Now it's time for us to start Tokyo Electron Financial Announcement for the Fiscal Year Ending in March 2024. Thank you very much for joining us today despite your busy schedule. I am Yatsuda of IR Department, acting as a moderator of today's session. Now, I'd like to introduce today's attendee, Mr. Toshiki Kawai, Representative Director, President, and CEO. I am Kawai, nice to meet you. Next, Mr. Hiroshi Kawamoto, Senior Vice President and General Manager in charge of Finance Unit. I am Kawamoto. Thank you for joining us. Prior to the presentations, let me explain the flow of today's conference. First of all, Mr. Kawamoto and Mr. Kawai will make presentations. After that, until 6:15 P.M., Japan time, we will have a question- and- answer session, where we take questions from the audience. This meeting uses two channels of Webex for simultaneous interpretation between Japanese and English. As we explained in our email, you are kindly requested to use apps on PCs or mobile terminals if you plan to ask questions. But if you are not going to ask questions, you can use telephones. Since this conference is intended for institutional investors and analysts, we would appreciate your understanding that we receive questions only from institutional investors and analysts as usual. We will post the audio contents of this conference in Japanese and English on our website within a couple of days. We appreciate it if you could also visit our website. Now, Mr. Kawamoto will present the consolidated financial summary. Mr. Kawamoto, please. Once again, good afternoon. I am Kawamoto of finance unit. I'd like to present the consolidated financial summary of the fiscal year ending in March 2024. First of all, I'd like to present the financial highlights of fiscal 2024. This slide shows, from the left, net sales, operating income, and net income attributable to owners of the parent in chronological order. For net sales, due to the slowdown of customers' capital investment, we generated JPY 1,830.5 billion, declined by 17.1% on year-on-year basis. By contrast, gross profit margin hit the record level because of growing proportion of high profit margin products and sales. We delivered operating income of JPY 456.2 billion, and net income of JPY 363.9 billion. ROE declined to 21.8% on the year-on-year basis. This shows financial summary of the fiscal year ending in March 2024. The results surpassed financial estimate we announced in February in all of net sales, profit, and profit margin. I will mainly refer to the figures in the blue box. In fiscal 2024, we generated net sales of JPY 1,830.5 billion, 17.1% decline on the year-on-year basis, due to the slowdown of the customer's WFE spending, as I said before. Gross profit margin was 45.4%, hitting record level because of growing proportion of high value-added products in sales, as I said earlier. We delivered operating income of JPY 456.2 billion, declined by 26.1%. Operating profit margin was 24.9%, 3.1 percentage point decline, as we kept investment for the future growth, in particular, R&D investment, despite decline of net sales. Net income attributable to owner of the parent was JPY 363.9 billion, dropped by 22.8% on the year-on-year basis. R&D expenses were JPY 202.8 billion, raised by 6.1% on the year-on-year basis, since we kept R&D investment for future growth, as I said earlier. This is the record high. Capital expenditures were JPY 121.8 billion, along with construction of the development buildings in Yamanashi, Miyagi, and Kumamoto, and construction of Iwate distribution center. Depreciation and amortization were JPY 52.3 billion, 21.9% increase from the previous fiscal year, because of growing number of evaluation tools for our development activities. This slide shows quarterly-based financial summary. In Q4, we generated net sales of JPY 547.2 billion, 18.0% increase from Q3. We delivered gross profit of JPY 256.1 billion, increasing by 15.3%. Gross profit margin was 46.8%, declined by 1.1 percentage points as a result of strategic replacement of loaners, as well as recording one-off costs, including disposition of inventories. Operating income was JPY 145.2 billion, increasing by 9.6% from the previous quarter. Operating profit margin was 26.5%, dropped by 2.1 percentage points from Q3 because of declined gross profit margin and increase of R&D expenses and labor costs, coupled with our business performance. Income before income taxes was JPY 157.8 billion, 17.4% increase from Q3, due to the extraordinary income generated as we sold off land and buildings, along with relocation of head office of American subsidiary. Net income attributable to owners of parent was JPY 124.9 billion, 23.1% increase from Q3. This slide shows net sales by region. As we switch to single segment disclosure from fiscal 2024, here is the composition of company-wide net sales by region. As you can see here, gradual recovery of net sales is recognized after hitting the bottom in Q1. In general, net sales by region in Q4 showed an increase from or equivalent to those in Q3. Proportion of sales in China in fiscal 2024 topped 40%, as Chinese customers' investment for mature nodes were active throughout the year, while there are adjustments in the capital investment for leading-edge nodes. This shows SPE new equipment sales by application. In the fiscal year ending in March 2024, from the bottom of this chart, sales to non-memory customers accounts for 66%, non-volatile memory accounts for 7%, and DRAM accounted for 27%. For DRAM, both sales and proportion showed a rise due to the active investment by Chinese customers. For non-volatile memories, both sales and proportion declined as capital investments were continuously low due to inventory adjustment by customers. For non-memory, although customers spending to leading-edge nodes were reduced, our sales for mature nodes were strong. This slide shows Field Solutions sales. In fiscal 2024, sales were JPY 428.5 billion, 9.6% decrease on the year-on-year basis. Along with decline in utilization rate of customers' fabs, our sales dropped both in the parts service business and business of used equipment and modifications. This slide shows the balance sheet. Total assets were JPY 2,456.4 billion. Cash and cash equivalents were JPY 472.5 billion. Notes and accounts receivable, trades and contract sales were JPY 391.4 billion. Inventories were JPY 762.9 billion. Inventories declined by JPY 15 billion, as demand showed a gradual recovery, while we strategically secured inventories. Investment and other assets amounted to JPY 386.2 billion, growing by JPY 54.1 billion from the previous quarter, due to rising price of shares we owned. For liabilities and net assets, shown on the right-hand side, purple portion, liabilities were JPY 696.2 billion, increasing by JPY 56.4 billion, partly due to income tax payable. Net assets were JPY 1,760.1 billion, increasing by JPY 182.5 billion from the previous quarter due to rising price of shares we owned, while we recorded net income of JPY 124.9 billion. The equity ratio was 71.1%. This slide shows the cash flow. In Q4, the cash flow from operating activities was JPY 139.0 billion. The cash flow from investing activities were - JPY 20.3 billion. The cash flow from financing activities was - JPY 600 million. As a result, free cash flow was JPY 118.7 billion. This concludes my presentation about consolidated financial summary. Thank you very much. Now, Mr. Kawai will make a presentation regarding business environment and financial estimates. Mr. Kawai, please? Once again, good afternoon. I am Kawai. Thank you very much for joining us today. I will report business environment and financial estimates. Let me start with full year business highlights in fiscal 2024. In fiscal 2024, all the leading-edge chip makers suppressed their investment. Investment for capacity enhancement of mature nodes were pulled forward, and thereby, we revised our financial estimate upward during the fiscal year. We landed fiscal 2024 in line with the revised estimates, generating net sales of JPY 1,830.5 billion, operating income of JPY 456.2 billion, and net income of JPY 363.9 billion. Preparing for future growth, we implemented record high R&D investment of JPY 202.8 billion. In July 2023, construction of a new development building in Yamanashi was completed. We made good progress in winning PORs with high value-added strategic products for high volume production, as well as for development. We won volume production PORs and development PORs with a broad range of our products, including cryogenic etching, conductor etching, supercritical dry, and bonders and de-bonders for HBM, and we are making steady progress toward achievement of midterm management plan. We also make numerous results in non-financial areas, such as sustainability. We put forward target year of net zero achievement, including in Scope 3, by 10 years to calendar 2040, which is part of our midterm environmental goals. In April 2024, we were selected for the SX Brands 2024, established by METI and Tokyo Stock Exchange. Next, I'd like to present the business environment. There have been no changes in our WFE market outlook that I announced in the previous financial announcement in February. Towards calendar 2025, the market is currently recovering in general. Calendar 2024, WFE market is expected to be $100 billion in size. We expect that investment for leading-edge DRAM will start to recover from late 2024, driven by growing demand for DDR5 and HBM, among others. In calendar 2025, following DRAM, a full-fledged recovery in capital investment is also expected for NAND and advanced logic foundry. One of the drivers is AI server, whose annual growth rate is 31%. In addition, AI will be mounted not only to servers but also PCs and smartphones. Also, there will be a demand to replace those product purchased during COVID-19 crisis, and business are actively investing in IT system. These factors are expected to boost semiconductor demand furthermore. Driven by those factors, WFE market expected to achieve two-digit growth in 2025. In parallel, semiconductor technology innovation will further advance. For logic, investment for 2-nanometer node will finally start. To achieve low power consumption and high-speed CPU, gate-all-around nanosheet and backside PDN structure will play a core role in technological inflection. For DRAM, to realize DDR5 high-speed working memory, EUV lithography and high-K metal gate will be introduced. HBM packaging technology to realize high bandwidth, high storage, high-speed memory will be evolving furthermore. For NAND, to realize larger storage, initiative to deliver high stacking structure of 300 layers will start. In addition, the NAND manufacturing process is expected to adopt multi-tier stacking and bonding technology to bond memory cells and peripheral circuits fabricated on different wafers. Our company offers broad product portfolio, coping with such future technology inflection. We believe area indicated in both phase, in particular, will provide us with great business opportunities. We aim to expand market share in those high-value-added areas. In order to make sure to capitalize on these business opportunities, we are investing actively in R&D. In addition to development of strategic products to achieve midterm management plan, to make us ready for longer-term sustained growth, we are developing technologies for next generation and beyond, increasing domestic R&D development sites and enhancing our resources. To go beyond the enhancement of standalone equipment performance, we have initiated new initiatives, such as smart manufacturing and robotics, leveraging digital technology while visualizing the image of future semiconductor manufacturing. As I presented in previous financial announcement in February, in order to maximize our growth potential, we are planning R&D expenses for JPY 1.5 trillion and CapEx of JPY 700 billion in the coming five years. We consider that it is people that drive company's growth and that our employees are sources for value creation. Based on this belief, we plan to hire 2,000 people every year, to hire 10,000 people in total in five years to come. Next, I will present the financial estimate for fiscal year ending in March 2025. As I said earlier, driven by growing demand for AI-related devices, WFE market is currently recovering in general. Toward calendar 2025, WFE spendings for advanced logic are expected to start in full-fledged manner. Accordingly, in fiscal 2025, we expect net sales of JPY 2.2 trillion, gross profit of JPY 1.022 trillion, operating income of JPY 582 billion, and net income of JPY 445 billion. Gross profit and gross profit ratio are expected to record all-time high. Under such business environment, we are planning to invest JPY 250 billion to research and development in order to capture future growth opportunity as much as possible. Now, this slide shows SPE new equipment sales forecast. As you can see here, sales are recovering in general after bottoming out in the first half of fiscal 2024. This chart shows little changes in proportion of different applications, but towards the second half of this fiscal year, proportion of investment for advanced nodes is expected to increase. This shows our plan for R&D expenses and CapEx. In fiscal 2025, both R&D expenses and CapEx are expected to hit a record high. We expect R&D expenses for JPY 250 billion, CapEx of JPY 170 billion, and depreciation of JPY 63 billion, as I said earlier. Board of Directors meeting held today decided to implement share repurchase up to JPY 80 billion. This decision was made in accordance with our capital policy by comprehensively taking into account various factors, such as investment of future growth based on expected mid and long-term profit increase and current cash position. We'll continue to manage our balance sheet flexibly. This slide shows dividend forecast. Based on fiscal 2025 financial estimates and payout ratio of 50%, full year dividend per share is expected to be JPY 481. This is my last slide, showing total return amount. The total return amount in this fiscal year, totaling the dividend per share that I expressed earlier, and share repurchase, is expected to be JPY 303.3 billion, hitting a record high level. This concludes my presentation. Thank you very much for your kind attention. We will have question and answer session until 6:15 P.M. Japan time. You can ask question either in Japanese or English, but our speakers on the Japanese channel, please allow us to take all your questions only in Japanese. If you ask a question in Japanese, please press the Raise Hand button on the Webex. For details, please refer to the instruction attached to the invitation email. I will call the name of person who ask a question one by one, and our secretariat will contact you in advance, so please check the Webex chat box. When asking question, you are kindly requested to unmute your microphone for yourself. When your question is answered by our attendees, please hit the Raise Hand button again to remove raise hand signal. For questions in English, please use Webex chat box and give your affiliation and name and your question in text, and send it to our secretariat. We will refrain from answering question if your name or affiliation are not given. On the Japanese channel, we'll translate your English question, and we will read it out in Japanese, and speakers will answer in Japanese. On the English channel, the question and answer will be simultaneously interpreted into English on the real-time basis. As we would like to take as many questions as possible, we will take one question per person. If time allows, we will take additional questions as well. Now, first question. Mr. Yoshida from CLSA Securities Japan. Thank you very much. I am Yoshida from CLSA Securities Japan. Regarding WFE market outlook, I have one fun question. So now you haven't revised your outlook. By 2025, you said, "To double-digit growth is expected in 2025." You didn't give us any specific figures. Are there any changes in actual number for two-digit growth from the previous financial announcement? And when you look at application, how do you view the outlook by application toward 2025 based on market share? The cryogenic etching and conductor etching is newly added in your presentation today when you think of PORs. So by application, how do you think about the potential of the adoption of your tools for conductor etching, cryogenic etching, current adoption, and what sort of application can you see for the conductor etching in the market? I am Kawai. Thank you very much for your question. First of all, as for WFE market outlook, there have been no major changes over the past three months. We can expect two-digit growth in next year, and no changes in our perspective. Last year, our company, 40% or more of reduction was observed for the leading-edge chip makers. However, gradually, you can see recovery in the leading-edge chip makers after 40% reduction last year. In particular, for servers. The growth is rather promising. The AI servers growth is highly expected, and we think the WFE for AI servers are expected 2028. CAGR is about 10% for semiconductor industry from 2023 to 2028. I mean, those circumstances, when you look at 2023 to 2025, the server is expected to grow by 32% on annual basis. PC is expected to grow by 14%, smartphone is expected by 15% on the annual basis up until 2025. That's our prospect. So toward those markets, for AI PC, about 16 GB memory will be mounted. That's about 10 GB. Therefore, quite a few memories are to be mounted for AI PC. Smartphone, the general purpose smartphone is about 8 GB, but AI smartphone require 12 GB. Therefore, leading-edge logic and leading-edge memories are expected to grow. Furthermore, along with this trend, next year, we expect to double-digit growth, and leading-edge area will start gradually from the second half of this year. Therefore, there have been no changes in our outlook in those areas. For each share, for this fiscal year, as Gartner presented the other day, the leading-edge area investment dropped more than 40%, so we are now providing a lot of products for the leading-edge product. Our market share declined last year, but actually, leading-edge chip makers will start the investment again. Then accordingly, our market share is expected to grow furthermore. As you said earlier, for etching system for capacitor, we can bring the POR. And in 2025 and 2026, the cryogenic etching and supercritical dry systems, backside cleaning system. In those areas, for memory customers, we can expect the new PORs for the volume production. I have one clarification question. For conductor etching, that is for capacitor, is that correct understanding? For both, actually. For logic interconnects, partially, we want the PORs. So both capacitor and logics. Thank you very much, Mr. Yoshida, for your question. Next question is from Goldman Sachs Japan, Mr. Nakamura of Goldman Sachs Japan. Mr. Nakamura, please. Thank you very much. Thank you. I also have a question about the new POR for high volume production. I have some question regarding that aspect. According to this slide, one moment, please. Slide 15 and 16. So for the cryogenic etching, for the high volume production PORs, I think you have won the PORs for that. So could you tell us the progress over the past 3 months? And you said the American competitors of your company, they do also have the technology for cryogenic etching. So when you look at the market position, I think they said they can defend the current market position. How do you think about that? For EUV lithography, the dry resist can be applied. That's what they said earlier. So how do you think about this kind of competition in the market? Thank you. Thank you very much. Regarding cryogenic etching... So finally, around 2025, cryogenic etching will start. In 2026, that should be the volume zone for ourselves. So cryogenic etching are present. So we are in the middle of the evaluation for the verification in the high volume production. That's the current status. I reported in SEMICON Japan last year, for the temperature range, is rather lower, - 30 degrees Celsius, specifically, or below. So that's the area of temperature range for cryogenic etching. In that sense, so 10 micron or more in depth, the in-depth etching can be achieved more than 10 micron compared with the conventional tool. Actually, 10-micron depth etching can be achieved within 33 minutes by using cryogenic etching. So, so we can have the straight, vertical etching in the depth, and that's how we can reduce the number of tiers for NAND, by using this technology. And the, this technology does not use CF gas, therefore, carbon footprint can be reduced. And for power consumption, because etching can be completed within short period of time, the carbon footprint is also low, as well as the power consumption productivity is really high. The number of tiers can be reduced. That will enhance the efficiency of the production line. So these are the advantages of the cryogenic etching. More than 400 layers. Note, I think our technology can present high advantages. It is true that the dry resist area by and large, the coating and development, that's about only 5% of the coater developer domain, so remaining 95% uses conventional method. Dry resist accounts for only 5% of coater developer domain. Of course, in order to reduce or prevent the pattern collapse, this technology is important, and we are taking various approaches to prevent pattern collapse. There are several solutions available, and our main approach is based on the conventional method, the wet development process. That's a very special wet development process, which is very close to the conventional system, but we can prevent the pattern collapse, which is the best technology we can use, and we are now conducting a variation, and we are getting promising result little by little for this new technology. Thank you very much for your question. The next question is from Mr. Shimamoto of Okasan Securities. Mr. Shimamoto, please. I am Shimamoto of Okasan Securities. Thank you very much. I have a question regarding China situation. So there is a strong demand continuing in China market, Chinese market. For this fiscal year, how do you view the continuity of the strong market in China? I think export control could be another risk, and you cannot make any comment on that, I think. But if you can say something about the export control, we are very happy to listen to your opinion. For China, so regarding export control and re-regulation, as a company, we cannot say anything, and we cannot make any decision. So, so METI, Ministry of Economy, Trade and Industry, and government, we will follow the government decision properly. In China, in particular, for the investment for mature nodes are continuing, and the volume of investment should be almost the same as last fiscal year. That's what we expect for this fiscal year. As I said earlier, investment for leading-edge nodes will start growing. From that viewpoint, the proportion between the mature node and leading edge, last year that was about 44%, but it's below. The proportion of China market should be below 40% this year, although it was more than 44% last year. Thank you very much. So how do you view the impacts of the regulations? You cannot make any comment, but some customers may start placing order ahead of the plan. That sort of situation was observed from January to March. Or do you see some advanced placement of orders because customers are afraid of the enhanced regulations? There was such kind of trend last year. We received orders as usual, and we didn't see any particular trend. So last fiscal year, you saw some orders placed earlier than necessary? Yes, I got that feeling. American, European, two vendors received advanced orders ahead first, and after that, Asian two vendors, in particular, Japanese two vendors, received inquiries after that. There is slight gap between the two regions. The gap should be around one quarter. Thank you very much. Mr. Shimamoto, thank you very much for your question. Next question is from Mr. Yasui of UBS Securities. I'm Yasui from UBS Securities. Regarding slide 19, the gross profit margin for fiscal 2025. So for the gross profit margin, I have a question. For first half, the 45% gross profit margin, that is slightly below from the second half of fiscal 2024, and next fiscal year, this year, forty-seven percent in the second half of fiscal 2025. So I think... Are there any reasons for the drop of the gross profit margin in the first half of this fiscal year from half to second half? And the sales increased by JPY 200 billion, and the gross profit is increased by JPY 100 billion. When you think about marginal profit ratio, I think the very high gross profit margin is expected. So from the first half to second half, what is the reason why of the gross profit margin improvement is presented here? So now we are delivering high value-added products to the market. High-value value-added products are growing steadily right now. That's the major driver to improve gross profit margin from the first half and second half. Now we can deliver new products, increasing value added, and we also improve the productivity and reliability of the products, by which we can enhance or improve the marginal profit ratio. From the second half of this fiscal year, new products will be launched in many cases. At the same time, volume of the sales will be increased, and also efficiency can be enhanced. Because of those reasons, you can see high gross profit margin in the second half of this year. Marginal profit ratio of 50% is rather high, even for the new products with high value added. Is the marginal profit ratio very high because of the conservative outlook in the first half of this year, or are you really sure that you can achieve the high level of marginal profit ratio of 55%? Do you think that is realistic? Marginal profit ratio will exceed 55%. I didn't say anything about 55% for the marginal profit ratio at all. But when we have the high value-added products and productivity, yield, process performance to uptime, when those things are good enough, then we can increase the marginal profit ratio, which may exceed the value you said earlier. Thank you very much. I have a follow-up question. Based on the high profitability, you have announced JPY 80 billion share repurchase. However, your share is highly valued. So under such circumstances, it is a bit surprising that you made an announcement of the share buyback right now, according to the basic principle. So what is your policy or perspective for the share repurchase? Why did you decide to implement share repurchase now? Could you let us know your idea or basic principle that you made announcement of share repurchase now? Thank you very much for your question. I am Kawamoto. So we try to be flexible in implementing share repurchase. That's our policy. When you look, we should look at the market condition and cash position at present and in the future. In addition, we should consider the dividend to the shareholders. So we discussed those things all together to decide to conduct the share repurchase of JPY 80 billion. We made this announcement today. As you said earlier, there are various ways of looking when it comes to the stock price, we know that. But when you think of our future growth potential, I think we can enhance the corporate value furthermore in the future. So we're comprehensively taking into account those, account of these factors to make a decision now. We felt this is the right timing. Let me add some comments. I am Kawai. Cash position should be considered, and we should do the appropriate balance sheet management. Regarding share repurchase, as I said earlier, we should consider the total return amount when you make a decision. This time, we were taking into account the total return amount of last fiscal year. That's one of the reasons why we have decided to implement share repurchase now based on the consideration of last year's total return amount. Thank you very much, Mr. Yasui, for your question. Next question is from Mr. Yoshioka, from Nomura Securities. Mr. Yoshioka, please. I am Yoshioka from Nomura Securities. Thank you very much for giving me an opportunity. I have a question regarding new equipment sales by application. This fiscal year, actually second half of this fiscal year, how do you think about that? To be more specific, sales to the NAND customers. As for NAND, the second half of fiscal 2025, the sales to NAND customer will be recovering. On the other hand, when I look at the conversation, however, I heard process tool for non-advanced NAND are to be allocated to the advanced NAND. Therefore, the utilization ratio of customers fab is not so high. You expect increasing sales to NAND customers in the second half of this fiscal year. What is the reason for that? Do you observe some trend in the market f or NAND? Actually, compared with DRAM, which constraints, I think NAND has more inventories compared with DRAM. For NAND, inventory adjustment will continue for NAND throughout this year. Therefore, the investment for NAND lines remain unchanged from last year. So NAND investment will start next year in a full-fledged manner. For DRAM, on the other hand, in particular, for AI server, for AI, DRAM is running short, especially for AI application. So the active investment is expected for DRAM for this year. In some cases, because of the space, maybe the NAND line might be replaced by DRAM line. DRAM production might be conducted by using the NAND line in order to fill the growing demand of DRAM. So, in the first half, you said JPY 38.5 billion in the first half and JPY 91 billion in the second half for NAND sales. Quite big increase is expected between first half and second half of this fiscal year. What is the reason for that? Let me answer to your question. By receiving orders to shipment from NAND customers, so we have the big sales to NAND customers. For the NAND customers share the long-term production plan with us. At present, from the first half of this fiscal year, we already received some plan from the NAND customer. Also, second half of this year, we received the NAND customer's investment plan already. So this is the sales output based on the investment plans shared with, by the customers for NAND. Please allow me not sharing information for specific customer. I have one follow-up question. I'm sure you cannot say anything about the specific customer, but slide 15, the focus area for NAND, you said high throughput etching, but also peripheral circuit, and also the multilayer stacking are also mentioned. So from the second half of this year, those application might increase, or there are some trend of, enhancing those areas. Do you observe such kind of trend at present? At present, as for this fiscal year's sales, the leading edge area, the next generation investment is not expected. Thank you very much. That's all from me. Thank you very much for answering to my question. Mr. Yoshioka, thank you very much for your question. Next question is from Mr. Hirakawa of BofA Securities. Mr. Hirakawa, please. I am Hirakawa. Thank you very much. I have a question regarding R&D expenses. In this fiscal year, you are planning to invest JPY 250 billion for R&D, out of JPY 1.5 trillion for five years to come. I know that you have a policy to invest necessary amount when necessary. The current R&D expenses to sales ratio should be around 11.3%. That is R&D to sales ratio, almost the same as AMAT and other competitors. So you, I know you are flexible policy for the R&D investment. In order to keep good balance, maybe you try to keep 11% to 12% range of the R&D to sales ratio, and now you have JPY 250 billion, so about JPY 40 billion increase from the last year. So which area are you focusing in terms of R&D activities? Thank you very much. For JPY 250 billion R&D expenses, in principle, needless to say, we do have the midterm plan and financial model. We are aware of the midterm financial model when we decide the amount of R&D expenses, but we need to capitalize on the growth potential as much as possible. As a result, our current R&D expenses to sales ratio remains around 10% to 11%. But we don't say 11% is maximum. We don't set any upper limit of the percentage or proportion of R&D rate expenses against sales. So based on our midterm management plan, and we try to exceed the midterm financial model, that is our target. And applications, we have the broad product portfolio. Based on that product portfolio, we have, we share the technology roadmap with our customers for four generations to come.... I mean, those circumstances. For further future, we try to provide higher value-added products. On top of that, in order to increase SAM, we should pursue opportunities to increase SAM. We try to utilize our technologies to provide effective products, and we should expect the appropriate return on investment, and we also can provide some advantages to our customers and stakeholders. So we try to develop those products if that will contribute to our customers and stakeholders. Therefore, our R&D expenses ratio against sales, we don't put any cap; well, we don't put any upper limit for R&D expenses against sales. That's our policy. Mr. Hirakawa, thank you very much for your question. Next question is given in English; therefore, I'd like to read it out in Japanese. The question is from Mr. Varun Rajwanshi of Lazard Asset Management. The question is: What is your expectation for China sales as we move through the year? Are you seeing weakness in China spending, or have you taken a conservative approach to China spending for fiscal 2025? And why is gross profit margin declining in first half of this fiscal year? Thank you very much for your question. Well, as for your first question, for China market, so the self-sufficiency ratio in China is expected to increase. For that purpose, the China need to invest more in order to improve self-sufficiency ratio. Of course, we need to look at the trend of the regulations by the different governments. But when it comes to trend of the investment in China market, we don't think any decreasing trend at all. That's what we are observing. However, having said that, as I said earlier, in the future, the leading edge area, for example, for AI-related devices, are expected to grow by 10% annually up until 2028. The CAGR of 10% is expected. That is driven by the leading edge nodes. When you think about these factors and current regulation situation, I think the proportion of China market will be declining. Regarding gross profit ratio, Mr. Kawamoto will give you the answer. Is that okay? As you said, for the first half of this fiscal year, the gross profit ratio is rather low. But as in the second half, in the previous fiscal year, the gross profit margin was rather high, but in the first half of this year, there are some increase in various costs, and also product mix might have negative impact of the gross profit margin, and sales will be about around JPY 1 trillion. Because of those factors, you can see a slight decline in the first half. Second half, we can see more sales, and we can launch the new highly value-added products. This will bring up the gross profit ratio in the second half of this fiscal year. Thank you very much for your question. Thank you very much for your question. Are there any other questions from the audience? So we can take second question, if any. Could you raise your hand if you have second question? Second question from Mr. Nakamura, from Goldman Sachs Japan. Mr. Nakamura, please. I'm sorry, I didn't hit the Raise Hand button. I don't have any second question. Mr. Yasui of UBS Securities. Mr. Yasui, do you have a second question? No, no, I didn't hit the Raise Hand button. I'm sorry. So next question is from Mr. Hanaya of SMBC Nikko Securities. Mr. Hanaya? Yes, I am Hanaya. Thank you very much. I have a question regarding slide 15, the business opportunities. So for the back end, I have a question regarding your efforts for back end, for high rate bonding for HBM. So not temporary bonding, you do have the strong product portfolio for the hybrid bonding. Your competitors tend to have partnership in this field. I don't think you pick up any partner in particular, but cryo, cryogenic etching, you have the strong partnership with chemical manufacturer. That's what you said earlier. So do you plan to do everything by yourself? That's the reason why you don't need any partner? But when it comes to hybrid bonding, what is your strategy for the partnership? So regarding die-to-wafer bonding, I think your question is regarding die-to-wafer bonding. We do see some business opportunities in this domain. In many cases, our product portfolio can be utilized to differentiate our technology, because our technology has high value added, and we are now studying the possibility. But we don't think we can do everything for ourselves. Therefore, within our supply chain, as Tokyo Electron equipment, we can provide the customer with the high value-added products, and we are now studying the possibility within our supply chain. Thank you very much. I have one follow-up question. For hybrid bonding for NAND, can you, you said backside PDN? So what is the timeline do you think this technology will start picking up? When can you get the profit from this technology? Do you have any idea? For hybrid bonding, there are two types of hybrid bonding. One is wafer-to-wafer level, so that's for CMOS image sensor. We do have high share for CMOS image sensor, and that products are already available for the high-volume production lines. So the needs will be mounting in this area. And other than CMOS image sensor, that is NAND flash bonding, that area will start upping within two to three years. And back side power delivery network, PDN, I think back side PDN may be behind the NAND, but maybe three to four years to come, I think the market will start picking up. For hybrid bonding, die-to-wafer, the other hybrid bonding is die-to-wafer. I think that is future technology compared to wafer-to-wafer, so backside power delivery network. And after that, we can see new needs emerging. That's our timeline for the future demands. As Mr. Hirakawa asked us a question earlier, as for Mr. Hirakawa's second question, he asked about the applications that we are focusing on, and I didn't answer to that question. I'm just aware that I didn't answer to Mr. Hirakawa's question. Could you refer to slide 16? We put down some information for you for R&D expenses, in particular, mainly the cryogenic etching, conductor etching. So prepare for the high-volume production. We've got the POR, but we should be prepared for the high-volume production start. And for ALD area, our company have the batch ALD for memory customers. So batch and also semi-batch, and also the single wafer processing. All those things are combined here so that we can have a single wafer ALD for the logic area should be another focusing area. As for the development, the new platform for development and the lithography, the leading-edge lithography, surface preparation technology, GCIB is used, and also advanced packaging area, wafer-to-wafer bonding, and also die-to-wafer bonding. There are some business opportunities in this area. In addition, the laser lift-off technology, and for EUV lithography, ultra- flat wafer treatment. We have a technology for that as well. So these are area we try to focus on. I'm sorry, this is my additional answer to Mr. Hirakawa's question, because I thought I didn't answer the second question asked by Mr. Hirakawa earlier. Thank you very much, Mr. Hirakawa. I am Hirakawa. Thank you very much. I have one more follow-up question, if I may? You already said something, but I have a question to get the clarification. Cryogenic etching. So in previous question, he asked about the Lam Research, the dry resist, the cryogenic etching. So far, the, your customer, memory hole, mass production etching, high aspect ratio etching for mass production, for memory hole etching, are covered by Lam Research so far. But that's for mass production, high volume production. Lam Research is defending that area. But when it comes to 400 layers or more, customer haven't make any decision. That's where your company is now searching great opportunity. Is that correct understanding? Yes, what you say is correct. Thank you very much. Toward that area, we are now working on evaluation by using customers clean room. Thank you very much for your clarification. Mr. Hirakawa, thank you very much for your question. So now it's time for us to conclude the financial announcement. So there is one information. SEMICON West will be held in San Francisco for three days, from July the ninth to July the eleventh. Just like last year, on day one, at St. Regis Hotel, near the venue of SEMICON West, we will organize one-hour fireside chat from 2:00 P.M., joined by Mr. Kawai, Mr. Mitani, and Dr. Sekiguchi. If you go to SEMICON West, please join us in this event. We will send you the details about fire chat later. Lastly, we'd like to continuously improve our IR activities based on your precious feedback, so we would appreciate your kind cooperation in filling out the questionnaire before you exit the Webex. Thank you very much for taking time to join this conference despite your busy schedule today. Thank you very much.