Ladies and gentlemen, thank you very much for joining Renesas Electronics Corporation Earnings Call for 2023 Q2. Today, simultaneous interpreting channel is available. Those of you who wish to use the interpreting, please select your language from the globe icon at the bottom. May we ask the speakers to turn on your camera? Today, we're being attended by Mr. Hidetoshi Shibata, Representative Director, President and CEO, Mr. Shuhei Shinkai, Senior Vice President and CFO, as well as other staff members. We will first have Mr. Shibata give an opening remark, and after that, we will hear from Mr. Shinkai, earnings result for Q2. After that, we will have Q&A session. We expect the entire session to be 60 minutes. The materials to be used in today's earnings call is the same material that is within our IR website. With that, Mr. Shibata, please turn on your microphone. Thank you very much for joining in spite of your busy schedule. The numbers for Q2, I do believe, is in line with our expectation. When we think about the Q3 and onwards, I do believe that I mentioned that we want to be prepared for upsides. When we look at the contents, not exactly sure upside would be the right word, but we do believe there are areas where we can make a very good progress. However, there still are uncertainties that will continue, and that is our current thought. For the time being, we do want to make sure that we be able to go on a safe side. As for details, I would like to leave it to Mr. Shinkai to explain. With that, Mr. Shinkai, please. Yes. This is Shinkai, CFO. Allow me to go over with you the details for Q2 results. Referring to the materials within our IR website, can we start with slide number 3? Here are some disclaimers. I do recall that I did give some heads up at the point of Q1 result as for the integration of ERP system. We have not really been able to prepare, and so there's a delay, and so that there is not going to be any impact to Q3. We currently are expecting that we'd be able to do that next year, and I will make sure that I'd be able to update you when we are ready. Here we have the... Please look at the middle blue column for the actuals for Q2. Revenue stands at JPY 368.7 billion, gross margin, that's 57.4%, and operating profit, that's JPY 129.1 billion, with the margin standing at 35%. As for profit attributable to owners of parent, that's JPY 119 billion. Excluding the currency impact, that's JPY 108.2 billion. EBITDA, that would be JPY 149 billion. Currency, that stands at JPY 135 versus USD, JPY 146 versus EUR. If you'd be able to look at 3 columns on the right, we have the comparison versus the forecast, which I will be going over in the following slides. Also for the year to date, for the first half, that is on the next dark blue column. Moving on to the next slide, which is about the quarterly revenue trend. If you'd be able to look at the far right, that shows the actuals for Q2. In total, the revenue fell by 2.2% year-over-year and increased by 2.5% Q1-Q2. If we try to exclude Forex impact, that's a decline by 8% year-over-year, and it increased by 0.8% Q1-Q2. The breakdown, anything for automotive or industrial, infrastructure, IoT, you see all the numbers there. At the same time, we try to exclude foreign currency impact, automotive, that's a negative trend. In other words, negative 2.7% year-over-year, and negative 1.1% Q1-Q2. On the other hand, industrial infrastructure, IoT, that's a decline by 12.3% year-over-year, plus 2.5%, that's an increase on Q1 basis. Please go to the next slide. Here we have the revenue gross margin, operating margin for Q2. Start with the company total, refer to the upper right-hand corner, retained against the forecast. Revenue was +2.4% above the medium forecast, JPY 8.5 billion in real terms. Slightly more than half is due to the exchange rate effect, just under half for non-exchange rate effects. By segment, there was slight decrease in automotive, while industrial infrastructure, To registered an increased gross margin was 1.9%, just points above forecast. Main risk, reasons, risk is considered at the time of guidance were not realized, Forex large in line with expectations, product missed positive. Products, we find that in terms of cost, we see an increase in terms of cost. This is attributed to decline in production. We had expected the costs associated with raw materials. However, this was under expectations, and therefore, these are the main reasons. As for operating expenses, when we look at R&D, SG&A was down against expectations, and therefore, it was 3.0 percentage points above our expectations. Down below, we are looking at Q on Q. As for operating margin, it was +2.5% and 1.2% in terms of gross margin. In terms of product mix, infrastructure, IoT industry, we see some positives. In terms of utilization, due to decline in utilization, there was a decline in terms of recovery. However, production costs, of course, we need to take account for accounting factors, but we are seeing on a net basis, this is a positive. We need to look at the left-hand corner, and by segment, please take a look. Here, we're looking at Q&Q variabilities. In terms of automotive, there have been impact from weak production recovery. In industry, infrastructure, and IoT, there was an improvement in mix, and there was also evaluation downgrade, and therefore, net it up, this is a positive. For industrial infrastructure IoT, we find that a Q-on-Q, there's an increase in R&D, and this was one factor behind this. Going on to page 7. Here, we're looking at in-house inventory. Overall, when we look at the DOI, dates of inventory, that's indicated to the right in the second quarter. On Q&Q, there's a decline. First, quarter was 107 days, and now it's 106 days. For infrastructure and also automotive, we see a decline. Going on to the next page, this is a sales channel inventory. We're looking at WOI, weeks of inventory, all segments on Q&Q basis, we are seeing an increase. Automotive, somewhat of an increase, in industrial infrastructure and IoT, somewhat of an increase, as expected. Around nine weeks overall. Factors behind increase and decrease of inventory, to the very left, we have our in-house inventory. Overall, we are looking at JPY 10.3 billion decline. In terms of raw materials, Q-on-Q, it's JPY 1.7 billion plus. There have been production adjustments, and therefore, there have been lower wafer consumption, and this is a factor. We have, of course, long-term contract, and the utilization rate has declined, and therefore, in the third quarter, we are expecting an increase that will continue. As for work in progress, for internal products, we increased the die bank inventory, but there have also been production adjustment as anticipated, and therefore, work in progress decreased. Therefore, it was basically flat Q-on-Q. For the third quarter expectations, we are also intending to pursue further increase in die bank inventory. We would like to decrease the inventory, and therefore, we'll decrease the finished products, which will mean that the work in progress will increase, and therefore, Q-on-Q, there will be a slight increase that is expected. In terms of finished products in the first quarter has declined. For a handful of products, there will be a temporary increase expected. To the right, we have the channel inventory. In all of these segments, there is somewhat of an increase. For automotive, sell-through somewhat increased, and therefore, WOI has slightly increased. For industry, infrastructure, sell-through and also sell-in also increased. Therefore, as anticipated, we have registered an increase. As for the third quarter expectations for automotive, industrial, and IoT, we expect to see somewhat of an increase. Next page. This is the quarterly trends in front-end utilization rate for wafers, 6% in the first period. However, due to production adjustment, somewhat of a decline against the expectations. Into the third quarter, we expect to see a flattening trend. Moving on. Here, we look at gross profit and operating profit quarterly trends. Please take a look. Moving on to the next page, we are looking at EBITDA and also free cash flow. To the right, I would like to make a comment. For Q2 and Q1, we see that there's quite a gap. In the second quarter, the operating cash flow, when you compare it to the first quarter, there have been, of course, tax payments, and also increase in terms of bonus payments. That's the factor behind this. In third quarter, there'll be interim payment of taxes as well as bonus payments, therefore, we'll see minus figures. Going on to the next page. In third quarter, our forecast is indicated here, please look at the dark blue column in the middle. The forecast for median revenue is JPY 270 billion year-on-year. It will be -4.5% Q-on-Q, +0.3%. Down below, excluding Forex impact, the figures are -5.4% year-on-year and -0.1% Q-on-Q. In terms of gross margin, 56.5%, that will translate to -0.9% down on Q-on-Q, and 32.5% in terms of operating margin. When we look at this on a Q and Q basis, 0.9% decline is attributed to product mix deterioration and also increase in manufacturing costs. Just the production mix, in the first quarter, we saw best performance. However, there has been a decline. In terms of production costs, there are increase in write-downs and also utility costs have surged. Also facility and construction in terms of operating margin, third quarter, R&D is expected to increase. The second half of the year, R&D spending will increase, mainly for automotive, IGBTI, and also SiC SOC rather, next-generation product where the focus will be placed. Moving on to the appendix, please take a look at page 19. This is for the second quarter, non-GAAP to GAAP. One point worthy of mention, the third from the right. This is a reference stock-based compensation for 2023. It is increasing year-over-year. Dialog employees will be integrated into the same cycle as Renesas and M&A. Due to M&A, the number headcount is also increasing, and also attributed to the weekend. On a quarterly basis, the expenses was about JPY 4 billion up to now, but it will increase to JPY 7 billion in the second quarter. Moving on to page 21. This is in terms of CapEx. There are subsidies that have been gained from METI that have been indicated in light blue. End of April, announcement has been made. The subsidy, as indicated, is highlighted in light blue. It's about a third of what's indicated here. Moving on to the next page. This is just for reference sake. With global speed, for the latest wafer supply agreement, it was July fifth that we have been able to assign a 10-year supply agreement. That will conclude my presentation. Thank you for your attention. Thank you very much. We will now like to open the floor for Q&A. Mr. Shibata, thank you very much for turning your video camera on as well. Allow me to go over with you how this question is to be asked. The moderator will call out. If you have any question, please raise your hand. If you do, please use the raise hand icon, and I will call upon you. Upon that, please state your name as well as your occupation. Once you are nominated, please unmute yourself, so that you'll be able to speak up. Due to time limit, allow us to limit your question to 2. May we ask Sugiura-san from Daiwa Securities, please unmute yourself to ask your question. This is Sugiura from Daiwa Securities. Thank you for taking my question. Thank you very much. I have 2 questions. I'd like to start with the first one. It goes back to what Mr. Shibata said at the outset. I think you're saying that there's been a little bit of a color in terms of how the revenue is progressing. Can you tell us a little more detail? For example, if you'd be able to also speak to your subcategories. What is doing well, what is not exactly versus your expectation, et cetera. Yes, thank you very much. This is Shibata. Up until now, we know that anything around industrial has been very strong, there is going to be a continuous growth year-over-year. However, the pace of the growth is going to slow down. That is what we are expecting at the moment. In other words, we were extremely strong up until today, the strength seems to be slowing down. That's more like the negative side. I did mention that everything is pretty much in line, that's about PC and consumer side. Versus last year, it still is low, it is still in line. In other words, it bottomed in Q2, from Q3 and onwards, we are expecting some modest growth, in other words, a recovery. That is exactly in line with our expectation. One more thing, that's anything for data center. It's probably too early to speak, just looking at a specific quarter, and I don't want to say too much here. When we look at how things are developing at this moment, a DDR5, a switch to DDR5, it seems to be progressing very fast. Thanks to that, I think that at next quarter, I think we'd be able to expect a large growth. How that will go? Is it going to continue? Of course, we do want to see that, but then there are still some customers that will be using DDR4 who would want to utilize their inventory. In other words, they are slimming down the amount they would be purchasing, there might be a bit of a rebound in the future. At least when we look at how things are going at the moment, there is this strong move towards DDR5, and this trend itself is that's going to mean even more content, so that's favourable. Also, anything from automotive side? For the automotive side, it's still uncertain. That's my frank comment, and it's really as it is. In other words, it's not that we're seeing a real weakness, we were expecting there'd be a little more robustness. However, that's not exactly what we are feeling. It seems like this is really the situation, the status that is just going to continue. That's the feel that we have right now. I think there are two factors based on our assumption today. In other words, one is what's going on in China. In other words, the immense growth of EV and the reduction in ICE. That is especially something, it's something that we are observing. In other words, that's exactly what's creating the uncertainties, especially amongst our Japanese customers. Of course, when we look at the large tier one customers, the global customers, I'm sure if you'd be able to look at the numbers, it's self-explanatory, but cash flow is really tight. In other words, we believe that everyone is really trying to control their inventory, and I think that's what's happening right now. It seems like everyone's really focusing on cash, there are some shortages in inventories every at some point. We still do have to keep an eye on how the develop goes, the demand goes. With all of that in mind, that's why I'm saying we are seeing some uncertainties. Thank you very much. My second question, I think I should ask Mr. Shinkai. The Wolfspeed, that JPY 2 billion deposit, I'd like to ask more about that. How are you going to finance this? I think you have always been putting forth a very proactive message in terms of shareholder return. In other words, how you'd like to come back to paying dividend and so forth, but what is your expectation now? Yes, $2 billion. The first $1 billion has already been paid, and the other $1 billion is going to be paid next year and onwards. The source of this is our own cash. The implication to the shareholder return is no major change to our policy thus far. That's my response. Yes, sir. Thank you very much. Thank you. Goldman Sachs? Takayama, please unmute yourself and present your question. Thank you. Takayama from Goldman Sachs. I have two questions. First of which is the revenue outlook. When you look at the inventory in third quarter, you will intend to increase your inventory. I would like to inquire as to how far you will go. What is the policy direction? Also, perhaps it will not be that pronounced in the third quarter. However, fourth quarter, it will bottom out. Is that your expectations? If we could confirm your outlook. In terms of the inventory, we talked about in-house inventory, and we talked about DOI. When we look at the channel inventory and also in-house inventory in terms of level, we have identified a target, and as you view, it is very clear. As of now, when we look at the holding inventory, it is beneath the target. Basically, we hope to be able to achieve the target, and from that perspective, bit by bit, we are trying to increase our inventory. As for the outlook ahead, if it is clear, we will be able to, of course, increase the inventory substantially. However, that is not the case, and therefore, we are very attentive to the market situation as we try to increase our inventory. If the weak situation prolongs or if there is a reversal, we hope to be able to increase our inventory, but we need to inch closer to the target. We're taking a wait-and-see approach, and that is what we are doing as of now. Likewise, as for the third quarter, as Shinkai-san has mentioned, as we go into the year-end, the utilization is very early to refer to, and therefore, I would not be able to make a definitive comment. As we're looking at the quarters ahead, of course, the market situation might change. It's very difficult to say for now, as of now, as I had mentioned up front, the uncertainty prolongs, and therefore, we cannot really accelerate the situation. We need to look at the situation second quarter and third quarter as we try to manage our inventory. In the first quarter of next year, if the outlook becomes more clear, where necessary, we will also apply adjustment. That is all. Thank you very much. As for the second question, this is a reference to order placement or backlog. What is the trend? In terms of order backlog, as you all know, in the midterm, there have been some accumulation, and therefore, new orders, we are finding that the situation is rather slow. We need to consume, of course, what has piled up in the past, and that is, describes the current situation, and that is also within our expectations. On the other hand, as you might recall, we are looking at NCNR, non-cancellable orders. We have departed from that, and the lead time is also very short, which also means that, of course, we need to have ample inventory, and therefore, when orders come in from our clients, compared to the past, we find that the orders are coming in in a shorter span based on actual demand. Therefore, the expectations as of now is that for new orders that will come in, as the orders are processed, we believe that the orders will begin to climb up. Against revenue, the orders comparatively is quite high. As we look at the revenue, you expect revenue to increase in the future, and therefore, expect orders to come in and pick up. Well, it's sort of early to say for now, but as for this fiscal year, we are not concerned in any form. Thank you. Thank you very much. Can we ask Mr. Hirakawa from Bank of America? You okay? Yes, this is Hirakawa from BofA. I have two questions. My first question, I think it's a recap of the earlier question. In other words, it's about the wafer. Wolfspeed and $2 billion, I do believe, is quite a large number. As we look into the future, so SiC power, semiconductor, how much share do you mean to gain through this contract? If there is anything that you'd be able to share with us, anything about your outlook, we'd be happy to hear. Also, mention about R&D, enhancing your R&D. On this SiC production technology, like, where are you in that sense? That's also something I'd also like to hear. That's my large first question. Yes, thank you very much. SiC, the process, is something that we are starting, and I do not think that we will. I mean, it's not that we're making such a large investment here, and at this moment, we're not expecting that we're going to just accelerate this investment here. It's just going to be like a step-by-step gradual increase into the investment for the technology. As for the size, this investment, for example, IGBT, 300 millimeter or IPD, that's an intelligent power device, any development, R&D to go there. At the same time, there's also going to be the investment for additional purpose. For example, a 5th generation SOC, we know that's also going to accelerate, there are a lot of things that we do need to invest. What's going to happen to our share in the SiC power semiconductor? That's a good question, like 10% or 15%. I mean, trying to put forth a figure, maybe I can, like 10 or 15, et cetera, at this moment, it's not that we have that clear visibility. We're going to start slow, and once we make some good progress, we're trying to make these step-ups, and we also are trying to enhance the values that we'd be able to gain here. From all means, I believe that it's probably going to be the time of when we have a switchover to 8-inch from 6-inch. That's probably when we'd be making another large investment increase, and it's not something that we want to go hastily. It's something that we do want to make sure that we access the timing well. Thank you very much for that response. My second question is almost like a follow-up to my first one. Sorry for that. A follow-up to the earlier question. In the capital, in the capital day, I think I did have a sense that you will be giving us some explanation at some early days in how you're thinking about the shareholder return. Today, we're hearing about CapEx and investment and what is going to be your capital allocation. If you'd be able to recap that for us. That's my second question. Y es, thank you very much for your question. Again, no major change to our shareholder return policy, the capital allocation. In terms of shareholder return policy, it is something that we have been saying from before. In terms of dividend, try to look at our annual cycle. In other words, the large milestone is probably we probably will be start talking about the timing around the AGM. In other words, we will be looking at that point of time to prepare about what kind of a dividend we'd be able to have. I don't know what your image would be in terms of the shareholder return, as I have been saying from before, we need to start small. It's not that we're going to be making a large, for example, dividend pay out, that is going to pressure the source, the cash source that we will have for R&D and other investments, so we'd like to start small. That's my response. Thank you for that response. Thank you very much. For Nikkei Shimbun, Mr. Makino, please unmute yourself and present your question. Thank you. Makino from Nikkei Shimbun Newspaper. In the earlier financials, you said that with generative AI, just to impact the numbers, upon reflection, what would you say? Third quarter in hours, what would you say would be the outlook? Did I say second quarter, there being an impact from generative AI? I do not really recall. I believe that I said that it would be second quarter and onwards. Third quarter and onwards, we believe that the impact will be felt, and the implications to our operations will not be that sizable. On a net basis, it will turn positive. For example, in terms of (OKI), it will not be three-digit numbers or the two-digit numbers in terms of (OKI). We'll start to see the impact on a positive sense in a moderate level. In the immediate future, we are looking at generative AI, rather than that, we believe that the impact will be more pronounced with memory architecture and also power architecture as there's a shift to next generation. That from where we will be able to enjoy a larger impact in terms of numbers and figures. Of course, if our pipeline does, is realized in the future, of course there will be an impact. As for generative AI, the impact will be positive. More than that, for NPU, the architecture side, with a shift in generation, the impact will be more pronounced. Thank you very much. Another question, and this is in terms of product mix improvement in second quarter, if you could, once again brief us, and also what is your outlook for the third quarter in terms of product mix? I will turn to Mr. Shinkai. As for the second quarter, for infrastructure, the analog product, specifically timing IC and timing device, for these products, more than expected, they were positives. Hence, these are products with a large growth margin, which have, of course, pulled up the entire product mix performance. As for the third quarter, because of the backlash, there might be some, of course, a weakening of the numbers, and also seasonality will be felt. Overall, for consumables, where the growth margin is somewhat lower, we believe this will pull down the numbers. That is all. Thank you very much. Thank you very much. Can we ask Mr. Kojima from Nikkei BP to ask your question? Yes, thank you. This is Kojima from Nikkei BP. Thank you very much. My first question is about your power semiconductor. You're going to have a slow start, you're going to start with SiC slow start. I'd like to ask about the expected scale of your business in terms of SiC power semiconductor. At this moment, I mean, for example, you might be able to say, like, right now, you're around this level, but then, for example, like, in years down the road, how much you want to be like, for example, in, like, the year 2030. I think that's a question for Mr. Shinkai. This is Shinkai. 2030, where we would be for power semiconductor? That is a good question, not an easy one to answer. It's exactly what Mr. Shibata said earlier. In other words, for SiC, we're going to have a slow start, for IGBT, from 25, year 25, in other words, from 2024, we're going to resume Kofu plant, so that for 300 millimeter, we'd be able to resume our production, the mass production from 2025 at Kofu. Down the road from there's going to be an expansion of production in Kofu plant. Those are some of the things that we are keeping in mind. That's my response. Well, this is Shibata. At this moment, I would say some little more than JPY 10 billion or a little under JPY 100 billion. That's probably the scale of our power semiconductor at the moment on an annual basis. It's really about how we'd be able to make good, steady progress in expanding the scale. Thank you very much for that. My second question, I believe there was a brief comment about the fifth generation, the 5G. When do you think you'll be able to have your new product, and how will this fifth generation SoC different from fourth generation? Well, when we'd be able to have five, gen five SoC, we can't really say at this moment, but then it might be as early as 2027, year 27. If it's after that, it probably will be pushed out by two or three years. That's how we imagine the pace will be as we prepare. I don't want to say too much here, but then, of course, higher computation capability is one differentiation from G4 and G5, Gen 5, and of course, that's easy to understand. In addition to that, I think there are two, I mean, compared to Gen 4, I think there are some more other changes that we want to implement. For example, I'm trying to find the right word to explain this, but I don't exactly want to say customized, but like use, utilizing chiplets. We're hoping that we'd be able to seek more flexibility in responding to the needs of our customers. Another factor, for example, compared to the past, it was like SoC versus MCU. I think that was two categories in computation, and I think that was really the reality. I did talk about scalability, and from next generation, we want to have a crossover device. High compute and the more traditional MCU, something in between is something that we'd like to have, and so that we'd be able to have a true seamless situation. From that perspective, like, Arm core, trying to implement that in MCU is something that we are trying to prepare. I guess it's really those two factors. In other words, flexibility, higher flexibility device and to seek more scalability. We want to make a step further scalability than what we have been doing in the past. I guess that's something that is more on the hardware side. Of course, the computation feature, it will be increasing, and that's the precondition to make these happen. It's really the software part is really also going to be crucial. Simulation, emulation, how we'd be able to create a better environment for that, what kind of model would fit that? That's probably where we will be allocating more of our resources. That's my response. Thank you very much. If I may just confirm, currently, you are producing fourth generation, right? Currently, we are mainly offering gen two and gen three. I see. There's still this fourth generation that we haven't really been able to see in its entirety, but you also have talked about this generation SoC. That's right. We're really talking about something that has happened in the future. I got that. Thank you very much. Thank you very much. Citigroup Securities. Mr. Fujiwara, please unmute yourself and present your question. Thank you very much. From Citigroup Securities, my name is Fujiwara. I also have two questions. Firstly, earlier, you mentioned the tier one vendors of which, the inventory is being controlled, and you referred to this, three months ago during your financials. Within the past three months, how has the situation changed, perhaps by region? Also, how serious and dedicated are the customers in controlling inventory? That's the first question. That's a tough one to respond to. How should we put it? To quite some extent, there has been an emphasis in looking at the easing the burden on the balance sheet. Such a trend is being observed, and that would be one of the most pronounced trends from in the past three months. There is an emphasis on controlling the dollar amount, so there's a lot of fixation here, there, and dedication, dedicated efforts, and as a result, oftentimes there's been excessive control, and therefore, customers find that they are now short of inventory. Therefore, looking at it from our perspective, we find that it's very, very difficult to achieve certainty. In terms of regionality, for now, that's not yet been felt. In global tier one, that are selling into various regions on their platforms, it appears as if they are trying to reduce or control their inventory, according to some fragmented information. That is the interpretation as of now. Thank you very much. The second question, in terms of Forex implications, I understand you are hedging, I guess, the dollar. I'm sure it is time that you're considering what to do for next year. Are you going to devise a scheme by which to account for a weekend? What is the flow when you look at the revenue and also expenses? Are there not a major change there? That's the second question. Mr. Shinkai will respond. 2024, preparations are moving ahead. The policy is the same as we have applied this year. We will hedge against the currency. This year, of course, it was based on dollar yen terms, but of course, we are also looking at a high EUR. Therefore, we will also hedge against the EUR for next year as well. As for the flow and by currency, there will not be a major change from the past. On revenue basis, of course, primarily USD and cost side, a JPY denomination is higher. Therefore, when we look at the profit and also cash flow, basically in USD terms, that doesn't change from the past. That is all. Thank you very much. Thank you. Thank you very much. Next, let me ask Mr. Ishizaka from Toyo Keizai to ask your question. Thank you. This is Ishizaka from Toyo Keizai. Thank you very much for taking my question. I'd like to ask your supply contract with Wolfspeed for SiC wafer. I'm sure there are other companies as a SiC wafer supplier. Amongst the other players in the world, why did you select Wolfspeed this time? They offer good quality. Again, this time, what we did was we wanted to focus on 8-inch wafer, and we have been able to, for the first time in the world, secure supply for this 8 inch. I think that's, that means a lot for us. Also for Wolfspeed, they needed cash, and so they had the needs to obtain cash so that they'd be able to expand their capacity. The two sides' needs met. That's my response. Thank you very much. Thank you. Dempa Shimbun, Yamamoto-san, please. Am I being heard? Yes. The first question is reference the front-end utilization. You said between 50%-70%, the early part of 70% from what I have recently heard. As for outlook ahead, I believe you mentioned it will be basically flat. What is the recovery from the next fiscal year and onwards? That's my first question. Yes, next term, we are looking at the utilization being mainly flat. For the fourth quarter, this is of course, dependent on the trends for the next fiscal year. A decision will be made. The second question, this is in reference to revenue, down from previous year, 2.4%, 2.5%, excuse me, up. While the situation appears to be fragmented, there is, of course, a sign of a recovery, and that would explain the total picture. Would that be correct? The overall outlook, I would say that there are not yet signs of recovery, and therefore, uncertainty is still very pronounced, and that is what I wanted to convey to you. We look at the circumstances as anticipated. There are some areas in which recovery is being observed. However, there are ups and downs, and therefore, overall picture is such that, at least compared to 3 months ago when I spoke to you, a full-fledged recovery appears to be somewhat later in time. Thank you very much. Thank you very much. Next, Mr. Hanaya from Nikko Securities, can you unmute yourself to ask your question? Yes, this is SMBC Nikko Securities. This is Hanaya. Thank you very much for taking my question. I have two questions. My first one, just a confirmation. In your earlier comment, I think you were talking about consumer product, which is in line with your expectation. I think that's what you said. Every time, in your quarterly result, you have been saying that there's been some delays. At the moment, you believe that this bottoming out is in line with expectation. Yes, this is Shibata. Consumer, computer side, like I mentioned in Q1, when we look at the numbers, I think, we now are seeing it clearly that we have bottomed out. It's in the numbers. Thank you very much for that. My second question is about Wolfspeed deal. You mentioned about 8-inch, and I'm thinking that probably more into the future when you say 8-inch. You're trying to get supplied, and you're trying to obtain some scale here. At the same time, I do believe there is also going to be a more CapEx for your internal production. What is going to be the size of this CapEx and the timing? Is there anything you'd be able to share that with us? This is Shibata. Please look forward to what we'd be able to announce in the future. We do want to be careful in making this decision. We don't want to go too hasty because that's not really going to create good results. From Q3, there we are going to be shipping out some samples for the 6 inch, and we want our customers to look at that and be happy with that. Once we go to that point, we should be able to increase 6 inch and 8 inches more down the road after that. That means we're talking about something that should happen a little more down in the future. Thank you very much. 6 inch, is there going to be any investments or capacity increase? We will be, yes, on adding some capacity here, too. Thank you very much. That's all for my question. Thank you very much. Thank you very much. Are there any other questions? If you do have questions, please use the Raise Hand button. Nomura Securities, Yamasaki-san, please unmute yourself and present your question. Thank you. Yamasaki from Nomura Securities. I have two questions. The first of which is in reference to SiC wafers. In terms of financial benefits and how do you look at this? On a dollar basis, with interest rates very high, will you be able to enjoy some measure of discounts? In the recovery period within the 10-year contract, will you be able to recover the costs? If it really sells well, what would be the upsides? In terms of financial benefits, how do you look at the contract? To the extent possible, we'd like to hear your thoughts. That's the first question. The second question has to do with the automotives. There were some comments made by region, during the call. We look at this by product to product segment, what is the situation? Of course, the shortage of supply has now been eased, but are there still some shortages? Where inventory is being suppressed, we hear this from other companies. We look at the situation, say, for 40 nano, are pretty strong, as you mentioned, but what are the circumstances today, at this point in time? If you could share the situation. I'd like to respond with the second question. Firstly, I would, of course, respond to your first question, and where necessary, I'd like to ask Mr. Shinkai to fill in. As for anything that is short in terms of supply and whether that situation exists, the numbers have declined. However, that still remains. That is a comment I would like to make. Also, I referred to this several times within my comments. To quite some extent, there's an emphasis on reducing the dollar evaluation of the inventory, which has led to some shortage of inventory. The circumstances of that nature appear to be on the rise compared to the first quarter. The supply, in the beginning, was short. However, now we're looking at a different situation in which companies have been trying to control their inventory. However, with the demand increasing, now they are falling short of supply. That is what we are observing in the automotive semiconductor segment in terms of supply and also demand. As for Wolfspeed, as you know, capital procurement situation for borrowers is favorable because of the low interest rate. Therefore, looking at this, from our perspective, we want to be able to capitalize on this situation. Given the interest rate environment that we are currently in the US-based interest market, we are of course, using an arbitrage. This is an upbeat situation for our company. Wolfspeed, which is a borrower, rather than procuring from the US market, of course, there are benefits in terms of interest rate payment by procuring in Japan. This is a win-win situation for both sides. As for the wafer pricing, this will have, of course, implications on our operations, and therefore, I would like to refrain from making that remark. However, on the question as to what has driven us to invest at this scale, of course, I'm sure that you will be able to read between the lines. I would like to refrain from commenting further. Also, SiC substrate is very tight in terms of supply, and therefore, procurement of supply is very difficult. With a long-term contract, supply contract, we will avail ourselves of substrates that are necessary for our operations, and therefore, which will mean the certainty of our operations will also be enhanced. There is, of course, an interest rate gap, and we find that, of course, we will be able to reap the rewards, and that is our, of course, judgment. Just one more thing, this is for automotives. Within your company, are there differences, of course, which nano micro is strong or weak, depending on the product? Are there some differences? Well, it's not so pronounced. In terms of the order placement, 40-nanometer, of course, remains strong for the MCUs. Does that mean they will fall short? I do not think that that will be the case. However, when you look at the order books, this informs us that 40-nanometer MCU is strong. For Mr. Shinkai, we talked about die bank inventory to be increased. As for 40-nanometer MCUs, with on that point, is the die bank inventory being increased? That is not the case, because what we produce is being sold. That is the situation. Thank you. Thank you very much. With that, we'd like to end the Q&A session because we're nearing the time to end. Before we end, can we ask Mr. Shibata to give a closing remark? Yes, thank you very much. I guess today's earnings call didn't give you such a surprise. With that said, some of our future outlook, again, it's not that we've changed our outlook. We are trying to be prudent in how we manage ourselves, but we do want to make sure that we be prepared when the market picks up. That is why we want to use both levers, accelerator, as well as how we'd be able to put on some brakes if we need to slow ourselves. That's really has been our stance. I hope I'd be able to tell you more about what is going to be our outlook for Q4 and onwards in the next quarter's earnings result. Please look forward to what we'll be able to say. With that, thank you very much for taking your time to join with us. Thank you.