more systematically, including some interesting tips. We would like to work firmly on the training improvement as well as part of these initiatives. Now, as I said at the outset again, since last year, we have seen accelerated ESG environment-related activities. I would like to use the two pages to talk about our initiatives. First, about the environment-related initiatives. As you can see on the left-hand side, greenhouse gas reduction target. Last year, we raised the bar for climate change. In light of this market trend, we have also raised our bar, internal bar as well. This was changed last year, so the baseline was changed from 2020 to 2021. Compared against 2021, by 2030, we have set a target to reduce the greenhouse gas emission by 38%. This is a new target. On the right-hand side, water-related efforts. Actually, to be honest with you, we have been a laggard here more than any other initiatives. In Japan, because Japan is blessed with water resources, that's the reason why we were a laggard. As a global player, we thought that we have to be more aware of the water targets and set a higher bar. We have set a new target here as well. The consumption per revenue, the unit revenue in 2030 compared to 2021 will be reduced by 33%. That is the target we have set. As for water intensity and also for water recycling rate, although this is not a significant change, but compared against 33% recycling rate, we have raised this to 35% for 2030. In conjunction with all these initiatives, in the latter part of last year, green bonds, $500 million, we were able to secure this in the second half of last year. Our ESG environment-related initiatives, I think to some extent were evaluated, and this proves that our efforts were evaluated to some extent. The two more things related to ESG, social and governance pieces. On the left-hand side, you see the four boxes. DEI, supplier management, shareholder engagement, all these things are the focus areas of the company. We have just highlighted the major initiatives here. That is reflected in the ratings at the bottom there. We are focusing on many different initiatives, so I would like to just show you some of the examples. First of all, at the BOD, the board of directors, the female directors ratio target was set 20%. In the middle part, especially last year. Because there was a significant focus last year, especially for supplier management, so the supplier audit on the field was started from last year. 12 companies so far have been audited, and in the two years, this year, next year, we plan to cover altogether 70 different major suppliers of ours with the actual field audit. In the bottom left circle there, at the end of this month, we are planning to hold the annual general meeting of shareholders, and we are going to have a full online AGM. We have changed the articles of association to that effect. We will do so. We plan to change the articles of incorporation to that effect. Of course, we do understand that there are many discussions here, but if you consider the actual operations of the company, many of our shareholders are actually foreign shareholders. Physically, most of them are not really able to participate if you have only face-to-face options. Therefore, the online AGM, in light of the shareholder structure, I think that is a better option for us to listen to broader voices of shareholders and also to deliver a message to the shareholders. Online AGM, I think, is a must that we have to deliver. Whether to hold this online, completely online, or on a hybrid format combining physical and also online, that was a discussion point, I believe. In reality, hybrid meetings, if you have ever attended, I think, hybrid does not do so much good, I think, in reality, because the face of the people are too small to see. You see a lot of audio howling, disrupting the discussion. Hybrid, of course, there might be some benefits, but there are also a huge number of disadvantages in that kind of format. Hybrid is possible, but a smoother operation can be enabled by online. Especially in order for us to deepen our interaction with shareholders who are not able to visit Japan, we would like to enable a full online format for the AGM. We don't want to sacrifice the voices of our shareholders at all with this format. If you look at the bottom, middle part there, we are eager to hold discussions with shareholders on various occasions. In addition to the AGM, of course, due to COVID-19, there are some restrictions today, but we would like to prepare many different opportunities to have discussions with shareholders. We will conduct many trials this year. For the agenda items that received a lot of objections, we would like to take firm actions to investigate what are the reasons for the objections, what are the opinions of the company to those suggestions, and what initiatives led to the concerns that led to the objections, and then what can we do in order to minimize those concerns. We would like to disclose that information. Through those efforts, we would like to provide an opportunity, make sure that the opportunities for the shareholders to raise their voices will never be sacrificed. In that way, we would like to hold this full online AGM. Maybe today, I think, today's participants are mainly analysts, but I think we would like to seek understanding of many different people. By fulfilling and enriching these initiatives, as you can see at the bottom, the ratings. We will aim to improve the ratings that you see at the bottom, and we would like to hope that we are incorporating many different indexes. Of course, we are doing this in itself because this has a meaning in itself. As a by-product, by being introduced in the indexes as much as possible, those capital that are only available through indexes can be incorporated by the company. Because there are so many questions regarding valuation gap, but I think by broadening the basis of our shareholders through these initiatives, we would like to close the valuation gap as much as possible. I am conscious of time, so I would like to pick up my pace. Now, I would like to discuss some design-in numbers. In 2020, we had a strong year, as we presented last year. In 2021, from 2020 level, as regards automotive business, excluding the anomaly from 2020, we have set a target for growth for IIBU. We also set a target for strong growth in 2021, and both businesses achieved target above target levels at high single digit. Results were strong, and target itself, if it is overachieved or underachieved by double digit, target is not meaningful. However, it was achieved overachievement of target by high single digit, which means that we also had a good target of which we were able to overachieve. As for automotive, higher teens and IoT, a higher range of 20% are included in the target. These are not apples to apples. IoT includes the effect of acquiring Dialog that has a huge contribution. Raw materials are rising in cost on the part of our customers. We are asking our customers to share the burden of the cost, and the mechanism is different. IIBU is revising prices, whereas for automotive business, right now, we are taking approach other than price revisions to ask the customers to also bear the cost, the burden. That is not reflected in these charts, and therefore, on an apples-to-apples basis, automotive should be adjusted slightly upwards. The bars should look longer for automotive on an apples-to-apples basis. There is not a great divergence in terms of performance between automotive and IIBU. That is what I would like to point out. We are expecting significant progress in design-in from last year, and will aim to achieve these targets. Through examples of winning combo, I would like to illustrate how we are making our customers' lives easier with the Dialog joining our group. We had a Bluetooth BLE capability to some extent, and Bluetooth and Wi-Fi capability from Dialog have been incorporated. At the end of last year, with the acquisition of Celeno, we were able to further enhance our Wi-Fi portfolio with regards to connectivity as a result from endpoint to access point. In an end-to-end fashion, we are now able to provide connectivity. This is a very easy-to-use very enhanced winning combo portfolio. On the right side, an example is shown, and this shows only a Dialog device, but we have a same series which also incorporates Celeno devices. These are under preparation. This is an example of smart door key. If this is assembled into an existing door, smart key can be enabled. Based on our devices, we are able to provide such functionality. With this, many customers, especially smaller-sized customers or customers who are new to these areas, will be able to reduce their time to market significantly. These, we believe, will make our customers' lives easier. In the area of IoT, this is a second example I would like to share with you. First, UX or training videos are made available. More than 110 videos are made available on our website. Recently, I think many people enjoy watching YouTube, and with videos, it is easier to understand the subject. We would like to increase a number of videos that shows the way of using our devices. We will continue efforts in this area. What is shown in the middle is a sample program. Oftentimes we received complaints from our customers that it was not easy to simply obtain samples. With our website and other mechanisms, free samples are offered, or small purchase of samples are made much easier. For your information, in case of microcontrollers, our RL78 included in the portfolio, sample availability was improved, including analog for overall products. More than 10 million devices are readily available as samples, and they are stored for immediate delivery together with the video training. It will be easier for customers to test our devices using one sample or a couple of samples. Mobile microcontroller guide app, which I mentioned on previous occasion, is being developed further. From device selection level, it is now possible to select a board. We are enhancing the functions and features of this app. I would like to use two slides to discuss automotive business, our auto Winning Combinations from 2019 to 2020. To be honest, we started from wherever we were able to. That was how we started, but right now, we are more strategic in our approach in this area. In terms of the fields of applications, what is shown on the left are applications, EV, including e-axle and ADAS and E/E architecture. These are three major applications. We are focused on these applications for our solutions. As shown on the right side, each small ECU unit reference was how our efforts have started. Some are at a level of proof of concept or demonstration. As a larger group, at ECU level, turnkey solutions are offered, including those that I've introduced to you on previous occasions. For example, E/E architecture. In E/E architecture, important role is played by central computer, and a solution that can be instantaneously used will be offered. A further enhancement in terms of integration will be pursued to offer a turnkey system. For example, all of the electronics combined can be offered as e-axle or sensor fusion used in ADAS, including radar and camera. All of that will be fused at a system level as a solution. We will be increasing the level of integration. For our customers, solutions can be used in plug-and-play fashion. We are in the process of evolution in terms of further integration of our devices. As regards automotive software and tool sets, I am showing a rather complex matrix. Vertical axis, the tool is somewhat of a different nature, but a more primitive driver to middleware framework to what is key to differentiation for a customer's application are shown. On a horizontal axis, various applications are lined up. Here, for differentiation by our customers, what will be at the center are those that are developed by our customers. In areas other than those, we can offer solutions, or through collaboration with the third parties, we would like to offer even more PAS. We have been enhancing our lineup. For example, virtual platform and semiconductor device. Our device is completely simulated in computer in facsimile. This is still evolving and changes are taking place every day in AI. AI-related tools are also offered, and how... What should we do so that the results of our learning of AI can be transferred to inference, and that inference results should be reflected as the best performance in our computers, and how best to compile for that result. Those learnings are reflected in the tools that we offer. Every day, there are changes in terms of where we are focusing on. But the point is, for all of the areas where we have our offerings, we will be enhancing our offerings. And at the same time, our devices themselves will be made easier to use for our customers. Devices should be having tools that will assist digitalization. We will be enhancing such devices. Now, as for synergy with Dialog, Mr. Shinkai will discuss this in more detail, but cost synergy is progressing, and is on track. As for top-line synergy, this is still premature, but winning combinations are expected to drive top line, and 56 were launched last year. Bottom line is not limited to Dialog, but including Intersil synergy, winning combinations designs are being offered in increasing numbers year by year. As for our maximization of shareholder value growth, deleverage, shareholder return, these are exactly the same as what were presented before. OpEx was shown as an emphasis point, and that remains unchanged, as Mr. Shinkai will explain later. In the next few years, we would like to be more bold in CapEx, especially in capacity area. Short-term demand surge or decline, irrespective of increase or decrease of demand short-term, we would like to increase our capacity for long term. For that purpose, we would like to make sure we have sufficient CapEx. These are still under consideration, and there are not definitive plans yet. Once decisions are made, we would like to inform you of those. It doesn't mean that we will change our fab-lite strategy, but we will be making sure that there will be adequate CapEx. Having said so, last year and this year, we are expecting continuation of strong performance. Initially, at the time of the acquisition of Dialog, a net debt to EBITDA of less than one was set as a target. One year ahead of plan, we expect to achieve this. Therefore, regarding deleverage, we believe that we are able to achieve this ahead of plan, given that more so than ever, first and foremost, we would like to positively consider buyback. I would like to communicate this to you once again. I would like to summarize. On the left side, three items are shown, and these are same as before. As for well-positioned portfolio, with the acquisition of Celeno last year, at the end of last year, we are able to enhance our portfolio. Furthermore, in automotive, this is more pronounced. But applications are likewise. But in terms of customer segments, high growth, faster growth are expected. The segment is growing into such a segment, and we will be providing more support in the high growth segment. We would like to persist on delivering results, emphasize delivering results. We were able to enjoy favorable environment thus far, but environment may not continue to be favorable. Eventually market may soften, and we would like to solidify our position in anticipation of change in environment. We will be customer-centric, but not only for our customers, we would like to make our lives easier. Thank you very much for that. I would like to conclude. Thank you for your patience. Thank you. Now we would like to go to the Q&A session. Before starting the Q&A, we would like to explain how you raise your questions. If you have any questions, please, press the Raise Hand button on the screen. We will call out your name and your company name, then you are allowed to start your question. Please control and unmute yourself, and begin your question. In the interest of time, we would like to limit the number of questions to one question per one questioner. Now, we would like to start the Q&A session. If you have any questions, please raise your hand. All right. BofA Securities, Hirakawa-san, please unmute yourself and begin your question. BofA, my name is Hirakawa. Thank you very much for appointing me. I'm sorry to ask this but, because of the geopolitical risk, in view of the current environment in Russia and Ukraine, Shibata-san, compared to your prospects, what kind of impact has this caused on your business? And what is the main scenario and sub-scenario that you're currently contemplating? To the extent that you can share with us, that would be appreciated. Well, the situation is changing every day, so it's very difficult to make a comment here in that regard. At this moment, if there are any changes from the initial outlook at the year, actually I would say there's no major changes so far. The change itself has been seen in the business. The impact on the business itself, that's one thing. As I said at the outset, very important and excellent R&D people. We have R&D base there, so that will have an impact on the R&D activities. That's something that we foresee. When it comes to business, this relates mostly to supply. Raw materials, supply impact is something that we are currently forecasting. These are the three possible impacts, and I won't rule out any possibility that we will be free and immune from any impact. But as of this point, the R&D and supply related impact, if the situation does not aggravate and it does not get prolonged, this is actually my expectation partly, but I think I would say that to some extent these things are under control. The impact on our sales revenues. I hope that this will not cast a significant impact, but I think we are still calculating and confirming the impact. Russia and Ukraine, if the situation, if that has repercussions on the customer's productions, right, well, that will have impact, so we have to be carefully observing the situation. In terms of sales, development, procurement, for those aspects, among all those, the sales risks I think is the highest, and we have not been able to estimate completely yet. As of this point, we have not seen any significant impact as of yet. Thank you. Thank you very much. Next, Mr. Sugiura from Daiwa Securities, please unmute and start. This is Sugiura from Daiwa Securities. Thank you for taking my question. Regarding shareholder return, what are your current views regarding share buyback? I believe the comment that you made earlier was unchanged from before. Are there any bottlenecks for share buybacks or is it simply a matter of timing, and as soon as you have a better feeling for year-end results will you make decision? To the extent that you are able to, please respond. Thank you for your question. In the past, we had more leeway in terms of timeline, but I was saying that we would like to implement this sooner. This time, as I mentioned earlier, based on the results from last year and forecast for this year, I am saying we would like to implement sooner, but there are no bottlenecks. Having said so, we have to also make sure that we deleverage, to be honest. As of today, deleverage target is certain to be achieved one year ahead of plan. I have announced that earlier. More so than before in terms of timeline, we would like to consider a buyback at an earlier timing. Thank you. Thank you. All right, then the next question will be from Asahi Shimbun, Suzuki-san. Please ask your question after unmuting yourself. Suzuki from Asahi Shimbun, can you hear me? Thank you very much for the presentation. I have a question relating to TSMC, Kumamoto plant. In this regard, what do you think about the estimate on, of the impact on your business with TSMC's, Kumamoto plant opening? Well, for us, this is a big positive for us. Because simply, all the necessary capacity that we require will just simply increase. We talked about designing targets earlier in my presentation, especially when it comes to automotive. 28 nm microcomputer designing, we are planning to significantly increase in our current business plan. The Kumamoto fab, the major products there is the 28 nm node product that will be produced there. That's already decided. This is going to be a major tailwind for us. In addition to that, naturally, of course, region-wise, the procurement sourcing basis will be diversified. This has a geopolitical impact as well as if you think about the natural disaster kind of impact, this will only be a positive development for us. The Kumamoto fab is a very welcome development for us. We hugely welcome their decision. Thank you. Sorry for the follow-up question, but the reason why you did not invest in that plant, can you. No comment for that. Okay, thank you. Thank you. Next we have Yamamoto-san from Mizuho Securities. Please unmute and please start your question. I'm Yamamoto from Mizuho Securities. Thank you for taking my question. Towards the end of your presentation, you discussed CapEx, and you've commented that you are not able to discuss in specific terms, but pre-processing, post-processing of semiconductors, are those the types of CapEx that you have in mind? Or in automotive, winning combos, you said that you would like to increase the degree of integrations in areas other than before. Is Renesas planning to make CapEx? Could you comment on that? Thank you for your question. What I mentioned is about CapEx of the capabilities of semiconductor manufacturing itself. In the past, on a smaller scale, smaller scale may not be the right phrase, but in incremental way for pre-processing and post-processing to increase capacity, we have been investing. As we discussed in our earnings release session, we said at that time that we will be increasing CapEx. What I mentioned today is over medium to long term to increase a sizable CapEx. Those are under considerations. That is all. Thank you. For both the pre-process and post-process, over medium to long term, you will have new locations? In terms of new location, we are not currently thinking of building a new plant, but including foundry with our partners, how we engage with them, perhaps there may be a way to engage more deeply than before. In the facilities that we already have, maybe we can take a look at them from different angle and work on them. More broadly, I'm thinking of possible CapEx. Greenfield large investment is not much considered. Thank you very much. Thank you. I'm sure we are receiving so many questions, but we have to move on to the next session. Okay, I am CFO. My name is Shuhei Shinkai. In the finance part, in 2021 last year, I would like to provide an recap and also talk about the progress of Dialog acquisition. Earlier, there was a mentioning about the capital allocation, so related outlooks and prospects. All these, with respect to these elements, I would like to provide you with an update. Next page, please. 2021 progress year. If you look at the middle section there, in the green box area, please, take a look at those numbers there. In 2020, in 2019, in 2020, the adjusted revenues, adjusted numbers are provided here. The 2021 actuals adjusted amounted to JPY 889 billion. Gross margin amounted to 54%. Operating margin, 29%. All of them are non-GAAP numbers, so that's the result for 2021. The adjusted definition, the Forex US dollar, 100 yen to the dollar, euro 120 yen to the euro, that's the medium term rate, and we universally apply this. Also, we only included the continual business, continuing ongoing business. Up until 2021, for 2021, four months worth of Dialog numbers are consolidated. The 2021 adjusted numbers, and if you look at the far right, the targets, if you can refer to them, you will see that 2021 has already achieved good progress if you make reference to these numbers here. Now, another point regarding the highlight for fiscal 2021, the financing diversification was achieved in 2021. Actually, in conjunction with the M&A, the balance sheet has been updated in our history. In 2019, when the acquisition of IDT happened, we used all debt for the financing. In 2021, for the acquisition of Dialog, we diversified the financing sources. As you can see on the left-hand side, we have diversified the financing sources. From the equity market as well as from the capital and debt market, we were able to finance ourselves, which I think for Renesas will be a very positive factor for us to add more flexibility to our financing going forward. Also, if you look at the term loan, indirect loans, JBIC, we have expanded the contact window to JBIC so that we can increase our financing sources. For the indirect financing, we have secured a very strong relationship with our main banks as well. The right-hand side shows the maturity profile. 2024, we see a big peak there, but this is due to the IDT acquisition in 2019. The term loans will mature there, and also the green bond issued in 2021 will see its maturity as well. At this timing, some will be redeemed and some will be refinanced at this timing in 2024. Now, the leverage. As Mr. Shibata mentioned in his presentation, simply put, to be precise here, all the targets that we had initially anticipated were achieved, will have achieved one year ahead of the target date. With the completion of the Dialog acquisition in two years, in ten some years, we, the net debt, will come down to less than one times. If you look at the right-hand side according to the current outlook, after the completion of acquisition in just one year, within this year, in fact, we will have achieved the net debt to EBITDA multiple of less than 1x. This is according to our reasonable projection, we will most likely achieve this. Therefore, with this progress update, we declare that the target is already achieved and therefore the capital allocation will move on to the next phase. I would like to declare that we will move on to next phase of capital allocation with this completion of the target. Now, Dialog's cost synergy progress. I would like to explain this using this slide here. On the left-hand side, you see the target that we set one year ago when we announced the intent to acquire Dialog. In three years' time after that completion of the acquisition, $124 million is the run rate that we set for this acquisition. If you look at the right-hand side, this is the track record and the outlook for the future. Now, if you look at the three bars, and if you look at the day one, the lowest bar there, in 2021, this is the run rate for 2021. Day one, immediately after day one, the start, this is the initial speed after the start. In that regard, I think we got off to a favorable or good start already. For the outlook for the future, two years after the acquisition completion, the target will be nearly achieved. In three years' time, we will overachieve the target according to the current plan. One point that I would like to supplement here is the components comprising the synergy. The most recent data shows that in light of the supply shortages, the COGS is coming smaller compared to our initial assumption. The chip shortage will be offset by the SG&A synergies. That is the current plan that we are currently contemplating. In year two and year three, if you compare the height of the bar, the third year bar is much larger, as you can see there. In 2024, all the system integration that we are currently working on will have a full year effect by that timing. Even before the acquisition of Dialog, this project has been ongoing. Of course with Dialog will be subject and included in scope of system integration. Those synergies will materialize and accelerate to be developed, accelerate the synergies at this timing in 2024. Now, OpEx. Part of the OpEx comes from SG&A, so this shows the SG&A performance. I would like to provide you with an update of SG&A. Originally, SG&A actual amount, we wanted to reduce the SG&A actual amount and at the same time expand the revenues so that the SG&A percentage to revenues can be diluted. That was the original plan that we have set. First, if you look at the upper left-hand side and the dark blue part, line there. This shows the track record of the last three years comparing with the assumptions. The actuals versus the dotted line assumptions. You see 2019, 2020, and 2021. In 2021, the one-time cost was there, so therefore we underachieved the target in 2020. But in 2020, we achieved the target just as planned. The revenue size is increasing, but the fixed cost is not increasing in proportion. We have been able to maintain the CapEx in this time horizon. That's what we are talking about here. What is the outlook for the future? As you can see, the red, green, now you have to shift your focus to the green line. The actual amount will come down. The improvement measures include the midterm measures. Those are still ongoing and have not been completed. By executing those initiatives, we would like to achieve a stepped improvement so that we can achieve the green line there. As for the SG&A percentage. The theme of the initiatives implemented last year are introduced on the right-hand side. One thing, synergy, that we talked about in the previous page. Second is the IT integration. Number three, logistics cost. Those are the three major components for the initiatives to achieve the improvement of SG&A. Synergies, our contribution is the largest here, accounting for more than 50% of the cost reduction. IT, currently, we are still making investments for improving the efficiency. Once this is complete, I think we will be able to start recouping the investments and achieve improvement. For logistic cost, of course, with the addition of Dialog, new logistics lines and operations will be defined, so we would like to achieve efficiency by streamlining the operations. With all these three initiatives, by combining all these initiatives, we would like to achieve the new target line, which is represented by the green line here. As the revenues makes progress, we would like to achieve a single mid-single-digit level of SG&A%. That is the current plan that we are contemplating. Next. Finally, this is my last page. Capital allocation related topics are presented here. I'll talk about CapEx first. On the left-hand side, you'll see the CapEx outlook. The gray line, in the last update we presented the revenue, the CapEx to revenue percentage. The green line is the current assumption that we have. If you talk about 2021 and 2022, we are planning to continue a reasonable level of capital expenditures, so we have been more aggressive in the plan right here compared to the last time. In the long term model, 5% to revenue is the baseline that we're talking about, but the trajectory to get there is different. That's how you should interpret this graph. Recently, the low-end MCU and analog-related capacity expansion is one target of CapEx. At the same time, in 2022 and 2023, if you look at the bars there, you see the dotted line part for the bars of 2022 and 2023. Those are only potential projects. Nothing is decided. This is not really finalized yet as a plan, but, given the recent size of the capital expenditures, we just included these components there to give you an indication about this potential size of CapEx. The details will have to be worked out going forward, but these are the size that we are talking about. Meaning that, 10% or so to revenues or somewhere to the north of 10% of revenues is the CapEx to be projected for the next two, this year and the next year. Then the right-hand side is the capacity expansion of the front end, in-house front end. The gray line shows the previous update, and the green arrow shows today's update. This year, we have been more aggressive for capacity expansion, so that portion will make contribution to expand the front end capacity for our in-house production. Therefore, the green line is somewhat steeper or larger compared to the last presentation. The potential projects are not included in the capacity projection on the right-hand side here. Once those are decided and to be executed, the angle of the green arrow may become steeper. In conjunction with the CapEx, depreciation amount will also increase, therefore, the gross margin will be definitely affected. Of course, gross margin numbers have been indicated to you, but with the CapEx plan and also including the production plan, when we have the next update, we'll talk about and share with you the gross margin outlook as well. That was all for myself. To summarize, shareholder in order to improve the shareholder value, we have contemplated some scenarios. We will deliver performance and achieve results. We will accelerate deleverage. Those are the things that we have been working on. For those two aspects, we have been making good progress already, and the deleverage is nearly complete. That's one thing. Therefore, going forward, we would like to make investments for growth, including CapEx and also focus our spending on capital allocation more than ever. With this, we would like to steadily expand and improve the shareholder value of Renesas as a company. That's all for myself. Thank you very much for your attention. Thank you. We will now open the floor for questions. If you have questions, in a similar manner as before, please click Raise Hand icon. First, from SBI Securities, Izumi-san, please unmute and speak. Thank you for taking my question. Deleveraging has achieved one year ahead of schedule, and in a nutshell, I think it is because EBITDA expanded more than expected. Is that the correct understanding? According to this table, 1x is the number. Does that mean that you expect more than JPY 500 billion of EBITDA? You are not announcing annual forecast, but EBITDA at the level exceeding JPY 500 billion is your expectation. Is this the correct way to understand? Thank you for your question. Outlook of EBITDA changed substantially, and that is correct. In comparison to initial expectations at the time when Dialog was acquired, over time, outlook has been improving. As a result, this is to supplement my earlier presentation, at the time of the acquisition of Dialog, what was assumed in terms of the amount for equity financing was now compressed. Last year in June, we had a public offering. As for the second point regarding the expectations for EBITDA for this year, in terms of a rough image, that might be how it appears. I wonder, well, going forward, there are various elements for fluctuations, volatility, so I would like to refrain from specifically commenting on this, but it is certainly true that outlook for EBITDA has strengthened. Thank you. The next question is from Citigroup Securities, Fujiwara-san. Please begin your question after unmuting yourself. Hello, this is Fujiwara from Citigroup Securities. Can you hear me? Yes, we hear you. All right. My question regarding the source of funding of your shareholder returns. Deliveries now complete, you said. If you're going to do anything this year, what is the framework of the shareholder return, let's say, for the EBITDA allocation, deliveries, capital expenditures, or. Then the remainder will be used for capital for shareholder return. I think there are many different ways of or approaches, but what is your basic approach as your company for shareholder return? Well, actually, the short answer is that this is for future study. With capital expenditures, as we talked about in the slide there, the production footprint, we will think about the production strategy and then have to consider what kind of amount of capital will have to be injected for the capacity. Besides that, other areas that requires capital injection will have to be considered. All these elements will have to be taken into consideration with priority. We also have to consider the timing and thereby make an overall adjustment for the returns. Currently, we don't have any clear-cut formula or priorities defined yet. All right. Thank you. Thank you very much. Next, we have Takayama-san from Goldman Sachs Securities. Please unmute, and please start your question. Thank you for taking my question. Earlier, gross margin outlook, you've mentioned that will be presented next time. This time, regarding the investments, basically, I believe, you will be looking at higher margin products. On the other hand, there will be depreciation. Is it because that you don't have a clear picture of how these will be appearing in combination? Is that why you're saying you're presenting next time? What is your thought process? Basically is the expectation that margin will continue to rise? Thank you for the question. As for the gross margin outlook or the bridging towards improvement of gross margin, was such that rather than depending on growth scenario with various different components, we will be improving our margins. Those were the assumptions. Substantial portion are based on the expectation that there will be depreciation. On the other hand, looking at the investment for increase in production, the contribution coming from depreciation will become smaller or will be reversed. On the other hand, with the increase of sales, there will be contribution coming from that to improve gross margin. That is our outlook, but as you pointed out, depending on the product mix and where we invest, the degree of contribution will have a different mix or a different balance. Based on the production plan, we would like to make appropriate updates. Follow-up question. I think you will not be decreasing your margin and because you're not able to clearly quantify the increase in margin. Is that why you're deferring the discussion of that? Basically, that would be correct. Thank you. All right. Thank you. Okay. Moving on to UBS Securities, Yasui-san, please, begin your question after unmuting your microphone. Yasui from UBS. Hello. I have two questions. The first question relates to capital expenditure, ROIC. Do you have any plan for ROIC for capital expenditures given the current, what is the return period and how long does it take for recouping those investments? The second question relates to page six of your presentation, the SG&A as a percentage to revenue. If the numbers on a non-GAAP basis, SG&A, that's the definition, right? On a non-GAAP basis. In the absolute amount, SG&A, will this remain flat? Is that your message here? That's the other thing that I wanted to confirm. If I comment from the second question first, this is non-GAAP basis. To be more precise, this is adjusted numbers are used here. So it's almost equal to non-GAAP numbers. SG&A, whether that's going to remain flat or not, that's not really the case. Actually, in tandem with the revenues, there are some items that will continue to increase, so we are not expecting flat. The latter amount will slightly increase, but as a proportion to revenues, because the comp decline will be larger than the increase of variable costs. Regarding the first question, ROIC, what kind of impact will there be on the ROIC, and will that have any positive impact? Actually, that is a very important decision and a core point that we have to make when we make the decision relating to investment. But it doesn't mean that we have a clear-cut formula defined. ROIC and also the revenue growth, those things are taken into consideration comprehensively, and thereby we make a decision. That's it. Thank you. Thank you. It seems that there are more questions, but we would like to move on. Yeah. Good morning, everyone, and thank you for joining the IIBU presentation. Next slide, please. I'll begin by covering the financials from 2019 to 2021. I had covered based on estimates when I spoke to you last in December, and I'll provide the actual outlook for the current quarter, provide some color on what we're seeing by segment for calendar year 2022. After that, I'll discuss trends driving the growth. At previous analyst days, we had provided deep dives in the industrial segment in December and the IoT segment in September of 2021. I'll briefly touch on those areas, but I'm gonna focus this time largely on the power domain for data center and overall for computing. I'll also address a couple of new growth vectors. A, the Metaverse, because there was some interest on this topic last time around. B, talk a little bit about our new Forge FPGA family before summarizing. Next slide, please. Let me begin with our financial trajectory between 2019 and 2021. The results here that I'm sharing are based on actual revenue growth. IIBU revenue growth had a 25% CAGR between 2019 and 2021, and EBITDA grew by 42%, gross profit by 33%, and operating income by 68%. The top line was achieved due to strong growth in each of our three segments, industrial, IoT, and infrastructure. The increased leverage that you see in the bottom lines is a result of better utilization of our factories, price increases, as well as a focused effort on cost improvement and targeted R&D investments. At the bottom right-hand side, by segment for the IoT infrastructure and industrial businesses, revenue grew by 74%, on the IoT side due to inclusion of Dialog in fourth quarter 2021. For the infrastructure, it grew by 19%, and for the industrial by 20%. Okay. Next slide, please. Let me now share our growth on a quarterly basis. Based on our guidance actuals, we expect between the first quarter of 2020 and first quarter of 2022 to see a revenue growth of nearly 46%. We expect to see EBITDA improvement of 59%, gross profit improvement of 51%, and an operating income improvement of 84% when looked at it quarterly. Once again, moving into 2022, we see growth across each of our three segments. By segment for IoT infrastructure and industrial. For the IoT segment, we expect to see growth of 70%, and remember, this is our full quarter of ex-Dialog included for that segment. 29% for the infrastructure side and 32% respectively for the industrial portion of our business. 2022 promises to offer sustained growth opportunities for our business. Turning to the outlook on the next slide by segment for 2022. For industrial automation area, we see sustained growth because of increased push to efficient factories and sustainability, which is driven by our customers. On the home appliance part of the industrial segment, we see moderating growth after a significant spurt that we saw during the COVID pandemic. In the broader industrial market, which is typically power tools, motor control, et cetera, we see a move towards much more improved performance, which is driving growth. In the IoT mobile segment, we see normalized growth after the share shifts from Huawei, which occurred in 2021. In the laptops, notebook, and notebook segment, enterprise and gaming growth offsets some decrease in the consumer segment. In IoT for other broad-based applications, we continue to see strength across the broader market. The infrastructure data center segment promises to be one of our strongest growth segments in 2022, with growth in both hyperscalers as well as in cloud computing. In the 5G area, deployment is largely today in the sub-6 GHz segment. While we see slower growth in the millimeter wave domain, we expect that this trend will continue for the next few years. I'll also mention that our inventory levels continue to be low across each of our product segments and well below normalized run rates. Next slide. IIBU's mission is moving intelligence from the core to the sensor endpoint sustainably, which is aligned very well with the Renesas mission that Shibata-san outlined before to make people's lives easier. The big opportunity that we see from a trend perspective is that the endpoint data creation growth has a CAGR of about 85% from 2019 to 2025. We expect this trend of driving intelligence from the cloud to the sensor edge is gonna continue to offer us significant opportunities for growth. You might have seen this chart that I'm showing before in the form of a bullseye chart that I represented before, but here I'm kinda trying to highlight a slightly different point. I'm highlighting it by way of a pyramid. The base of our pyramid is embedded processing, whether it's MCUs or MPUs. Above it's all about what Shibata-san mentioned, the software, the user experience, security, and embedded AI to build capabilities for ease of customer use. Above it are the four major elements that we've added to enhance our capabilities around embedded computing, and these are basically powers, sensors, connectivity, and actuation. If you recall before, these were the four quadrants of the circle. From a connectivity perspective, we have fully integrated our Celeno and the Dialog teams within our existing organizations, okay? The next step of this is we are working towards developing a common graphical user interface or a GUI, so that the look and the feel of Renesas products is the same for all its customers, regardless of the acquisitions that we've done. The customers, when they see us, see one Renesas and not ex-Dialog, not ex-IDT, and not an ex-Intersil, but rather one user interface. By focusing on superior application support and outstanding customer reach, we expect to sustain a path to grow faster than market with exciting new products. Next slide, please. Touching briefly on the industrial market. Next slide, please. I'd like to focus on the number of new products that we're introducing. It's pretty obvious that there's significant growth between 2019 and 2023. To remind you, RZ family as a whole on the MPU side has four major product groupings. Number one, RZV for vision-based AI, RZG for general purpose microprocessors, and RZT and RZN for industrial automation and networking. Our industrial ASSPs are primarily focused on sensor signal conditioning, and if you recall, the access layer in the industrial automation arena, right? That's kinda what we're focused on. How do we scale it? Shibata-san had mentioned scaling. We scale our RZ devices on the basis of higher performance at lower power and cost. We scale our general purpose products by way of platform software and expanded application support. We expand our access layer portfolio on the industrial ASSP side by combining Dialog solutions together with Renesas, right? The interesting thing that I'd like to announce today is we are launching our RZ/Five, which is a RISC-V based MPU, to address the gateway, IoT gateway market. This is a major expansion in our application space that we're going after. If you look at the right-hand side, between 2021 and 2022, we expect to drive design and growth of over 180% in those two years. This, together with a significant increase in new products, is a leading indicator of our growth for the industrial segment. Moving next to the IoT and the connectivity business. Next slide, please. I'd like to capture the progress in the IoT 32-bit core or the advanced IoT cores. To begin with, we have our proprietary products with the RX family. We have shipped over a billion units, making it one of the most widely deployed 32-bit proprietary cores in the market. Moving then to the Arm-based ecosystem, what you'll see is the design in growth for the RA has surpassed the record of RX in less than two years since the launch. On the far left, you look at the RA8 family, which is the most advanced Arm Cortex-M85 core. With the RA8 device, we're gonna establish industry-leading performance in the Arm ecosystem. This reflects a major transformation in our MCU journey, which began three years ago, as Shibata-san mentioned, with a change in strategy. We have also launched two RISC-V based products, one for motor control in record time, and I'm incredibly pleased with the team for doing this. The second one is voice-based application. With a portfolio of products consisting of proprietary cores, Arm-based cores, and RISC-V cores, we're well-positioned to take advantage of the evolving landscape in the microcontroller area. Looking at the bottom and talking about user experience and ease of use of customers, we solicit active feedback from both internal users as well as external users on their software and tools experience to make users' life easier, right? In the world of AI and tiny machine learning, we're expanding our ecosystem partnership. Today, I'd like to announce a strategic partnership with Arduino for expanding our microcontroller ecosystem. Arduino, based in Italy with over 30 million users, is one of the largest hardware and software platforms available to microcontroller users in the marketplace. We're also partnering with Syntiant for voice-based AI technology. Next slide, please. Microcontrollers need to connect seamlessly, right, with the cloud and the external world. With the recent acquisitions, whether it's Wi-Fi, Bluetooth, or partnerships for NFC and UWB, we now offer easy access to our cloud, to the cloud with our MCU-based solutions. Further, if you move to the right of the chart, with Sequans, we're now covering NB-IoT and LTE Cat-M as well as Cat-1 solutions, and are now able to offer a comprehensive cellular portfolio to complement our MCUs. We have launched over 30 new Winning Combinations with our connected portfolio since the acquisition of Dialog and Celeno, and we'll launch another 15 before the year is out. Much as power has complemented our portfolio in the past, connectivity is gonna be a major emphasis for us in 2022. Our software and user experience focus should allow customers to access the cloud with the fewest clicks and make their lives easier. Next slide, please. Now, changing the focus to the infrastructure area, we see strong growth in the power domain for data center as well as client and mobile computing. There are two major categories of products driving growth in data center and client computing markets. First is our digital multiphase controllers, and the second is the Smart Power Stage. Our controllers are extremely well suited for the needs of the advanced CPU cores, which have very stringent power requirements. With the controllers, we offer the Smart Power Stages that complement these products. To give you an idea why this is important, for each CPU controller you'll have between eight and 15 Smart Power Stages. You can easily see why you're seeing the kinda cascading growth that I'm showing in these charts. On the mobile computing side, on the other hand, the products that are driving the growth are industry-leading battery chargers that came from Dialog, fuel gauge ICs that are Renesas, and USB PD solutions that also came from Renesas. Those are the three major drivers on the mobile computing side. Next slide, please. The previous slide covered power from a CPU perspective, right? You have the processor on one side of the compute. On the other side of the compute, you have the memory stuff. The other side is the dual interface memory module side. What has changed from DDR4 to DDR5 is, unlike the prior generation, the power management IC resides on the DIMM module, highlighting the revenue scaling opportunity. Before, you'd have one for a system, now you have one for every DIMM board, so that's a huge scaling opportunity. Renesas is the market share leader and the only PMIC supplier currently approved for Intel's Alder Lake. Our market traction is clear by looking at the level of engagement with our customers. We're increasing our DDR5 PMIC design in, as you can tell, between 2020 and 2022 by a factor of 4. We expect that with each improving generation of DDR5, this attach rate will be a benefit to Renesas, assuming we continue to execute. Next slide, please. At each of these sessions, I've highlighted an important facet of what Shibata-san calls the sprouts for growth, one of which is the metaverse. Again, on the Metaverse, there's the cloud side, which is compute intensive, and the other side, which is the AR/VR glass side. Renesas has products that support both the compute side with PMICs, as well as on the memory side with PMICs memory interface products, SPD hubs, and temp sensors. On the compute side, there's an opportunity to have multiple digital controllers and power stage on a board with a BOM of up to $72. On the client side, which is the VR/AR glass side, with the host apps PMIC, we have a bill of materials of $3. On the total wireless stereo side, which is the TWS side illustrated there, the charger PMIC offers a system BOM opportunity of about $3.50. Okay. Next, I'm gonna cover the GreenPAK family. Most of you are familiar with the GreenPAK family, which is mixed-signal technologies put together with a state machine for a controller. We've spoken about that extensively at the previous session. This time I'd like to focus on the FPGA, which is really the ForgeFPGA family. The ForgeFPGA essentially offers very easy to use software capabilities for the industrial IoT market. To be very clear, we do not intend to compete with Altera, Xilinx, Lattice, or Microchip in the PLD or FPGA space. ForgeFPGA is very unique. It is low gate count, low power, and low cost solution optimized for IoT applications. The biggest problem with an MCU, typically single core MCUs, is that they're single-threaded, meaning that they can handle only one function at a time. FPGAs, on the other hand, can handle multiple functions at a given time. But the problem with FPGA is cost. The ForgeFPGA actually handles that. It avoids the high cost and software complexity of a typical FPGA. The product supports around 5,000 gates, offers half the power consumption of competing FPGAs in the market, and at volume the price will be at or around $0.50. We also avoid the traditional FPGA development struggles on software by offering free development software to accommodate both new and experienced FPGA users with what we call the macro cell mode and an HDL mode. Next slide, please. To summarize, we see solid opportunities for growth both and on the top and the bottom lines as into 2022. Inventory levels continue to be good. We've integrated both Celeno and Dialog. As Shibata-san mentioned, we expect to achieve or exceed our synergy plans for those businesses. We've expanded our ecosystem of partners with strategic partnership with Arduino and Syntiant. Our roadmap and design and traction offer continued prospects for sustained growth. To reiterate, our financial model of far greater than SAM, a gross margin of at or greater than 60%, an operating income of between 30% and 35%. What I will tell you is we have significant leverage to improve the bottom line performance as we grow the top line. Thank you for your attention. Thank you. Now we would like to move on to the Q&A session. If you have any questions, please press the raise hand button. Okay. BofA Securities, Hirakawa-san, please begin your question after unmuting your microphone. Thank you very much. BofA, my name is Hirakawa. On page 12, you explained about connectivity, that you said that connectivity is your focus area. Now, in that context, Wi-Fi and Bluetooth, you have reinforced your capabilities through acquisitions. What are the plans to reinforce your cellular capabilities? Can you elaborate on that point? That's my question. Thank you for your question. Yes. On the cellular area, today we're partnered with Sequans Communications. We've launched actually combinations of our microcontrollers together with their Cat-M and NB-IoT combined solution in the marketplace. We are aggressively launching products, the ZY 024, as well as the ZY O14, to go after this particular marketplace. My expectation is, over time, we are gonna be doing a product that is dedicated for both Narrowband IoT, as well as products that are dedicated towards the Cat-1 market, as well. It is our intent to partner very closely with them and expand the scope of what we're doing in this area. They also, longer term, they offer the possibility of working with us on a 5G solution as well that is focused on the client side, not on the infrastructure side like Renesas is focused. Hope that answers your question. Thank you. Thank you. Thank you very much. Next, Higuchi-san from Nikkei Newspaper, please unmute and please start your question. Thank you. This is Higuchi from Nikkei. Can you hear me? Yes, we can. Thank you for taking my question. RISC-V based microcontrollers. I have a question. RZ/Five design with Taiwan's Andes Technology using their designed IP. In this IP area, do you plan to do this on your own going forward? Or are you planning to use IP from outside? What is the timeline for the introduction of new products? Could you discuss all of these? In addition, RISC-V based microcontrollers ecosystem or what is the status regarding the users using the ecosystem, if you could touch upon that as well. Thank you for your question. From the RZ5 perspective, yes, you're absolutely correct. Today we're using the Andes core. We are investing in doing RISC-V development internally as well. This is for us, as we, I think Shibata-san alluded to this earlier. We are in a hurry to launch products, and to get products into the marketplace, and make sure that Renesas is in a leadership position. That's the reason why we partnered to get to market faster with the RISC-V solutions with Andes, both for the MCU side that I showed earlier, as well as on the MPU side. We have a focused effort of internal development. I expect that by 2023 timeframe, that we will have products developed with our internal capabilities. From a software and a user experience perspective, the teams are working actively to develop the tools, as well as the tool chains that are required to enable our customers to use this, from the get-go. It's not sequential. It is actually in parallel, that when the product is launched, the software is gonna be available at the same point in time. We have a concerted effort on software development, and this is one of the things that we are doing better than we've historically done in the past. The idea is, yes, get to market faster with partners, and then it bring along your own technology in-house, to develop that capability. Hope that answers your question. Thank you. Thank you very much. A follow-up question. Using RISC-V, the resulting microcontrollers, it seems that is there any application for manufacturers who are very active in introducing these products? Do you already see signs of active manufacturers' product application areas? Right. Yeah. Thanks. I'm not gonna talk about specific customers. Obviously, I cannot. What I will tell you is that the focus for the initial launch of the RISC-V products is for the China market. RISC-V is sort of application targeted, as you can imagine, right? Where you optimize the hardware and the software for the application space that you're after. I will address the question broadly, that it's dedicated to the markets where we see the biggest opportunities for traction, which is the China market today. Hopefully, that answers your question. Thank you very much. Thank you. I'm sure we have many questions in the queue, but we have to move on to the next session. Thank you. Thank you. Begin the presentation. Hello, good morning to you all. I am Kataoka, responsible for ABU. Today, myself, Kataoka, and from Dialog, Vivek Bhan joined us for the ABU business. He is currently responsible for analog and power business. Vivek Bhan, the two of us, will be explaining the automotive strategy. Please bear with us till the end. Now, first of all, I would like to talk about the progress update regarding the main product for the ABU, which is the MCU RH850 and SoC R-Car Gen3. This is the latest product of ours, so I'd like to talk about the progress of revenue of these two products. The right, left-hand side, RH850, gateway, domain control, xEV, ADAS, those are the major growth areas. For all these areas, we have achieved a significant growth. RH850, we started off from the 80 nm product, 40 nm product, and then on top of that, the 28 nm new product is now being launched. The number of content growth per one car, especially in the growth applications, the adoption rate is increasing. In fact, the number of units per one car is also increasing. Therefore, with all these synergies, being delivered, the market growth, according to analyst data, the gateway and also ADAS, is expected to achieve a CAGR of 12%-15%. xEV, 20%-25% is the analyst consensus. We have been able to achieve a CAGR higher than that. The right-hand side, the R-Car Gen3, this is a third generation of SoC. This shows the timing of new product launch. The ADAS and cockpit have been achieving a significant growth. Most recently, new gateway, central computers. In this area, we have been able to secure design-in, so therefore, this is expected to lead to further growth in the future. Of course, this year, again, the demand is expected to continue to be strong and, for RH850 and R-Car Gen3 up until now and also continuing this year, the revenue for these products is constrained by the actual supply constraints, so we have not been able to fully catch up with the demand growth. That is the current situation for these two products. Next page. Here, I would like to talk about the growth pillars for the ABU business unit. First and foremost, if you look at the upper left, the emerging market, the emerging OEM, the emerging regions, we will focus on these high growth areas, especially when it comes to xEV, Tesla, EY, BYD, all these new OEMs are now increasing their number of units sold at an astonishing level. In line with their growth, we would like to expand our xEV business. Secondly, the E/E architecture, ADAS and also xEV, those are the emerging applications. We would like to focus more on this opportunity so that we would like to achieve growth higher than the automotive market growth rate. The last piece, including Dialog, Intersil, IDT. With all these effects of acquisitions and our power, our portfolio has been expanded. The digital products that we have been always strong with, including MCUs and the SoCs, we would like to offer a winning combination so that we can win content, and thereby achieve our revenues and also market share. With all these three pillars, I would like to deep dive into each of them. Next page. This relates to our growth for the emerging customers and emerging regions. The design-ins in progress and the revenue growth are presented here for the design-ins last year. Because we have established a dedicated team, as a result of that, we have been able to achieve a significant growth in design-ins. Consequently, if you look at the middle part there, the future revenues based on certain assumptions, based on the design-in numbers, we are able to translate into the revenue growth expected for the future. As you can see there, for revenues, we are by far overwhelming the market growth rate in terms of our revenue projections based on the design-in progresses. Next page, please. Yes. For the strategy for these emerging customers and region, there are four major pillars. I'll start from the upper left. Winning Combinations, especially when it comes to xEV, reference designs and also turnkey solutions, we would like to make achieve substantial solutions so that we can expand our product portfolio. Two-wheeler EVs is also increasing in addition to four-wheelers. Including that opportunity, we would like to expand our business here. If you look at the left-hand bottom markets, China, India, and Southeast Asia, and of course U.S., those are the new OEMs there. Of course, IT platforms are now coming on board, so we would like to target them and expand the scope of our customers. Of course, what is good about them is that these customers are quite fast in terms of translating into actual sales. Rather than prices, they focus more and attach stronger importance and time to market and also the supply. Therefore, this translates into faster revenue growth and improved revenue growth margin. We expect these benefits by addressing these opportunities. Now, upper right. Because these are the new emerging markets and therefore, the orientation of these customers are therefore different. New business models, new services and new products will have to be provided to them. Just an example, RISC-V-based products, for example, as well as cloud-based software services, those environments should be provided. That's another focus area. The last one, bottom right. Startup mindset organization was set up as a dedicated team, as I just mentioned earlier. With this new team, we would like to catch up and agilely respond to the speed of the new customers and expand our business as a result of that. The next page, E/E architecture. How do we respond to this market? Demand and revenue growth are presented on the slide here. Design-ins, the central computers and gateways, these SoCs, we have secured all design-ins and also the domain control MCUs. SoCs and MCUs, by expanding the product portfolio, we have been able to achieve a significant increase in design-ins. In 2020, the SoC major platform design-in was secured, so 2020 numbers is outstanding. In 2021 as well, we have been able to achieve a favorable increase compared to 2019 level. Favorable growth is expected for this year as well. Therefore, as a result, the revenue growth, the perspective for the future is going to be larger than the market growth. In concrete terms for the measures that we have to implement for the E/E architecture, let us explain here. If you look at the left-hand side, one of the strength of Renesas is that, the SoC, MCU, and analog power. We have a broad portfolio of products. Especially when it comes to E/E architecture, if you look at the car picture there, central zone and actuators, all these different ECUs, domain ECUs, head unit ECUs, and actuator ECUs, and sensors and actuators. For those opportunities, we can provide many different total solutions, a total solution. What is important here is that the customers software usability and scalability will have to be enhanced by providing development support. Of course, if you look at the left-hand side, safety, security, IP across different products, we have a common structure there. Also when it comes to Winning Combinations, including analog, we provide a total solution for our customers. Furthermore, recently, and of course going forward, we are trying to expand our capability at the bottom there. Traditionally, for each ECU, different development environment was provided. Nowadays, going forward, we would like to have a unified development environment across many different ECUs. If you look at the right-hand side, based on that, we will provide many different tool sets, driver, middleware, framework, and applications. We would like to expand the portfolio of softwares so that the software-defined cars and software-defined architecture of our customers can be supported to our system-level integration. Meaning that, customers, they will move from the ECU specific optimization to a broader optimization for the entire car. In relation to this, the collaboration press announcement for this environment was made just yesterday. We made a press release yesterday. Now talking about the ADAS market here. Design-in on the far left. First and foremost, our central ADAS and also camera SoC and safety MCUs. By expanding our product portfolio, we have been able to achieve a significant increase in design-in. Just like the E/E architecture in 2020, JPY hundreds of billions in the end of project design-in was secured. The 2020 numbers is outstanding. But even for 2021, we have achieved a significant increase compared to 2019 level. This will result in a revenue growth by far exceeding the market growth rate in the future. For ADAS, the additional initiatives that we are planning to implement, if you look at the left-hand side. Traditionally, central ADAS camera and MCUs, as well as the related peripheral AHL and other camera interfaces and PMIC and timing ICs, these have been the products that we offered for the ADAS market in the past. If you look at the Level 2 on the left-hand side, our product benefits was the low power consumption, and also the major tier one collaboration, strong footprint among them. On the right-hand side, for the next solution in the future, with the acquisition of IDT in 2019, ever since, we have been able to offer the state-of-the-art RF 28 nm and RFCMOS. With this, low power consumption, low noise radar analog products have been expanded centered on this RF CMOS product. For the central camera, the radar is added. The fusion-enabled total solution is now going to be expanded for the future. If you look at this chart on the right-hand side, Level 3, of course, in few years' time, the industry will switch to Level 3. With our composition of products, SoC will be more advanced compared to before, and also the camera numbers will increase further, and the radar MMIC will be added. Compared to before, four times as many content growth is expected for the future. Therefore, in the ADAS area, we'll be able to achieve a growth rate higher than the market average. That is our plan. Now, from here, I would like to talk about the EV market, and the strategy will be explained by Vivek Bhan. Vivek, please, take over. Thank you. Thank you, Kataoka-san. Good morning. Ohayō gozaimasu. Let me take the opportunity to explain the growing and expanding presence of Renesas in the EV market. If you look at design-ins, we have seen a very strong opportunity pipeline and a very strong momentum to secure design-ins. Relative to 2019, in 2021, we achieved design-ins that were 420% to the 2019 levels. As far as revenue is concerned, we expect EV revenue to grow significantly from where we are today at a healthy CAGR of 40%, and significantly contribute to the expansion of revenues for our automotive business. As we all know, the market for EV is growing at a healthy rate of 25%. We at Renesas anticipate that our growth will be a lot faster than the market, based on the products that we are bringing into this space. When I talk about products, not only the strength in our digital and MCU space, but also our growing product portfolio for analog and power. As we look at the products here, Renesas has invested, and we are very excited about our broad product portfolio. In fact, we believe in the market today we have one of the broadest and most diversified product portfolios within our competitive space. With that broad portfolio, we expect our content to increase in EV solutions, and we also expect that our products and silicon would be used in multiple places, and a lot of these products are also used many times within a single system. With the investments that we have made in the past and also the acquisition of Intersil, IDT, and now Dialog, we have a very rich portfolio of products, that we can offer in the EV space, which very well complement what Renesas was previously offering with MCUs, SoCs, and power solutions. Specifically, in analog and connectivity, we see a lot more opportunities with the new products that we have. Overall, the serviceable market that we see with the products that we have has expanded significantly. A quick comment on the power side, power device side. We are actively investing in differentiating our MOSFETs and IGBT solutions. We also recognize as Renesas that silicon carbide will be an important technology for the EV market going forward, and we are evaluating and exploring options to internal and external options to make sure that we are able to offer SiC-based products in the future. Next slide, please. Further strengthening our broad portfolio is our focus on offering differentiation. We wanna make sure that we are achieving best-in-class performance. We are performing well against the key indicators for a product line. A very strong focus on improving cost competitiveness on our products. We are working diligently to make sure when those products are put together in a system, we are able to highly optimize the system and deliver those products as fast as possible. Starting from the left side of this slide, in the analog space, we believe we have a portfolio which establishes some of the best-in-class analog offerings for EV. For example, we have very highly precise battery monitor circuits for the battery space. For the growing sensor space, we have developed very sensitive and accurate position sensor devices. Complement that with our connectivity solutions that we acquired through Dialog and Celeno recently, and also other analog solutions that we can put together to complement our other offerings. We have a very broad portfolio of analog devices for the EV market. In addition to that broad portfolio, we're also very focused on scalable analog, where we are offering solutions based on the type of application that it is getting integrated into. Scalable battery cell monitors based on number of cells that are integrated in a particular application, or it could be scalable functional drivers, gate drivers based on the type of current and device strength that we need to support. In addition to that, in our analog space, we have more configurable and flexible parts to help our customers with flexibility as they evolve their solutions. In the power space, which is also our discrete space, very exciting area for us also, we are continuously adding differentiation to our products, making sure that our power solutions have the best efficiency, best thermal performance, best packaging, and the best power consumption possible. There have been investments done recently and will continue to happen to improve our IGBT offerings as well as our MOSFET product lines. As I mentioned before, we do absolutely see the importance of silicon carbide and GaN in the EV market going forward. Through partnerships and other decisions we take, we will share in the future our plan on how to service the growing silicon carbide market. In addition to analog and power, our digital continues to be our strength. We are offering optimized digital solutions which are scalable based on the application. As was mentioned by Shibata, software is also very important, and we are focusing to make sure that our software is delivered along with our hardware, and the combination of software and hardware provides the best optimization for our customers. Wherever relevant, we also have specialized IP, whether it is for AI or for security or for motor control that we integrate within our compute engines. With a combination of our analog power and digital capabilities, along with our strong focus to improve our methodology and focus on reliability and functional safety, where we have always received very good feedback from our customers, we are in a great position to offer complete system solutions integrating our digital analog and power content. Also enable fast time to market for our customers with these solutions. Next slide, please. With the broad portfolio and the differentiation I talked about, Renesas is positioned to succeed and offer complete platforms for EV applications. We have the capability not only to offer digital, analog power and software together, but also make sure that the interaction of these products is optimized to offer the best system performance possible. There are some examples of EV applications shown here, whether it is for traction inverters or onboard chargers or for battery management systems or even simple supplies for different sections of the car space. If I look at traction inverter, for example, we have the full lineup of what is needed for the system to be put together. We have all the products. Whether it is taking accurate position sensing information that is processed by our MCU or having integrated IP for motor control inside the MCU, or having power management IC that is driving the MCU with very strong understanding of the load and performance of the MCU so that the PMIC can optimize the MCU performance. Or having scalable and a range of gate drivers that are driving our IGBT and MOSFET devices. The feedback that you get from those power devices back into the gate drivers. That whole system can be offered by Renesas and is being actively optimized to give the best performance at a system level. If you look at quickly the battery management solutions, which is another area we can offer turnkey solutions, we have ASIL qualified MCUs and battery management solutions. Battery management solutions which offer highly accurate and scalable options. When we combine that hardware with our ability to offer application software, driver software, as well as specialized software that has a better, quicker understanding of the battery health, we offer complete solutions for our customers to integrate that in their products and go to commercialization as fast as possible. Next slide, please. With the portfolio of products I talked about, and obviously the focus on differentiation, we are absolutely expanding and accelerating Renesas' presence in the EV space. We see a lot of opportunities to work with different partners around the world, and through our winning combos and reference designs, we are enabling those partners to adopt our solutions as fast as possible. Also with our winning combos and our system capability, we are able to offer turnkey solutions and support, which is becoming very important for emerging markets and emerging opportunities in China, India and other regions. In Renesas we are also very uniquely placed, based on our capability to validate complete solutions for digital, for analog power, along with our software. We have test facilities in Renesas which can put systems together and validate them for the right system use cases. We have troubleshooting facilities, even our own demo car, which can integrate our advanced solutions to demonstrate the right performance. Also, many customers struggle with functional safety, quality and reliability. We have a very rich history and know-how to deliver in that space, and we continue to expand our capability to offer the best solutions possible to our customers. With the strong portfolio that I talked about and also the differentiation that we are strongly focusing on, we are continuously investing to expand our innovation for EV. We are very focused to improve the cost of the total solutions that the customers can enjoy from Renesas. Also to offer products for a lot of opportunities that we see in the EV space. We are continuously looking at increasing capacity, front-end capacity that Hidetoshi Shibata and Shuhei Shinkai-san talk about, so that we can service those growing capacity needs in the future. Thank you. Thank you very much. Now we would like to entertain questions. If you have a question, please click raise hand icon. Hi. We have Ishino-san from Tokai Tokyo. Please unmute and please start your question. Thank you for taking my question. Can you hear me? Yes, we can. About battery power management. In EV, many batteries are to be installed per vehicle. That is the trend. The competitor's Analog Devices are increasing shares, or they have substantial share. As of now, what is your market share? Going forward, I think that there will be a switch to wireless. Through a series of acquisitions, I believe that you are strengthening wireless capabilities. What is your advantage, competitive advantage, to the extent that you're able to discuss, please? Thank you. Vivek, could you address that question? Thank you. Thank you, Kataoka-san. Thank you for asking the question, it is a very good question. In battery management specifically, we see a lot of opportunity. In fact, it is one of our focus areas. You talked about our competition, we are aware of that. We also are working in partnerships to offer different kind of battery management solutions based on number of batteries that are integrated, number of voltage levels that are being desired by the market, and at what current and accuracy level. We have clear differentiation in terms of our accuracy, in terms of monitoring, in terms of the software that we offer, and we expect that we'll be very successful in the battery management based on the opportunities and the feedback that we have received from the market. Also, you talked about wireless. Absolutely there is interest in the market to deliver battery health through wireless communication. We have BLE, low power BLE solutions with low interference capability that can be integrated with our battery management solutions to offer a complete low-cost solution that not only provides a very accurate and quick update of the battery health, but also reduces the amount of wiring that is needed within the car. From a market share perspective, we are small, but we expect that is the case today. Based on our collaboration and designing activities, we will have a decent portion of the battery management market going forward. Thank you. What is your target in terms of market share? Market share target? I don't want to comment exactly today on the market share perspective. We expect to be one of the leaders in battery management in the next four to five years. We do recognize the huge opportunity that is there. As I said, we will be one of the top players in this space, but I would not like to comment on the exact market share today. Okay, thank you. Thank you. We have already overrun the scheduled time to finish this meeting, so we would like to take the last question from the floor. This will be the last question. Yamazaki-san from Nomura Securities, please unmute yourself and begin your question. Hello, thank you. This is Yamazaki from Nomura Securities. Just one point of confirmation. In the material, you said long-term. You talked about the market projection and your revenue projection for long-term. What is the time horizon when you mean when you say long-term? My question after that is that for MCU market growth, compared to before, it seems that the market growth is accelerating compared to before. I think that is one of the reasons for the shortage of supply. What is your projection pertaining to the number of MCUs per one unit, and also for the future E/E architecture when we shift to the new architecture, do you have to foresee any risks? What is your projection on this matter? Okay, thank you very much for your question. I would like to answer. This is Kataoka. I would like to answer your question. The long-term, we are talking about 2026 or 2027 as the time horizon. Based on that, MCU, as you pointed out correctly, we originally, when it comes to domain or when it comes to zones, the MCUs, I think the price per se will go up because it will become high-end. We thought that the number, quantity-wise it will come down up until a few years ago. The second page I think is a good example. In reality, this is just illustrative, but I think content growth. It's often said that 8%-20% growth for content per annum. In terms of our MCU, the market has developed faster than expected. A 40% CAGR is the market growth rate. I think for some time this kind of growth rate will continue. Then will this last forever, like for 10 years from now? I, to be honest with you, cannot predict if that is going to be the case. Definitely with xEV and ADAS and zone and the domain control, those applications are growing definitely. For the next several years, I think this kind of growth rate can be expected. Therefore, this is not really a demand issue, but I think that we have actually determined this growth rate based on the supply capability of ours. The inventory is also piling up to some extent, so that is an area that we have to pay attention to and carefully observe the trends. We will keep an eye on that and then try to expand our business at a comparable rate, at least with the market. Did I answer your question? Yes. Thank you. Thank you very much. Thank you, everyone for being patient with us today. As I mentioned at the outset, when we look at last year and this year, there are a great number of uncertainties. It is not that the environment has changed completely upside down. The focus of today's presentations is nothing that is very new, but this is to give you an update on our progress and whether there was upside or downside to our original projection. That was the focus of presentations today. As for the time allocation and the substance covered and logistics, we welcome your feedback so we can improve on future events. We welcome your comments and feedback. With this, we would like to conclude today's Analyst Day. Thank you once again for your time, and we look forward to working with you in the future. Thank you.