Financial Results Briefing for the Second Quarter FY2020: Q&A Session Summary
Q1: What is the current business situation?
A1: North American and Chinese customers are the two pillars of our smartphone business. There are
a number of R&D subjects to handle in relation to North American smartphone manufacturers,
many of which are progressing in the form of joint projects. In the Chinese market, the slowdown
in the domestic market has been making our customers cautious in placing orders, but we thinkstrong latent demand for development is still there.
With regard to camera lenses, capital investment appetite in surveillance camera sector is weak,
but we anticipate some improvement in future demand given that there is clear need for productupgrading despite the current harsh business environment.
Q2: What is the impact of U.S.-China relations, such as the issues around Huawei?
A2: Huawei-related sales are estimated to be around one-third of our sales in the Chinese smartphonemarket. Given that Huawei generates sales mainly in China with its relatively limited exposuresin the US, we believe the impact will not be significant at least for the time being.
Q3: What are the major uses and potential of ALD equipment?
A3: ALD system is capable of conducting uniform, ultrathin, and low-temperature deposition oncomplex surfaces such as lens curved surfaces and 3D structures. It is expected to be used to form
thin films on tightly curved lenses, such as wide-angle lenses for smartphones, as well as
decorative films on cover glass for complex surfaces and protective films for mini-LEDs andmicro-LEDs.
Our ALD equipment is the world's first equipment to combine our group company Afly Solution
Oy (Finland)'s ALD technology with our plasma technology and optimize it for optical thin films
in pursuing the possibility of new deposition technology. Once orders come into full swing, weexpect it to become one of our core products.
Q4: Previous demand and current order status of the evaporation equipment for optical communication
network?
A4: The evaporation equipment for optical communication networks was originally developed 21years ago when Optorun was established and became the foundation of our business. Once theoptical communications boom was over, the demand for new equipment disappeared. Recently,
there has been a movement to expand the number of base stations, such as for 5G-compatible
network infrastructure, and we have improved the performance by carrying out a comprehensive

design and performance review of original equipment to meet these newly developed needs.
Approximately 13% of orders received in the first half of this year are for fiber-optic
communications, and the company is in discussion with multiple customers for more futureorders.
Q5: Has there been a cancellation of orders in Q2?
A5: There have been almost no cancellations of official orders that affected our order backlogs.
However, due in part to the impact of the spread of COVID-19, there were cases in which officialorders were not placed at the negotiation stage.
Q6: How much of the order backlog as of the end of Q2 will be recorded as 2020 sales?
A6: We think that the order backlogs as of the end of Q2 will be recorded as sales in certain magnitude.
Risk factors include strict acceptance inspection conditions for some customers and how thecurrent COVID-19 situation unfolds from now on. These factors could lead some of ourcustomers to wish for a slower shipment, which would negatively impact the likelihood of someof the current backlogs to be recorded as 2020 sales.
Q7: Why don't you revise your performance forecasts?
A7: The period from order receipt to sales recording usually takes at least four to five months.
On one hand, orders rushed in August and September could add on to this year’s sales and push
up overall performance.

On the other hand, the spreadof COVID-19 may cause somecustomers to wish to push back the timing of shipping. Since it will take some time to determine
the future outlook of the business, we will maintain our current financial outlook.
In the event that it becomes necessary to revise the performance forecast in light of the futurebusiness environment and business performance, the Company will promptly disclose suchrevisions.