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FY13 4Q Earning Results Meeting Q&A 

Q.

I think DISCO’s business performance is outstanding. Several factors such as activation of organization and enhancement of stock business would affect this. Which factor do you think contributed the most to business performance for representing to the fast changing market environment?

A.

Since domain of our business, Kiru, Kezuru, Migaku processes (KKM) have a very high universality, our processes are expanding the areas of application to semiconductors and electronic components. For example, the process conducted with metal pattern has been replaced by the process using our programmable equipment. Such improvement of the process has been contributing to our business performance.


Q.

Please tell us the business opportunities for DISCO and the business which is already apparent as the expansion of sensor market.

A.

Sensor has already been used for variety of uses and the expansion of the market is an opportunity for us. Our laser cutting technology is suitable to the sensors that manufacturing need dry process. Our strength is that providing a variety of processes and customizing our processes for each customer’s needs.


Q.

Could you tell us the sales composition ratio of precision process equipment for medical and automobile industry?

A.

There are only 5% of each sales which we can tell these products are for medical and automobile. In most of the cases, it is very difficult to aggregate the data with exact number since both DISCO and our customers (OSAT) do not know for usage of the semiconductors and electronic components.


Q.

Could you tell us the shipping volume of equipments for analogue semiconductors and power semiconductors?

A.

As it is stated above, we do not have exact numbers for those but we believe that the sales for power semiconductor application is approximately 10% of overall equipment sales. As a corporation, I believe it is a healthy business model to add up the sales by capturing the various businesses with moderate market size.


Q.

For the next few years, is the target gross profit ratio 50%? Is it possible that DISCO is going to improve the business performance even more and increase GP margin to 55%?

A.

Since higher GP margin is ideal, we will keep elaborating cost cut and putting our resources into R&D to obtain customer satisfaction with our highly value added products. On the other hand, we believe that aiming extremely high GP margin does not bring us the good result and without causing negative impacts. We would like to maintain GP margin 50% or higher even if FX rate was under Yen appreciation.


Q.

Could you tell us the durability of recent orders?

A.

Compared to the previous years, we feel that recent orders trend is stronger. For instance, China currently has a high import ratio of semiconductor and they intend to produce it domestically in the future. In this year, China is going to increase domestic semiconductor production amount by putting their fund into this project as a public investment. We believe that this trend will support our sales.


Q.

Does wearable device become a business opportunity for DISCO? Have you received any specific business inquiries related to this device?

A.

Wearable device trends show that devices are becoming thinner and smaller. To meet this trend, there will be demand for our KKM technologies. Within recent orders, there are only a few products which we can say are clearly for wearable devices. However, I believe that there will be a gradual increase in our sales composition ratio of equipment for wearable devices among the sales of our equipment for general purpose applications in the future.


Q.

Could you tell us the each growth rate of semi-conductor and non semi-conductor in FY2014?

A.

Revenue had increased for both of them in FY2013. Since the composition rate of electronic components and semiconductor does not change, I believe that the demand of both categories would move in the same momentum. In the mid-term, it is expected that non semiconductor ratio is going to increase gradually.


Q.

As it is mentioned in the policy that DISCO distributes surplus fund, how much surplus fund do you expect to have in the end of this fiscal year?

A.

Based on the situation if all issued corporate bonds were converted, the surplus fund against intended necessity fund in the end of FY2014 would be minus 2.7 billion yen. Therefore we might be able to add surplus fund on the dividend only after FY2015.


Q.

There was a sudden increase of orders in March. Could you tell us what caused this?

A.

Mainly because OSAT (assembly contract manufacturer for back-end process) in Asia region actively spend CAPEX for obtaining contracts as they expected that the demands of semiconductors would increase.


Q.

In terms of high value added products for Europe, demand of this business area has increased in FY2013. Could you tell us the durability of this demand?

A.

In the United States and Europe, manufacturing business for highly value added products have been in the line light. The demand will not dramatically increase but constant demand is expected.


Q.

Major foundry in Taiwan seems to have an innovative idea for advanced packaging. What do you think about this business expansion?

A.

Each OSAT has been developing their own process for building their own specialty. As they elaborate challenging technologies, as a result, responding to their new demands, we can build the high entry barrier against our competitors.


Q.

Could you tell us the reason why laser saw is expected to have a large growth rate this year?

A.

The demand for LASER process has been increasing. I believe that technology know-how accumulated in each case and test cut from our customers would be our new business segment in the future.


Q.

Could you tell us the current operating ratio of plant?

A.

Our plant was operating as following as calendar during Golden Week however, we have asked some of our employees to work in holidays. Currently, operation rate of our plant is on a very high level.


Q.

About the balance of P/L statement, GP margin and ordinary income will both increase as sales increased. What do you think about this point?

A.

I believe that GP margin 50%, SG&A 30%, Ordinary income 20% is the golden proportion for DISCO. We would like to build a structure of the company which achieves more than 20% of ordinary income with continuous prior investment for the future.

Investors

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