TRANSLATION-FOR REFERENCE ONLY-

Financial Briefings for the Third Quarterof the Fiscal Year Ending March 2024
(April to December 2023)
February 9, 2024
KOKUSAI ELECTRIC CORPORATION
KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary
Copyright © KOKUSAI ELECTRIC Corporation 2024. All rights reserved.

Disclaimers
This document and the information presented in this document were created for the purpose of disclosing corporate information, etc.,
and do not constitute a solicitation of an offer to subscribe for shares or other securities of the Company, either domestically orinternationally.
Forward-Looking Statements
The Group’s business plans and forecasts stated in this document are prepared by the Group based on information available at the time of
preparation and do not guarantee future results or performance. Actual business results and performance may differ significantly from the plans
and forecasts due to changes in various internal and external factors. The Company does not undertake any obligation to update or revise any
information contained in this document based on future events, except as required by applicable laws or stock exchange rules. The key risks that
may significantly affect the Group’s business results, financial position and cash flows are stated in the annual securities report of the Company.



Currency Risk
The Group has a high proportion of overseas revenue. In addition, the valuation of the Group’s foreign currency-denominated assets andliabilities is affected by fluctuations of the foreign exchange market, but the export sales of the Company’s products are mostly reported inJapanese yen. Some sales and expenses are reported in foreign currencies, but the impact on profit is minimal unless there are extreme
fluctuations in the exchange rates.



Key Performance Indicators
To understand the trends in business results to improve corporate value, the Group uses Adjusted Operating Profit and Adjusted (quarterly) Net
Income as key performance indicators. The calculation methods are stated in the earnings report.



Accounting Standard
The Company prepares its consolidated financial reports based in accordance with International Financial Reporting Standards (IFRS) since
FY2021/3.

Rounding Convention
Except in certain cases, amounts presented in this document have been rounded to the nearest hundredth million, and accordingly the sum of
the amounts may not be equal to the total of the individual items.
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2

3Q FY24/3 Consolidated Financial Summary

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Highlight
Summary of Consolidated Results for 3Q FY24/3
 We recognized the market bottomed out as inventory adjustments of semiconductor devices is

progressing, and the unit price of memory devices has begun to rise.
In addition to robust investment in mature nodes, DRAM and Logic/Foundry are also recovering.
 Although our 3Q revenue and profit decreased YoY, we saw a remarkable recovery from 1Q to 2Q, andfrom 2Q to 3Q.
Orders received started to recover since 3Q as planned.

Consolidated Earnings Forecast for FY24/3 and Outlook for the future Despite a decrease in equipment revenue in FY24/3 YoY, equipment revenue in FY25/3 is expected tooutperform WFE.
 Our revenue and profit bottomed out in 1Q, orders received did in 2Q, and each has started recovering.

No changes to the full-year forecastFY24/3.
Robust investment in mature nodes are contributing to our revenue. Down the road, revenue for cutting-edge
devices will also recover.
 The impact of the 2024 Noto Peninsula Earthquake on our earnings is negligible.
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Consolidated Results Summary
3Q revenue and profit decreased YoY due to the stagnation in the memory market, but recovered markedly from 1Q to 2Q, and
2Q to 3Q. Gross profit margin remained above 40% despite the impact of changes in the composition of projects.
23/3期

24/3期

1Q

2Q

3Q

Revenue

56.0

64.4

65.2

Gross profit

23.1

27.5

41.2%

42.7%

（億円）

Gross profit margin

3Q累計

1Q

2Q

3Q

185.6

32.7

45.0

54.0

-17.3%

26.4

76.9

14.3

19.9

21.7

40.4%

41.4%

43.6%

44.2%

3Q累計

前年同期比

+19.9%

131.7-29.1%-17.5%

+9.3%

55.9

-27.3%

40.3%-0.1pts-3.9pts

42.5%+1.0pts

前年同期比 前四半期比

Adjusted operating profit

14.7

18.1

17.2

50.0

5.6

11.0

12.4

-27.7%+12.4%

29.0-41.9%

Adjusted operating profit margin

26.2%

28.1%

26.3%

26.9%

17.2%

24.5%

23.0%

-3.3pts-1.5pts

22.1%-4.8pts

10.8

12.5

12.2

35.5

3.8

7.3

9.1

-25.4%+24.6%

20.2-43.1%

19.3%

19.4%

18.7%

19.1%

11.6%

16.2%

16.9%

-1.8pts+0.6pts

15.3%-3.8pts

13.0

16.4

15.5

44.9

4.0

9.4

10.7

-31.2%+13.9%

24.1-46.4%

23.2%

25.5%

23.8%

24.2%

12.2%

20.9%

19.8%

-4.0pts-1.0pts

18.3%-5.9pts

Adjusted net income
Adjusted net income margin

Operating profit
Operating profit margin

Income before income tax

12.9

16.4

15.7

45.0

3.7

9.1

10.7

-31.4%+17.5%

23.6-47.5%

23.0%

25.5%

24.0%

24.2%

11.4%

20.3%

19.9%

-4.1pts-0.4pts

17.9%-6.3pts

9.6

11.3

11.1

32.0

2.7

6.2

7.9

-28.5%+28.5%

16.7-47.7%Net income margin

17.1%

17.5%

17.0%

17.2%

8.1%

13.7%

14.7%

-2.3pts+1.0pts

12.7%-4.5pts

R&D expenses

2.7

3.3

2.9

8.9

2.9

3.0

3.1

+5.2%

+1.3%

9.0

+1.4%

Capital expenditures

0.7

2.9

2.2

5.7

5.1

2.1

10.5

Χ3.9

Χ4.1

17.6

Χ2.1

Depreciation & amortization

2.5

2.6

2.6

7.7

2.6

2.7

2.8

+7.4%

+4.5%

8.1

+5.3%

Income before income tax margin

Net income

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3Q FY2024/3 Results: Factors for Changes
Revenue decreased by JPY11.3 bn YoY due to restrained investment in NAND.
Due to the impact of a sales decrease, adjusted operating profit declined by JPY4.8 bn YoY.
Revenue（JPY bn）

Adjusted Operating Profit（JPY bn）

NAND -13.1
DRAM +5.4
Logic/Foundry -2.0
Others +2.3

65.2

Sales volume decrease -4.55
Gross profit margin decline -0.07

17.2
54.0

-7.5
-3.7

+0.2
-4.6

12.4

-0.3

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Revenues by Business3Q revenue composition by business has returned to normal due to a recovery in equipment revenue, consisting of 70%
equipment and 30% service.
65.2

64.4

60.1

56.0

54.0
45.0

（JPY bn）

69%

71%

70%

66%

32.7

70%
58%

Service

57%

34%

31%

29%

7c

30%

43%

FY23/3（JPY bn）

Equipment

42%

30%

FY24/3

1Q

2Q

3Q

4Q

1Q

2Q

3Q

Equipment

36.8

45.4

45.0

42.3

18.5

26.2

37.5

Service

19.2

19.0

20.2

17.8

14.2

18.8

16.4

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Revenues by Application (Equipment only)
3Q revenue composition by application consists of 14% NAND, 40% DRAM and 46% Logic/Foundry + Others.
While investment in NAND continues to be restrained, investment in DRAM and Logic/Foundry, including mature nodes, hasrecovered.

（JPY bn）

45.4

45.0

7%

5%

11%

36.8
7%

42.3

27%

37.5

33%

12%
30%

29%

26.2

17%
22%
22%

18%

41%

41%

DRAM

33%

NAND
40%

45%

42%

Others
Logic/Foundry

18.5
16%

50%

34%

14%

41%
25%
14%

FY23/3
1Q

2Q

12%

14%

FY24/3
3Q

4Q

1Q

2Q

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3Q
8

Trends in Order Backlog
Orders received bottomed out in 2Q and have recovered since 3Q as planned. The order backlog level is returning to normal as
projects with long delivery times included in the backlog are being shifted to sales.
As a result, the order backlog at the end of 3Q was at the same level as the end of 2Q.
（JPY bn）

194.0

194.4

193.4

182.4

189.3
166.3

157.2

163.7

109.4

FY22/3End of 3Q

End of 4Q

FY23/3End of 1Q

End of 2Q

End of 3Q

FY24/3End of 4Q

End of 1Q

End of 2Q

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End of 3Q

9Balance Sheet
Total assets remained at the same level as the end of FY23/3 due to increases in property, plant and equipment, and inventories
despite decreases in cash and cash equivalents, and trade and other receivables.
Total liabilities decreased by JPY18.5 bn from the end of FY23/3 mainly due to a decrease in trade and other payables+ contract liabilities, and Interest-bearing liabilities.
Liabilities・Equity

Assets（JPY bn）

382.3

394.9
370.3

359.0

106.5

41.2

124.2

356.9

360.0

94.5

87.6

118.4

42.0

106.1

56.8

47.5

29.0

80.3

（JPY bn）

371.2

86.5

382.3

Cash and cash equivalents

121.0

33.6

86.3

37.2

86.8

Inventories

67.2

16.0

17.6

18.7

18.8

23.2

24.3

33.6

Property, plantand equipment

67.7

66.2

64.9

63.0

61.4

59.9

58.5

Intangible assets

79.2

7.8

8.8

FY23/3

59.1

59.1

59.1

59.1

Goodwill

8.7

9.5

9.3

9.6

Others

FY24/3End of 1Q End of 2Q End of 3Q End of 4Q End of 1Q End of 2Q End of 3Q

360.0

99.2

96.0

84.1

70.7

59.0

61.1

69.6

35.4

130.7

6.7

99.2

123.3

68.3

59.1

121.0

356.9

371.2

96.0

Interest-bearing liabilities(Loans payable + Leaseliability)

62.2

Trade and other payables+ Contract liabilities

32.7

Others180.4

EquityTrade and other receivables

65.5

59.1

370.3

359.0

61.9

59.1

394.9

40.4

141.6

37.1

152.7

FY23/3

39.5

31.4

160.9

165.3

32.9

172.1

FY24/3End of 1Q End of 2Q End of 3Q End of 4Q End of 1Q End of 2Q End of 3Q
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10Equity Ratio / Cash and Cash Equivalents / Interest-bearing Liabilities
The equity ratio increased to 48.6% as of the end of 3Q.
Net debt resulted in JPY9.5 bn at the end of 3Q due to a decrease in operating cash flows in FY24/3. Interest-bearing liabilities
have been decreasing.
Cash and Cash Equivalents / Interest-bearing Liabilities

Total Asset / Total Equity / Equity Ratio
Total asset

Total equity（JPY bn）
4,000

Equity ratio
60%

371.2

370.3

356.5

Cash & cash equivalents

3,500

48.6%
3,000

273.8

43.5%
33.5%
160.9

1,500
1,000

23.7%

125.8

123.2
108.4

50%

Interest-bearing liabilities

106.1

99.2

180.4

119.5

30%

20%

64.9

96.0
86.5

40%

2,500
2,000

（JPY bn）

40.0

10%

500
0

0%

End of
FY21/3End of
FY22/3End of
FY23/3End of3Q FY24/3

End of
FY21/3End of
FY22/3End of
FY23/3

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End of3Q FY24/3
11

Cash Flows
Operating cash flows recovered in 3Q as revenue recovered. The level of cash and cash equivalents remained high at the endof 3Q.
20.5（JPY bn）

22.1

10.1
13.2

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Free cash flow

-1.7

-1.0
-0.1

-2.1

-2.4

-2.0
-2.9

2.4

-2.0
-0.2

-7.4

-0.2

-3.4

-5.3

-3.1

0.1
-3.2

-2.0

-3.3

-0.9

-4.1

-5.4

-22.4

-12.6

FY23/3（JPY bn）
CF from operating activities
CF from investing activities
CF from financing activities
Free CFCash and cash equivalents

FY24/3

1Q

2Q

3Q

4Q

1Q

-2.0
-1.0
-0.1
-2.9
106.5

22.1
-1.7
-2.4
20.5
124.2

-3.4
-2.1
-0.2
-5.4
118.4

13.2
-3.1
-22.4
10.1
106.1

-7.4
-5.3
-0.2
-12.6
94.5

2Q

-2.0
-2.0
-3.2
-4.1
87.6

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3Q

2.4
-3.3
0.1
-0.9
86.5

12

R&D Expenses / Capital Expenditure / Depreciation Expense
The ratio of R&D expenses to revenue increased temporarily due to the continued investment in next-generation equipment
development. The ratio will normalize as sales recover. Large-scale capital investments with long-term amortization, such as
new factory construction and demonstration room expansion, are increasing.
R&D Expenses

Capital Expenditures / Depreciation Expense

3.5（JPY bn）（JPY bn）

3.3
2.9

2.9

Large-scale capital investment (new factory construction,
demonstration room expansion, etc.)
10.5

3.0

Regular capital investment

3.1

2.7

Depreciation expense
6.9
5.1

2.5
Capex total

0.7
0.0
0.7

R&D expenses

1Q
2.7

23/3期
2Q
3Q
3.3
2.9

Ratio to revenue

4.8%

5.1%

（億円）

4.5%

4Q
3.5
5.9%

1Q
2.9

24/3期
2Q
3.0

3Q
3.1

9.0%

6.7%

5.7%

2.9

2.6

1.2
1.6

2.2
2.6
0.5
1.7

4.2
2.6

2.6
0.8

2.1
2.7
1.0

0.4 0.8
0.5

2.8
3.6

1.0

Capex total

1Q
0.7

23/3期
2Q
3Q
2.9
2.2

Ratio to revenue

1.3%

4.4%

3.3%

1.4%

15.5%

4.6%

Depreciation

2.5

2.6

2.6

2.6

2.6

2.7

2.8

Ratio to revenue

4.5%

4.0%

4.0%

4.3%

8.1%

5.9%

5.2%

（億円）

4Q
0.8

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1Q
5.1

24/3期
2Q
2.1

3Q
10.5
19.4%

13

Consolidated Earnings Forecast for FY24/3 andOutlook for the future

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Highlight
Summary of Consolidated Results for 3Q FY24/3
 We recognized the market bottomed out as inventory adjustments of semiconductor devices is progressing, andthe unit price of memory devices has begun to rise.
In addition to robust investment in mature nodes, DRAM and Logic/Foundry are also recovering.
 Although our 3Q revenue and profit decreased YoY, we saw a remarkable recovery from 1Q to 2Q, and from 2Q

to 3Q.
Orders received started to recover since 3Q as planned.

Consolidated Earnings Forecast for FY24/3 and Outlook for the future Despite a decrease in equipment revenue in FY24/3 YoY, equipment revenue in FY25/3 is expected tooutperform WFE.
 Our revenue and profit bottomed out in 1Q, orders received did in 2Q, and each has started recovering.

No changes to the full-year forecastFY24/3.
Robust investment in mature nodes are contributing to our revenue. Down the road, revenue for cuttingedge devices will also recover.
 The impact of the 2024 Noto Peninsula Earthquake on our earnings is negligible.
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FY2024/3 Earnings Forecast
No changes to the previous forecast.
Investments in DRAM and Logic/Foundry, including mature nodes, has contributed to our earnings.
FY23/3（JPY bn）

1-3Q

FY24/3Full year

1-3Q

Full year (forecast)

YoY

Revenue

185.6

245.7

131.7

180.0

-26.7%

Gross profit

76.9

100.8

55.9

73.7

-26.9%

41.4%

41.0%

42.5%

40.9%

-0.1pts

Adjusted operating profit

50.0

64.3

29.0

36.3

-43.6%

Adjusted operating profit margin

26.9%

26.1%

22.1%

20.1%

-6.0pts

35.5

46.0

20.2

25.2

-45.3%

19.1%

18.7%

15.3%

14.0%

-4.7pts

44.9

56.1

24.1

29.1

-48.1%

24.2%

22.8%

18.3%

16.2%

-6.6pts

Income before income tax

45.0

55.9

23.6

28.3

-49.4%

Income before income tax margin

24.2%

22.7%

17.9%

15.7%

-7.0pts

Net income

32.0

40.3

16.7

20.2

-49.9%Net income margin

17.2%

16.4%

12.7%

11.2%

-5.2pts

-

-

-

11*1

-

-

-

12.5%

Gross profit margin

Adjusted net income
Adjusted net income margin

Operating profit
Operating profit margin

Dividend per share (JPY)Dividends payout ratio*1 Regarding the dividend per share for the year ending March 31, 2024, we plan to pay the amount for half a year as a year-end dividend, given the listing was in the second half of the year.
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FY2024/3 Earnings Forecast: Factors for Change
Equipment revenue is expected to decrease due to the impact of restrained investment in NAND.
Adjusted operating profit will also decline due to the impact of a sales decrease.
Revenue（JPY bn）

Adjusted Operating Profit（JPY bn）

NAND -56.7
DRAM +9.6
Logic/Foundry -4.7
Others +1.2

245.7

-50.6

64.3

Sales volume decrease -26.86
Gross profit margin decline -0.15

180.0
-15.1
0.2
-27.1

36.3

-1.1

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Revenue Forecast by Business
For FY24/3, a decrease in equipment revenue will result in temporary increase in the revenue composition ratio for service
business.
245.4

245.7

（JPY bn）

180.0

178.0
74%

69%

Equipment business
Service business
66%

72%

28%
FY21/326%

FY22/331%

FY23/334%

FY24/3E

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18

Revenue Forecast by Application (Equipment only)
For 24/3, the revenue composition ratio for DRAM and Logic/Foundry is expected to increase due to a recovery in investment in
DRAM and Logic/Foundry, including mature nodes, while restrained investment in NAND will continue.

181.8（JPY bn）

2%

169.5
7%

31%

127.7

30%

2%

118.9
Others

24%
30%
19%

Logic/Foundry

20%

DRAM
NAND

55%

37%

43%

FY21/3

FY22/3

FY23/3

FY24/3E

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19

Business Environment
Outlook for Semiconductor Devices and WFE Markets
Semiconductor Device Market
From a medium- to long-term viewpoint, significant growth is expected due to the expansion of data centers with the spread of 5G, AI, IoT, and DX, and investment in
reducing environmental impact (GX).
 WFE Market
The market for CY24 is expected to be almost flat from CY23 and grow to USD110–120 bn in the next few years.
Demand for high-valued-added semiconductor manufacturing equipment is expected to increase as semiconductor devices become more complex and threedimensional.
Equipment Revenue Forecast in FY24/3 and FY25/3
Equipment revenue in FY24/3 will decrease YoY. However, it bottomed out in 1Q, and started to recover remarkably. Growth for FY25/3 is expected tooutperform the WFE.
 Trends by application are as follows;

DRAM• The most stable orders and sales are expected. In addition to demand growth for mature nodes for China, demand growth of cuttingedge devices is expected to recover globally.
• Demand for DRAM is anticipated to expand due to the spread of demand for HBM*1, resulting from the popularization of generative AI.

・Mature nodes for China are leading demand, after which mass-production for cutting-edge devices is expected to begun globally.
Logic/Foundry• The acquisition of POR*3 for the development of GAA*2 is in progress as well. It is expected to start contributing to revenue from FY25/3,
and a demand expansion is expected.

NAND• Currently, demand for equipment for development is expected to continue.
• The market is expected to start recovering from the latter half of FY25/3, and a full-scale recovery of mass-production is anticipated in
FY26/3.

SiC Power Device• Revenue is expected to expand in existing products in FY24/3 and FY25/3.
• Rapid growth is expected in high-temperature activated annealed new products after FY26/3.

*1 HBM：High Bandwidth Memory *2 GAA：Gate All Around *3 POR：Process of Record
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20

Advantages of Batch ALD
Batch ALD*1 market expands as devices become more complex. The demand for batch ALD is expected to increase not only in
NAND but also in DRAM and Logic, while separating from the single-wafer ALD market.
Features of our Batch ALD process

Positioning of Batch ALD Market
TAM growth
due to device complexity

Critical / Functional Films■ Deposition with excellent step coverage in vertical and horizontal directions
using thermal batch ALD technology■ High productivity through batch deposition

Series TSURUGI
Batch ALD Market(USD 1.0bn)*2

Series AdvancedAce®
Lower Aspect Ratio /Smaller Surface Area

High productivity through batch deposition

Higher Aspect Ratio /Larger Surface Area

Not much current overlap
between Batch ALD andSingle-Wafer ALD markets

Film formation image using conventional process

Increasing Demand for Batch ALD in Logic GAA※3
Inner Spacer
Low-k

Hard Mask（Gate Spacer）

Single-Wafer ALD Market(USD 2.6bn)*2
Non-Critical / Sacrificial Films*1 We refer to a technique for thin-film deposition at an atomic layer level involving a process of cyclical supply of multiple gases as “ALD.”*2 Kokusai estimate based on public information and internal sales data *3 GAA：Gate All Around

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21

Our Growth Roadmap
Short-, medium-, and long-term growth drivers exist in a well-balanced way.

Long-term
Mid-term
Short-term Increase of demand for DRAM and
Logic/Foundry, including mature nodes
 NAND market recovery

1-3 years
NAND

Batch
Deposition200-500 Layers*1 Fin Field-Effect Transistor*2 Gate All Around3-5 years>500 Layers

FinFET*1

Treatment
Power Device

 Further demand expansion for our
technology due to the shift towards
3D DRAM and Logic CFET3
 Achieving more balanced portfolio

Advanced 2D DRAM

DRAM
Logic

 Demand expansion for our technology due
to the shift to Logic GAA*2
 Demand expansion for DRAM, coupled withproduction increase for HBM*4
 Rapid growth of SiC power device

3D DRAM

GAA*2

CFET*3

Low Temperature / Complex device structures
SiC

Si*3 Complimentary Field Effect Transistor*4 HBM：High Bandwidth Memory

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22

Appendix

KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary
Copyright © KOKUSAI ELECTRIC Corporation 2024. All rights reserved.

1-3Q FY2024/3 Results: Factors for Changes
Revenue decreased by JPY54 bn YoY due to restrained investment in NAND.
The impact of a sales decrease was partially offset by an improvement in gross profit margin, and adjusted operating profit
decreased by JPY20.9 bn YoY.
Revenue

Adjusted Operating profit（JPY bn）（JPY bn）
NAND -45.3
DRAM +5.0
Logic/Foundry -7.9
Others +3.2

185.6

50.0

Sales volume decrease -22.24
Gross profit margin improvement +1.33

131.7

-45.1
-8.9

+0.2
-21.0

29.0

-01

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24

Income Statement, R&D Expenses, Capex and D&A expenses
FY23/3（JPY mn）

FY24/3

1Q

2Q

3Q

4Q

Revenue

56,03564,38565,21660,085Gross profit

23,09027,48926,35923,867Gross profit margin

Full year

1Q

2Q

3Q

245,72132,71044,99553,956

100,805

14,27519,89021,741

41.2%

42.7%

40.4%

39.7%

41.0%

43.6%

44.2%

40.3%

Adjusted operating profit

14,70018,102

17,154

14,29564,251

5,614

11,035

12,400Adjusted operating profit margin

26.2%

28.1%

26.3%

23.8%

26.4%

17.2%

24.5%

23.0%

10,796

12,473

12,193

10,52345,985

3,782

7,304

9,101

19.3%

19.4%

18.7%

17.5%

18.7%

11.6%

16.2%

16.9%

12,984

16,407

15,527

11,14656,064

3,990

9,383

10,689

23.2%

25.5%

23.8%

18.6%

22.8%

12.2%

20.9%

19.8%

Income before income tax

12,901

16,42915,667

10,89855,895

3,727

9,145

10,742

Income before income tax margin

23.0%

25.5%

24.0%

18.1%

22.7%

11.4%

20.3%

19.9%

Net income

9,605

11,297

11,064

8,339

40,305

2,655

6,158

7,914

Net income margin

17.1%

17.5%

17.0%

13.9%

16.4%

8.1%

13.7%

14.7%

R&D expenses

2,688

3,293

2,912

3,532

12,425

2,932

3,023

3,062

736

2,853

2,151

828

6,568

5,077

2,071

10,478

2,529

2,563

2,600

2,612

10,304

2,637

2,671

2,792

Adjusted net income
Adjusted net income margin

Operating profit
Operating profit margin

Capital expenditures
Depreciation andamortization

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25

Reconciliation of Adjusted Items

1Q
12,984-30
23

2Q
16,407-30
88

FY23/3
3Q
15,527-191
41

4Q
11,146-19
1,410

Full Year
56,064
-270
1,562

1Q
3,990
-30
45

FY24/3
2Q
9,383
-110
33

3Q
10,689
-285
19

1,592
105

1,593
16

1,592
156

1,592
76

6,369
353

1,592
1

1,592
10

1,593
203

26

28

29

90

173

16

127

181

Total adjustments
Adjusted Operating Profit

1,723
14,700

1,637
18,102

1,777
17,154

1,758
14,295

6,895
64,251

1,609
5,614

1,729
11,035

1,977
12,400Net income
Other income
Other expenses(Adjustments)
Purchase price allocation amortization
Stand-alone related expenses

9,605
-30
23

11,297-30
88

11,064
-191
41

8,339
-19
1,410

40,305
-270
1,562

2,655
-30
45

6,158
-110
33

7,914
-285
19

1,592
105

1,593
16

1,592
156

1,592
76

6,369
353

1,592
1

1,592
10

1,593
203

26

28

29

90

173

16

127

181

-525
10,796-519
12,473-498
12,193-965
10,523-2,50745,985

-497
3,782

-506
7,304

-524
9,101

（JPY mn）
Operating profit
Other income
Other expenses(Adjustments)
Purchase price allocation amortization
Stand-alone related expenses
Stock-based compensation (except for
performance-linked stock compensation)

Stock-based compensation (except for
performance-linked stock compensation)
Tax adjustment to total adjustments
Adjusted Net Income

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26

Key Balance Sheet Items

FY23/4

FY24/4End of 4Q

End of 1Q End of 2Q End of 3Q（JPYmn）
Assets Current

Cash and cash equivalents

106,053

94,49387,55086,498AssetsTrade and other receivables

47,47728,96733,58837,219Inventories

67,19780,27386,283

Other current assets

1,917

1,809

Total Current assets（百万円）

FY23/4

FY24/4End of 4Q

End of 1Q End of 2Q End of 3Q

Loans payable + Lease liability

6,596

6,582

7,298

7,256

Trade and other payables

41,79028,982

29,64537,77786,820Contract liabilities

28,91832,06829,354

24,427

1,213

1,237

Others20,873

13,293

14,461

14,238

Total current liabilities

Liabilities Current
Liabilities

222,644

205,542

208,634

211,774

98,17780,92580,75883,698Non-current Property, plant and equipment

18,77523,227

24,32533,556

Non-current Loans payable + Lease liability

92,61092,57088,743

88,696

AssetsGoodwill

59,06559,06559,06559,065

Liabilities

Others

18,59518,081

18,402

18,445Intangible assets

62,96861,42059,94158,475

Total non-current liabilities

111,205

110,651

107,145

107,141

Other non-current assets

6,811

7,651

8,074

8,323

Total Liabilities

209,382

191,576

187,903

190,839

Total non-current assets

147,619

151,363

151,405

159,419

Total Equity

160,881

165,329

172,136

180,354370,263356,905

360,039

371,193

Total Liabilities and Equity

370,263356,905

360,039

371,193

Total Assets

Equity ratio
Debt equity ratio

FY23/3
FY24/4End of 4Q End of 1Q End of 2Q End of 3Q
43.5%
43.5%
47.8%
48.6%

Net cash（JPY mn）

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0.6

0.6

0.6

0.5

6,847

-4,659-8,491-9,45427

Cash Flow Statement

FY23/3（JPY mn）

FY24/3

1Q

2Q

3Q

4Q

1Q

2Q

CF from operating activites- 1,950

22,120- 3,351

13,174- 7,365- 2,030

2,443

CF from investing activities- 982- 1,657- 2,069- 3,117- 5,278- 2,037- 3,321- 2,932

20,463- 5,420

10,057- 12,643- 4,067

- 878

- 120

- 2,425- 163- 22,405- 167- 3,17170

108,399

106,464

124,198

118,403

106,053

94,49387,550106,464

124,198

118,403

106,053

94,49387,55086,498

Free CF
CF from financing activites
Cash and cash equivalents
at beginning balance
Cash and cash equivalents
at end of the quarter

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3Q

28

Key Activities for 1-3Q FY2024/3
Business Activities
 Exhibited at semiconductor industry exhibitions held in various regions, including: “SEMICON® Japan” (December 2023), “SEMICON® Europa
2023“(November 2023), “SEMICON® Taiwan 2023”(September 2023), “SEMICON® West 2023”(July 2023) and “SEMICON® China 2023”(June2023).
 Held the completion ceremony of the demonstration evaluation area of the Korean production base. (November 2023)
 KOKUSAI ELECTRIC is part of the Integrated Green-niX Consortium for Research and Human-Resource Development (Green-niX), which has

been selected for the Ministry of Education, Culture, Sports, Science and Technology’s Initiatives to Establish Next-generation Novel Integrated
Circuits Centers (X-nics). (July 2023)
 Received the 2023 EPIC Distinguished Supplier Award by Intel Corporation. (June 2023)
 Recognized in Customer Satisfaction Survey by TechInsights as one of “10 BEST Suppliers” for the 26th consecutive year and won “The BESTSUPPLIERS” award recognizing excellent semiconductor manufacturing equipment by product type. (May 2023)

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Key Activities for 1-3Q FY2024/3
ESG Initiatives
 Formulated KOKUSAI ELECTRIC Group Sustainable Procurement Guidelines, dissemination and explanation to suppliers. (October 2023)
 Sponsored the “Owara Kaze no Bon” festival in Yatsuo, Toyama City, where the Toyama Technology & Manufacturing Center is located.

(September 23)
 Received “Kurumin Certification” from the Minister of Health, Labour and Welfare, recognizing our initiatives to support childcare. (July 23)
 Held Open-Air Environmental Classes at nursery facilities as part of local contribution activities. (June 23)
 Enhanced the “Compliance Whistleblower System” on the company website to strengthen compliance in our supply chain. (June 23)
 Signed the Women’s Empowerment Principles (WEPs), which offer guidance to businesses actively promoting women’s empowerment in theworkplace. (April 23)

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About the KOKUSAI ELECTRIC Group

KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary
Copyright © KOKUSAI ELECTRIC Corporation 2024. All rights reserved.

KOKUSAI ELECTRIC at a Glance
History

Overview of Financials (FY23/3)
Revenue

Gross Profit Margin

Adjusted Operating Profit
Margin

JPY 245.7bn

41.0%

26.1%

KOKUSAI ELECTRIC CORPORATION was formed through company split
as a specialty manufacturer in semiconductor manufacturing equipment

CAGR of Revenue(FY18/3 – FY23/3)

Adjusted ROE

Equity Ratio

Listed on the TSE Prime Market

12.9%

28.6%

43.5%

1949

Established “Kokusai Electric Co., Ltd.”

2000

Kokusai Electric Co., Ltd., Hitachi Denshi and Yagi Antenna
merged to form “Hitachi Kokusai Electric Inc.”2017

KKR joined as a shareholder through a takeover

2018
2023

Overview of Company

Overview of BusinessCompany Name

KOKUSAI ELECTRIC CORPORATION

Category of Industry

Electric Appliances

Securities Code6525

Fiscal Year Ending

March 31

Representative Director

Fumiyuki Kanai

Financial Accounting Standards

International Financial Reporting Standards (IFRS)

Number of Employees*1

Consolidated: 2,469, Non-consolidated: 1,127

Number of shares per unit

100

Specialty manufacturer of semiconductor manufacturing equipment,with strengths in “Deposition" in the Front-end process
Key Business Areasin the Front-end Process
Deposition /Treatment

Recent Awards

Lithography

Revenue Breakdown
by Business (FY23/3)

Revenue Breakdown
by Application (FY23/3)

7%
31%

JPY
245.7bn69%

30%

JPY 43%169.5bn
20%

Intel EPIC DistinguishedSupplier Award 2023

TechInsights
10 BEST Suppliers 2023

TSMC 2022 Excellent
Performance Award

Etching /Cleaning

Equipment

Service

NAND
Logic / Foundry

DRAM
Others*1 As of September 30, 2023

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32

Business Sites
Owns manufacturing sites in Toyama and South Korea, and business sites in Asia, China, the United States, and Europe.
With the start of operations at the new Toyama plant in fall of 2024, production and development capacity will expand significantly.
Capacity*1,2 of Production and Development

Group Network
Sites in Japan

Approx. 100% expansion*3of production capacity*1

Overseas Sites
Kokusai Semiconductor
Europe GmbH

Kokusai Electric
Semiconductor Service Inc.
Kamiichi Works

Kook Je Electric Korea Co., Ltd.
(Kokusai Electric Korea Co., Ltd.)
Head Office, Main Factory
Pyeongtaek Factory

New plant to be built in Toyama(Scheduled to commence
operations in fall of 2024)

KOKUSAI ELECTRIC CORP.
Toyama Technology &Manufacturing Center

FY21/3

Kokusai Electric
Semiconductor Service Inc.

FY24/3E

FY26/3E

GermanySouth Korea

United States

ShanghaiTaiwanKokusai Semiconductor
Equipment CorporationTokyo

KOKUSAI ELECTRIC CORP.
Head Office

Kokusai Electric
Asia Pacific Co., Ltd.

Approx. 50% expansion*3of development capacity*2
Part of production line at the
Toyama plant was transferred to
the new plant. Enhanced
development capabilities

KE Semiconductor
Equipment (Shanghai) Co., Ltd.

Production

Distribution

Service

FY21/3

FY24/3E

FY26/3E*1 Max. production volume per month *2 No. of evaluation equipment *3 In comparison to FY21/3

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Mid- to Long-Term Management Policy
Based on the “KOKUSAI ELECTRIC Way” (corporate philosophy), pursue economic value and environmental and social value
from both aspects of business activities and ESG initiatives, contribute to the achievement of SDGs, and continue to support a
future where creation and innovation are born.
“KOKUSAI ELECTRIC Way”

KOKUSAI ELECTRIC Way

Technology & Tai-wa
for Tomorrow
Purpose

Purpose
VisionVisionValue /
MissionMateriality

Contribute to the realization of a sustainable society
and the achievement of SDGs

The KOKUSAI ELECTRIC Group supports afuture where creativity and innovation are bornout of Technology and Tai-wa.

Your Trusted Partner To Bring
Technology Dreams to Life
Our Technology

Value / Mission

Sustainability management

 Refine technology
 Create technology

Expanding corporate value and sustainable development

Business activities

Environmental &Social activities

 Advance technology
 Captivate with technology

Our Tai-wa

Strengthening governance Tai-wa with cutting edge technology
 Tai-wa with the natural environment
 Tai-wa with social issues
 Tai-wa with ourselves

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34

Our Business and Major Products
Business Profile and Revenue Breakdown (FY23/3)

Major Products

Equipment (69%)

Large batch deposition “AdvancedAce®-300”

Batch Deposition

Worldwide Market Share No.

1(CY2022)*1

 Batch deposition equipment that can process dozens or more wafers at

Batch ALD

Batch CVD Achieved high productivity and high quality

Treatment

once and compatible to ALD technology. Due to semiconductor devices
becoming more complex, demand for more difficult and high-quality
deposition has expanded the need for ALD.
 ALD is abbreviation for Atomic Layer Deposition. We refer to a technique
for thin-film deposition at an atomic layer level involving a process ofcyclical supply of multiple gases as “ALD.”
 CVD is abbreviation for Chemical Vapor Deposition. Multiple gases are

simultaneously flowed into a chamber, react in the gas phase. We mainly
focus on Low Pressure CVD.

Worldwide Market ShareNo.

2 (CY2022)*2

 Treatment equipment improves film

properties by applying plasma and heat on
thin film to remove impurities from film andstabilize particles.
 As semiconductor devices have become
more complex in recent years, demand has
grown for treatment with excellent isotropy
and step coverage.
 Demand for treatment in low-temperatureenvironments has grown as well.

 After-sales service for semiconductor manufacturing equipment sold by our group. (“Parts

Sales”, “Maintenance”, “Repair”, “Moving and Modifying Equipment” and “Legacy Equipment
Sales”)
 In Parts Sales and Maintenance, steady > around 10% YoY growth of installed base in
FY17/3-FY23/3, contributing to stable and recurring service revenue growth.
 With “Design for Service Business” concept, we aim to provide higher value-added services.

MaintenanceRepairbatch CVD, oxidation, diffusion and steadyannealing.

Mini batch deposition “TSURUGI-C²® 剱®” Capable of both highly difficult deposition and highproductivity on next-generation devices.
 Compatible with thin film formation processes suchas the latest batch ALD technology.

Single-wafer treatment “MARORA®”

Service (31%)

Parts Sales

deposition.
 Compatible with technology including batch ALD,

Movingand Modifying
Equipment

LegacyEquipment
Sales

ServiceEquipment

31%

69%

Revenue
JPY 245.7bn

 Improves film properties by applying plasma and hea

 Able to treat complex semiconductor shapes with hig

productivity and quality.

Single-wafer treatment “TANDUO®”
 Improves film properties by applying heat on thinfilm.
 Capable of annealing in low temperature.

*1 We classified and described by business because the Group has a single segment. *2 Source: TechInsights Manufacturing Analysis Inc.（VLSI）“TI_ALD Tools_YEARLY” 2023 (April)*3 We define “RTP and Oxidation / Diffusion” by Gartner’s WFE segment as “Treatment”, Source: “Gartner®, Market Share: Semiconductor Wafer Fab Equipment, Worldwide, 2022, Bob Johnson, Gaurav Gupta, Menglin Cao, 17 April, 2023”）
GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved. Gartner does not endorse any vendor, product or service
KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary
depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research
Copyright© KOKUSAIELECTRIC
2024.
rights reserved.
organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressedor implied,with respect
to this Corporation
research, including
anyAllwarranties
of merchantability or fitness for a particular purpose.

35

Batch Deposition Equipment: Accelerating Batch ALD Demand
As devices become more complex, productivity challenges have become more apparent and highly difficult film deposition
turned critical.
Batch ALD※ is the optimal solution combining high productivity with highly difficult film deposition.
Deposition onto 2D NAND
Gas

By-product Reduced gas travel distancedue to the large gas reaction
space.
 Structure that requires small
surface area for depositionand low aspect ratio.

Deposition onto 3D NAND
Gas

By-productIncreased demand for batch ALD that can achieve both highproductivity and highly difficult film deposition

Batch Deposition
High Productivity

ALD Technology
High Quality

Process dozens ormore wafers
simultaneously

Gas reacts
on the surface
Gas Increased time required fordeposition as larger surface
area and longer gas travel
distance is required.

Wafer

 Raised deposition difficulty
due to expanded surface area
and increased aspect.

Wafer
for illustrative purposes*We refer to a technique for thin-film deposition at an atomic layer level involving a process of cyclical supply of multiple gases as “ALD”.

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36

Treatment Equipment: Demand Expanding as well
Treatment (film property improvement) in a wide range of temperatures by plasma and heating is possible.
A solution that achieves high productivity with excellent isotropy and step coverage.
Treatment on NAND/DRAM (Film Property Improvement)

generated after deposition
1 By-products
in low temperature environment

Excellent isotropy
and step coverage

2 Remove impurities with abundant radical

Improved film quality by after-deposition
process with abundant radical produced byour unique plasma method.

High productivity and quality treatment (filmproperty improvement) for complex device
structures.



Expanding applicable area from NAND to
DRAM.

RadicalTreatment on Logic (Film Property Improvement)
Pre-treatment(base modification)3

Selective
deposition

Post-treatment(film property improvement)

After treatment (film property
improvement)

Si
Si
Si

Single-Wafer Treatment Equipment

MARORA®

Si
Si
Si

Si

Si
Si
Si

Single-Wafer Treatment Equipment



By combining MARORA® and selective
deposition, the etching process is shortened
and damage to the film is avoided.



Ideal selective deposition is possible bypretreatment (base modification) and posttreatment (film property improvement) by
MARORA.®

MARORA®
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37

Service Business: Rapid Expansion of SiC Power Device Equipment
Sales of 150/200mm equipment for SiC power devices have increased.
We aim to further expand the business by launching new products of high-temp anneal.
SiC Power Device Market*1

Our Revenue from SiC Power Devices Equipment

5,330(JPY bn)

New Equipment to be introducedHigh Temp Activation Anneal (~2,000C)
 Adopted a new heating system

CAGR

30.3%

2022~2035E

171
2020

2021

2022

2023E

2024E

2025E

2026E

2030E

2035E

FY23/3

FY24/3E*1 FUJI KEIZAI CO., LTD. “2023 Current status and future outlook of markets for power devices and power electronics-related equipment”

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38

Sustainability Management: Materiality
Promoting activates to solve issues based on five materialities. The Sustainability Committee regularly reviews materiality andfollows up on progress against activity plans and KPIs for each issue.
Materiality / Priority Themes

Activity Items

 Contribution to society through creativity and innovation

Creation of new technologies andnew products
Enhancement of customer
satisfaction
Enhancement of economic
performance

Development of advanced underlying
technologies and promotion of joint
development with external institutions
Provision of products, technologies, andservices attuned to the VOC1
Improvement of business results, investment,
etc. and confirmation of the return on
investment

Materiality / Priority Themes Human resources management as a source of innovation

Respect for diversity of humanassetsDevelopment of human resources
who learn on their own, think on theirown and act on their own
Maintenance and enhancement ofhealth and safety

Thorough management of energy
Reduction of environmental impact

Contribution to the environment
through technology and products
Promotion of sustainableprocurement

Thorough management of waste andhazardous substances
Thorough management of water andwastewater
Development of environmentally friendly
products
Strengthening of supply chain management

Promotion of diversity & inclusion
Development of global human resources andsecuring of excellent human resources
Strengthening of occupational health andsafety management

 Strengthening of the governance system to realize sustainability management

 Creation of a sustainable society and conservation of the global environment

Reduction of greenhouse gas emissions

Activity Items

Strengthening of governanceThorough management of major
business risks
Ensuring of managementtransparency

Strengthening of corporate governanceThorough compliance
Strengthening of SCR2 / CR risk
countermeasures and BCP
Strengthening of information security risk
countermeasures and BCP
Timely and appropriate disclosure to internaland external parties

 Respect and consideration of human rights

Respect for human rights

Promotion of the understanding andawareness of employees about human rights

1: VOC: Voice of Customer
2. SCR: Super Clean Room

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Mid- to Long-Term Business Strategy and Objectives

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Copyright © KOKUSAI ELECTRIC Corporation 2024. All rights reserved.

Mid- to Long-Term Objectives
We aim to expand R&D investments and enhance manufacturing and development systems to increase sales growth and profit
expansion for the sake of mid- to long-term growth.

Mid- to Long-Term
Objectives

FY22/3

FY23/3

JPY245.4 bn

JPY245.7 bn

JPY300-330 bn

Equipment (% Revenue)

74%

69%

70-75%

Service (% Revenue)

26%

31%

25-30%

Gross profit

43.6%

41.0%

> 43.0%R&D expenses ratio (vs revenue)

4.0%

5.1%

around 6%

Adjusted operating profit margin

32.4%

26.1%

28-30%

USD90 bn (CY2021) USD100 bn (CY2022)

USD110-120 bn

Revenue(Ref.) WFE assumption

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Shareholder Return Policy
We aim to provide high shareholder returns, placing top priority on growth investments.

Plan to pay dividends with a target of the consolidated dividend payout ratio of 20% to 30%
 Stable, continuous and proactive return of profits to our shareholders to be an important management issue, while securing theinternal reserves necessary for future business development.

Plan to conduct further shareholder return including share buyback once our net cash becomes positive Once our net cash becomes positive, we aim to allocate an amount equivalent to approx. 70% of free cash flow after theredemption of interest-bearing debt towards dividends and share buyback, in order to further improve shareholder profits andcapital efficiency.

KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary
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42

KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary
Copyright © KOKUSAI ELECTRIC Corporation 2024. All rights reserved.