TRANSLATION-FOR REFERENCE ONLY-

Financial Briefings for the Second Quarterof the Fiscal Year Ending March 2024
(April to September 2023)
November 9, 2023
KOKUSAI ELECTRIC CORPORATION
KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary & Confidential
Copyright © KOKUSAI ELECTRIC Corporation 2023. 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

About the KOKUSAI ELECTRIC Group

KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary & Confidential
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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: 2,473, Non-consolidated: 1,129

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 August 31, 2023

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4

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 transferredto 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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5

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

Major Products

Equipment (69%)

Large batch deposition “AdvancedAce®-300”

Batch Deposition

1

Worldwide Market Share No.

(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 Share

2 (CY2022)

No.

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.

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.

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

Maintenancebatch CVD, oxidation, diffusion and steadyannealing.

*2 Treatment equipment improves film

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 heat.
 Able to treat complex semiconductor shapes with highproductivity 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: “Market Share Semiconductor Wafer Fab Equipment, Worldwide, 2022, Bob Johnson et al., published April 17, 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 & Confidential
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
2023.
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.

7

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

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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)

Selective
deposition

Post-treatment(film property improvement)

treatment (film property
3 After
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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9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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2Q FY24/3 Consolidated Financial Summary

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Highlight
Consolidated Results for 2Q FY24/3
 Semiconductor devices inventory adjustments are progressing, and the market bottomed out. Some

semiconductor device manufacturers continue to restrain investment.
 Our 1H results saw a decrease in revenue and profits, but 2Q results improved significantly QoQ.

Consolidated Earnings Forecast for FY24/3
 1Q was sluggish; recovery expected to start in 2Q with further rebound anticipated in 3Q and 4Q.

Robust investment for mature nodes to support our revenue. No changes to the previous forecast.

Medium- to Long-term Business Strategies and Objectives
 We continue R&D investment and Capex for medium- to long-term growth, to respond to the changes in themarket environment and customer needs and further expand our business.

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Consolidated Results Summary
The decrease in revenue and profit continued from 1Q, affected by the restrained investment by semiconductor device
manufacturers. However, 2Q results improved significantly QoQ.
Gross profit margin improved to 44.0% for 1H.
FY23/3(JPY bn)
Revenue
Gross profit

1Q

2Q
56.0

FY24/3
1H

64.4

1Q

120.4

2Q
32.7

YoY

QoQ

45.0

-30.1%+37.6%

1H

YoY
77.7

-35.5%-32.5%

23.1

27.5

50.6

14.3

19.9

-27.6%+39.3%

34.2

41.2%

42.7%

42.0%

43.6%

44.2%

+1.5pts+0.6pts

44.0%+2.0pts

Adjusted operating profit

14.7

18.1

32.8

5.6

11.0

-39.0%+96.6%

16.6-49.2%

Adjusted operating profit margin

26.2%

28.1%

27.2%

17.2%

24.5%

-3.6pts+7.3pts

21.4%-5.8pts

10.8

12.5

23.3

3.8

7.3

-41.4%+93.1%

11.1-52.4%

19.3%

19.4%

19.3%

11.6%

16.2%

-3.2pts+4.6pts

14.3%-5.0pts-54.5%

Gross profit margin

Adjusted net income
Adjusted net income margin

Operating profit
Operating profit margin

13.0

16.4

29.4

4.0

9.4

-42.8%+135.2%

13.4

23.2%

25.5%

24.4%

12.2%

20.9%

-4.6pts+8.7pts

17.2%-7.2pts-44.3%+145.4%12.9-56.1%

16.6%-7.8pts

Income before income tax

12.9

16.4

29.3

3.7

9.1

Income before income tax margin

23.0%

25.5%

24.4%

11.4%

20.3%

-5.2pts+8.9pts

Net income

9.6

11.3

20.9

2.7

6.2

-45.5%+131.9%8.8-57.8%Net income margin

17.1%

17.5%

17.4%

8.1%

13.7%

-3.8pts+5.6pts

11.3%-6.1pts

R&D expenses

2.7

3.3

6.0

2.9

3.0

-8.2%

+3.1%

6.0

-0.4%

Capital expenditures

0.7

2.9

3.6

5.1

2.1

-27.4%-59.2%

7.1+99.2%

Depreciation & amortization

2.5

2.6

5.1

2.6

2.7

+4.2%

+1.3%

5.3

+4.2%

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2Q FY2024/3 Results: Factors for Changes
Revenue decreased by JPY19.4 bn YoY due to a decline of equipment revenue from investment restraints by some device
manufacturers.
A decline in equipment revenue led to a decrease in gross profit margin, with adjusted operating profit down JPY7.1 bn YoY.
Revenue(JPY bn)

Adjusted Operating Profit(JPY bn)

NAND -19.3
DRAM +2.9
Logic/Foundry -3.5
Others +0.7
Sales decrease -8.3
Improve gross profit margin +0.7

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Revenues by Business
FY23/3 revenue composition by business consists of approx. 70% equipment and approx. 30% service.
For FY24/3, while equipment revenue is decreasing, the sales composition of service is increasing due to continued strong
performance of service.
65.2

64.4
(JPY bn)

60.1

56.0

45.0
69%

71%
66%

70%

Equipment

32.7
58%

Service

57%

34%

31%

29%

7c

30%

FY23/3(JPY bn)

42%

43%
FY24/3

1Q

2Q

3Q

4Q

1Q

2Q

Equipment

36.8

45.4

45.0

42.3

18.5

26.2

Service

19.2

19.0

20.2

17.8

14.2

18.8

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Revenues by Application (Equipment only)
FY23/3 revenue composition by application consists of approx. 43% NAND, approx. 20% DRAM, approx. 37% Logic and others.
For FY24/3, decrease in NAND revenue will result in increased revenue composition ratio for Logic and others.

(JPY bn)

45.4

45.0

7%

5%

11%

36.8
7%

42.3

27%

33%
30%

29%

26.2

17%
22%

22%

14%
18%

33%

16%
50%

41%

42%

Others

18.5

45%
41%

Logic/Foundry

41%

DRAM

12%

NAND

25%
14%
1Q

2Q

FY23/3

3Q

4Q

1Q

FY24/3

2Q

1Q

2Q

23/3期

3Q

4Q

1Q

24/3期

2Q

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Trends in Order Backlog
Long lead times projects have begun to turn into revenue, and the order backlog started to return to normal levels.
As a result,the order backlog decreased to JPY166.3 bn at the end of 2Q.
(JPY bn)

194.0

194.4

193.4

182.4

189.3
166.3

157.2

109.4

3Q末 FY22/3

4Q末End of 3Q 22/3期End of 4Q

1Q末
End of 1Q

2Q末

FY23/3

3Q末End of 2Q 23/3期 End of 3Q

4Q末
End of 4Q

1Q末

FY24/3 2Q末End of 1Q24/3期 End of 2Q

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Balance Sheet
Total assets decreased by JPY10.2 bn from the end of FY23/3, mainly due to decreases in cash and cash equivalents, and tradeand other receivables.
Total liabilities decreased by JPY21.5 bn from the end of FY23/3, mainly due to decrease in trade and other payables, etc.
Asset

Liabilities・Equity(JPY bn)(JPY bn)
118.4

106.5

124.2

41.2

42.0

61.9

65.5

106.1

56.8

47.5

94.5

29.0

87.6

121.0

Cash and cash equivalents

67.2

80.3

33.6

86.3

18.7

18.8

23.2

24.3

Property, plant and equipment

67.7

66.2

64.9

63.0

61.4

59.9

Intangible assets

40.4

35.4

130.7
59.1

59.1

59.1

59.1

59.1

59.1

Goodwill

6.7

7.8

8.8

8.7

9.5

9.3

OthersEnd of 1Q End of 2Q End of 3Q End of 4Q End of 1Q End of 2Q

84.1

70.7

61.1

69.6

Inventories

17.6

FY24/399.2

96.0

Interest-bearing liabilities

59.1

Trade and other payables+ Contract liabilities

32.7

Other liabilities

172.1

EquityTrade and other receivables

16.0

FY23/3

99.2

123.3

79.2
68.3

121.0

141.6

FY23/3

37.1

152.7

39.5

31.4

160.9

165.3

FY24/3End of 1Q End of 2Q End of 3Q End of 4Q End of 1Q End of 2Q
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Equity Ratio / Cash and Cash Equivalents / Interest-bearing Liabilities
The equity ratio increased to 47.8% as of the end of 2Q.
Interest-bearing liabilities has been decreasing, having achieved a net cash position as of the end of FY22/3. For FY24/3,
operating cash flows have deteriorated temporarily, resulting in net debt of JPY8.5 bn as of the end of 2Q.
Total Asset / Total Equity / Equity Ratio
Total Asset

Total equity(JPY bn)

Cash & cash equivalents

Equity ratio
360.0

125.8

123.2
108.4

47.8%

273.8

Interest-bearing liabilities(JPY bn)

370.3

356.5

Cash and Cash Equivalents / Interest-bearing Liabilities

106.1

99.2

43.5%
33.5%
160.9
23.7%

96.0
87.6

172.1

119.5

40.0

64.9

End
of
21/3期
FY21/3End of22/3期
FY22/3End of23/3期
FY23/3Endof 2Q
24/3期2Q
FY24/3

End
of
21/3期
FY21/3

End
of
22/3期
FY22/3

End
of
23/3期
FY23/3

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End
of 2Q
24/3期2Q
FY24/319

Cash FlowsFor FY24/3, the decrease in trade and other payables and quarterly profits resulted in a decrease in operating cash flow.
The balance of cash and cash equivalents remained high at the end of 2Q.
(JPY bn)
Cash flows from financing activities

20.5

Cash flows from investing activities
Cash flows from operating activities

10.1

Free cash flow

22.1
13.2
-1.0

-2.0

-0.1

-1.7
-2.4

-3.1

-3.4
-2.1

-2.9

-0.2

-5.4

-5.3
-22.4

CF from operating activities
CF from investing activities
CF from financing activities
Free CFCash and cash equivalents'23/3期1Q
1Q
-2.0
-1.0
-0.1
-2.9
106.5

'23/3期2Q
2Q
22.1
-1.7
-2.4
20.5
124.2

-0.2

-4.1

-12.6

FY23/3(JPY bn)

-2.0
-2.0
-3.2

-7.4

FY24/3'23/3期3Q
3Q
-3.4
-2.1
-0.2
-5.4
118.4

'23/3期4Q
4Q
13.2
-3.1
-22.4
10.1
106.1

'24/3期1Q
1Q'24/3期2Q
2Q
-7.4
-5.3
-0.2
-12.6
94.5

-2.0
-2.0
-3.2
-4.1
87.6

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R&D Expenses / Capital Expenditure
R&D expenses are increasing gradually due to the investment in next-generation product development.
Capex has increased compared to previous terms due to new factory construction and demonstration room expansion.
R&D Expenses

Capital Expenditures(JPY bn)

Large-scale capital investment (new factory construction,
demonstration room expansion,etc.)
Regular capital investment
5.1(JPY bn)

Depreciation expense
3.5

3.3
2.7

2.9

2.9

3.0
2.5

2.9
2.6

2.2

0.7

16

17

7

(JPY bn)

R&D expenses
Ratio to sales revenue

1Q
2.7
4.8%

FY23/3
2Q
3Q
3.3
2.9
5.1%
4.5%

4Q
3.5
5.9%

FY24/3
1Q
2Q
2.9
3.0
9.0%
6.7%

(JPY bn)

Capex
Ratio to sales revenue

1Q
0.7
1.3%

2.1

0.8
5

FY23/3
2Q
3Q
2.9
2.2
4.4%
3.3%

2.7

2.6

2.6

2.6

4Q
0.8
1.4%

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10

FY24/3
1Q
2Q
5.1
2.1
15.5%
4.6%

21

Consolidated Earnings Forecast for FY24/3

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Highlight
Consolidated Results for 2Q FY24/3
 Semiconductor devices inventory adjustments are progressing, and the market bottomed out. Some

semiconductor device manufacturers continue to restrain investment.
 Our 1H results saw a decrease in revenue and profits, but 2Q results improved significantly QoQ.

Consolidated Earnings Forecast for FY24/3
 1Q was sluggish; recovery expected to start in 2Q with further rebound anticipated in 3Q and 4Q.

Robust investment for mature nodes to support our revenue. No changes to the previous forecast.

Medium- to Long-term Business Strategies and Objectives
 We continue R&D investment and Capex for medium- to long-term growth, to respond to the changes in themarket environment and customer needs and further expand our business.

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FY2024/3 Earnings Forecast
No changes to the previous forecast. Investments in mature nodes and DRAMs to support 2H earnings.
FY23/3(JPY bn)
Revenue
Gross profit

1H

FY24/3Full year

120.4

1H

245.7

Full year

YoY

77.7

180.0

-26.7%-26.9%

50.6

100.8

34.2

73.7

42.0%

41.0%

44.0%

40.9%

-0.1pts

Adjusted operating profit

32.8

64.3

16.6

36.3

-43.6%

Adjusted operating profit margin

27.2%

26.1%

21.4%

20.1%

-6.0pts

23.3

46.0

11.1

25.2

-45.3%

19.3%

18.7%

14.3%

14.0%

-4.7pts

29.4

56.1

13.4

29.1

-48.1%-6.6pts-49.4%

Gross profit margin

Adjusted net income
Adjusted net income margin

Operating profit
Operating profit margin

24.4%

22.8%

17.2%

16.2%

Income before income tax

29.3

55.9

12.9

28.3

Income before income tax margin

24.4%

22.7%

16.6%

15.7%

-7.0pts-49.9%-5.2pts

Net income

20.9

40.3

8.8

20.2

Net income margin

17.4%

16.4%

11.3%

11.2%

-

-

-

11*1

-

-

-

12.5%

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 decline due to the impact of restrained investment by some device manufactures.
Adjusted operating profit will decrease due to a decline mainly in equipment revenue.
Revenue(JPY bn)

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

Adjusted Operating Profit(JPY bn)

Sales decrease -27.0
Gross profit margin decline -0.2

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

245.4

245.7

(JPY bn)

180.0

178.0
74%

69%

66%

72%

Equipment business28%

FY21/326%

FY22/331%

FY23/3Service business34%

FY24/3E

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Revenue Forecast by Application (Equipment only)
For FY24/3, revenue composition ratio for Logic/Foundry is expected to increase due to restrained investment in memory andactive investment in mature nodes.

181.8(JPY bn)

2%

169.5
7%

31%

127.7

Others

30%

2%

118.9
Logic/Foundry

24%
30%
19%

DRAM

20%

NAND

55%

37%

43%

FY21/3

FY22/3

FY23/3

FY24/3E

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Mid- to Long-Term Business Strategy and Objectives

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Highlight
Consolidated Results for 2Q FY24/3
 Semiconductor devices inventory adjustments are progressing, and the market bottomed out. Some

semiconductor device manufacturers continue to restrain investment.
 Our 1H results saw a decrease in revenue and profits, but 2Q results improved significantly QoQ.

Consolidated Earnings Forecast for FY24/3
 1Q was sluggish; recovery expected to start in 2Q with further rebound anticipated in 3Q and 4Q.

Robust investment for mature nodes to support our revenue. No changes to the previous forecast.

Medium- to Long-term Business Strategies and Objectives
 We continue R&D investment and Capex for medium- to long-term growth, to respond to the changes

in the market environment and customer needs and further expand our business.

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Business Environment
We believe the semiconductor device and WFE markets likely have already bottomed out and will start to recover inand after CY2024
 Semiconductor Device Market
In the medium- to long-term, significant growth is expected due to expansion of data centers by expanding 5G, AI, IoT, and DX, andinvestment in reducing environmental impact (GX).
 WFE Market

Semiconductor device makers continue to invest in cutting-edge product development.
The market is expected to be mostly flat in CY24 and grow to USD110-120 bn in the next few years.
Demand for high-value-added semiconductor manufacturing equipment is expected to increase as semiconductor devices become more
complex.

Equipment Revenue Forecast in FY24/3 and FY25/3
 Although equipment revenue in FY24/3 are expected to decline significantly compared to FY23/3, we anticipate

growth that exceeds WFE in FY25/3.
 Trends by application
NAND

Expected to recover in and after the second half of FY25/3.

DRAM

Most stable orders and sales are expected. Mass production of cutting-edge devices is expected to recover.

Logic/FoundryIn the short-term, mature nodes for China will lead demand, after which the balance is expected to improve as global
demand for cutting-edge products starts to increase.

OthersRapid growth of SiC power devices is expected to contribute.
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Our Growth Roadmap
Short-, medium-, and long-term growth drivers exist in a well-balanced way.

Long-term
Mid-term
Short-term Bottoming-out of the memory market andan upcoming recovery
 Investing actively to capture the higher
mid- to long-term growth

NAND

Batch
Deposition

FinFET*1

Treatment
Power Device

 Further demand expansion in our
technology with shifting towards 3D
DRAM and Logic CFET3
 Achieving more balanced portfolio

1-3 years

3-5 years

200-500 Layers>500 Layers

Advanced 2D DRAM

DRAM
Logic

 Demand expansion in our technology
with shifting towards Logic GAA2
 Rapid growth of the SiC power device
business

3D DRAM

GAA*2

CFET*3

Low Temperature / Complex device structures
Si

SiC*1 Fin Field-Effect Transistor *2 Gate All Around *3 Complimentary Field Effect Transistor

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Batch ALD Market Outlook
Batch ALD 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.
Positioning of Batch ALD / Single-Wafer Market

Demand Outlook for Batch ALD by Application

Critical / Functional Films

Potential TAM Growth
Due to Shifting Market Demands

Market Demands Shifting
Towards Batch Processing
due to Device Complexity
Lower Aspect Ratio /Smaller Surface Area

Series TSURUGI

Series AdvancedAce®

Batch ALD
Market(USD 1.0bn)*1
Higher Aspect Ratio /Larger Surface Area

Not Much Current Overlap
between Batch ALD andSingle-Wafer ALD Markets

NAND
 The number of processes that require batch ALD willcontinue to increase due to further layering of 3D NAND
DRAM
 Demand for cutting-edge deposition, where batch
deposition is a specialty, has expanded The number of processes that require batch ALD has
been expanded further due to the shift to 3D DRAM
Logic/Foundry The number of processes that require batch ALD has
been expanded as device structures become more
complex and three-dimensional by shifting from FinFET to
GAA and CFET.

Single-Wafer ALD
Market (USD 2.6bn)*1

FinFETGAA

CFET

Non-Critical / Sacrificial Films*1 Kokusai estimate based on public information and internal sales data

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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 from capital surplus with a target 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.

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Appendix

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1H FY2024/3 Results: Factors for Changes
Restrained investment by some device manufacturers resulted in a decrease in revenue of JPY42.7 bn YoY due to thedecrease in revenue for equipment and service.
Decreased revenue led to a decrease in gross profit, with adjusted operating profit down JPY16.2 bn YoY.

Revenue(JPY bn)

NAND -32.2
DRAM -0.4
Logic/Foundry -5.9
Others +0.9

Adjusted Operating profit(JPY bn)

Sales decrease -17.9
Improve gross profit margin +1.5

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

1Q

2Q

3Q

FY24/3
4Q

Full year

1Q

2Q

Revenue

56,03564,38565,21660,085

245,72132,71044,995Gross profit

23,09027,48926,35923,867

100,805

14,27519,890

41.2%

42.7%

40.4%

39.7%

41.0%

43.6%

44.2%

14,70018,102

17,154

14,29564,251

5,614

11,035Gross profit margin

Adjusted operating profit
Adjusted operating profit margin

26.2%

28.1%

26.3%

23.8%

26.4%

17.2%

24.5%

10,796

12,473

12,193

10,52345,985

3,782

7,304

19.3%

19.4%

18.7%

17.5%

18.7%

11.6%

16.2%

12,984

16,407

15,527

11,14656,064

3,990

9,383

23.2%

25.5%

23.8%

18.6%

22.8%

12.2%

20.9%

Income before income tax

12,901

16,42915,667

10,89855,895

3,727

9,145

Income before income tax margin

23.0%

25.5%

24.0%

18.1%

22.7%

11.4%

20.3%

Net income

9,605

11,297

11,064

8,339

40,305

2,655

6,158

Net income margin

17.1%

17.5%

17.0%

13.9%

16.4%

8.1%

13.7%

R&D expenses

2,688

3,293

2,912

3,532

12,425

2,932

3,023

736

2,853

2,151

828

6,568

5,077

2,071

2,529

2,563

2,600

2,612

10,304

2,637

2,671

Adjusted net income
Adjusted net income margin

Operating profit
Operating profit margin

Capital expenditures
Depreciation and amortization

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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

1,592
105

1,593
16

1,592
156

1,592
76

26

28

29

Total adjustments
Adjusted Operating Profit

1,723
14,700

1,637
18,102

Net income
Other income
Other expenses(Adjustments)
Purchase price allocation amortization
Stand-alone related expenses

9,605
-30
23

(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

FY24/3
1Q

2Q
3,990
-30
45

9,383
-110
33

6,369
353

1,592
1

1,592
10

90

173

16

127

1,777
17,154

1,758
14,295

6,895
64,251

1,609
5,614

1,729
11,035

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

1,592
105

1,593
16

1,592
156

1,592
76

6,369
353

1,592
1

1,592
10

26

28

29

90

173

16

127

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

-497
3,782

-506
7,304

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Key Balance Sheet Items
End of 4Q
FY23/3(JPY mn)
AssetsCurrent
AssetsEnd of 2Q
FY24/3End of 4Q
FY23/3(JPY mn)
Current
Liabilities

End of 1Q
FY24/3End of 2Q
FY24/3Loans payable

6,000

6,000

6,750

33,588Trade and other payables

41,79028,982

29,64580,27386,283Contract liabilities

28,91832,06829,354

1,917

1,809

1,213

Other current liabilities

21,46913,87515,009222,644

205,542

208,634

Total current liabilities

98,17780,92580,75818,77523,227

24,32591,50091,50087,750Goodwill

59,06559,06559,065

Other non-current liabilities

19,705

19,151

19,395Intangible assets

62,96861,42059,941

Total non-current liabilities

111,205

110,651

107,145

Other non-current assets

6,811

7,651

8,074

Total Liabilities

209,382

191,576

187,903

Total non-current assets

147,619

151,363

151,405

EquityTotal Equity

160,881

165,329

172,136

370,263356,905

360,039

Total Liabilities and Equity

370,263356,905

360,039

Cash and cash equivalents

106,053

94,49387,550Trade and other receivables

47,47728,967

Inventories

67,197

Other current assets
Total current assets

Non-current Property, plant and equipment
AssetsTotal Asset

End of 1Q
FY24/3Liabilities

Non-current Loans payable
Liabilities

End of 4Q
FY23/3Equity ratio

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

43.5%

46.3%

47.8%

Debt equity ratio

0.6

0.6

0.6

Net cash (JPY mn)

6,847-4,659-8,491

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Cash Flow

FY23/3(JPY mn)

1Q

2Q

FY24/3

3Q

4Q

Full Year

1Q

2Q

CF from operating activities-1,95022,120-3,351

13,17429,993-7,365-2,030

CF from investing activities-982-1,657-2,069-3,117-7,825-5,278-2,037-2,932

20,463-5,42010,05722,168-12,643-4,067-120-2,425-163-22,405-25,113-167-3,171

108,399

106,464

124,198

118,403-

106,053

94,493

106,464

124,198

118,403

106,053-

94,49387,550Free CF
CF from financing activities
Cash and cash equivalents
at beginning of the quarter
Cash and cash equivalents
at end of the quarter

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Sustainability Management: Materiality
Identified five materiality to accelerate the solution of issues. Identify the priority issues from subjective and objective
perspectives and engage in activities with KPI set for each issue to promote sustainability management
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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Key Activities for 2H FY2024/3
Business Activities
 Earned the 2023 EPIC Distinguished Supplier Award from Intel Corporation (June 23)
 Recognized in Customer Satisfaction Survey by TechInsights as “10 BEST SUPPLIERS” for 26th consecutive

years and won “THE BEST SUPPLIERS” award recognizing excellent semiconductor suppliers by producttypes. (May 23)
 Exhibited at semiconductor industry exhibitions held in various regions, including “SEMICON® China 2023”(June 2023), “SEMICON® West 2023” (July 2023), and “SEMICON® Taiwan 2023” （September 23).
 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 andTechnology's Initiative to Establish Next-generation Novel Integrated Circuits Centers (X-nics). (July 23)

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Key Activities for 2H FY2024/3
ESG Initiatives
 Signed the Women’s Empowerment Principles (WEPs), which offer guidance to businesses actively promoting

women’s empowerment in the workplace. (April 23)
 Received “Kurumin Certification” from the Minister of Health, Labour and Welfare, recognizing our initiatives tosupport childcare. (July 23)
 Held Open-Air Environmental Classes at nursery facilities as part of local contribution activities. (June 23)
 Sponsored the “Owara Kaze no Bon” festival in Yatsuo, Toyama City, where the Toyama Technology &Manufacturing Center is located. (September 23)
 Enhanced the “Compliance Whistleblower System” on the company website to strengthen compliance. (June 23)

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