COMPANY RESEARCH AND ANALYSIS REPORTRS Technologies
3445Tokyo Stock Exchange First Section

21-Oct.-2020
FISCO Ltd. Analyst

Yuzuru SatoFISCO Ltd.
http://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Results for FY12/20 1H surpassed initial forecasts due to stronger-than-anticipated demand. ...................

01

2. New China plant to start operations in earnest one month behind schedule in November 2020. ................

01

3. Results are expected to enter a re-growth period from FY12/21 onwards. ..................................................

02■Company overview--------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. History................................................... ......................................................................................................

03

2. Reclaimed wafers and prime wafers...... ......................................................................................................

04

3. Business description. . ..................................................................................................................................

07■Business trends----------------------------------------------------------------------------------------------------------------------------------------------------------- 10
1. FY12/20 1H results summary................. ......................................................................................................

10

2. Developments by business segment..... ......................................................................................................

11

3. Financial condition and management indicators. .........................................................................................

14■Forecasts--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 15
1. Company forecasts for FY12/20............ ......................................................................................................

15

2. Medium-term management plan............ ......................................................................................................

16■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 20

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html█ Summary
Earnings are forecast to return to a growth track from 2021,
following a temporary downturn as a Chinese subsidiary relocatesproduction lines in the latter half of 2020
RS Technologies <3445> (hereafter, also “the Company”) is a top provider of reclaimed silicon wafers, a major
material for semiconductor chips. It has factories in Japan and Taiwan and the largest global market share withapproximately 33% (the Company’s estimate) in mainstay 12-inch reclaimed wafers (300 mm). In 2018, the Company
entered the integrated manufacturing business of prime wafers in China to aim for the acceleration of growth withtwo pillars including reclaimed wafers.
1. Results for FY12/20 1H surpassed initial forecasts due to stronger-than-anticipated demand
In the FY12/20 1H consolidated results (January to June 2020), net sales increased 1.1% year-on-year (YoY) to¥12,653mn, while operating income decreased 6.3% YoY to ¥2,580mn. Both net sales and operating income
finished the period above the Company’s initial plans (net sales of ¥11,200mn and operating income of ¥1,400mn).
Considering the impact of the economic slowdown due to U.S.-China trade friction and the spread of coronavirus
disease 2019 (COVID-19) (hereafter, “the COVID-19 pandemic”), the Company had anticipated a sluggish performance in the prime silicon wafer manufacturing and sales segment. However, business performance did not
deteriorate as much as anticipated because of continued demand growth, including moves by customers to build
up inventories throughout FY12/20 1H. Production also increased due to capital investment against the backdropof surging demand from customers in the silicon wafer reclaim business in Japan and Taiwan. These factors led toabove-plan net sales and operating income.
2. New China plant to start operations in earnest one month behind schedule in November 2020
For FY12/20 results, the Company is forecasting net sales of ¥23,500mn, a decrease of 4.1% YoY, and operating
income of ¥4,300mn, a decrease of 8.8% YoY. The Company has thus upwardly revised its forecasts from its
initial plans (net sales of ¥22,700mn and operating income of ¥3,200mn). These upward revisions factor in theoutperformance of net sales and operating income through FY12/20 1H. On a semiannual basis, the Company
has reduced its forecast of net sales for FY12/20 2H from its initial plan of ¥11,500mn to ¥10,900mn. This forecastreflects, among other factors, the fact that the start of operations of the new prime wafer plant in China was pushed
back by one month compared with the initial plan to November 2020. There has been no change in the assumed
foreign exchange rate of ¥108 to US$1.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html

Summary

3. Results are expected to enter a re-growth period from FY12/21 onwards
From FY12/21 onward, results are expected to return to a growth stage due to expansion in the production capacityof 12-inch reclaimed wafers in Japan and Taiwan and 8-inch prime wafers in China. The Company has decided
to increase the monthly production capacity of 12-inch reclaimed wafers at the Taiwan plant, where demand issurging, one year ahead of schedule, from 150,000 to 170,000 wafers. Together with production capacity in Japan,
monthly production capacity will expand from 400,000 to 440,000 wafers. For 8-inch prime wafers in China, monthly
production capacity is forecast to increase from 70,000 to 120,000 wafers by the end of 2021, as newly installed
production lines come online. China has unveiled plans to develop the semiconductor industry as a national policy.
The Company plans to establish and launch a joint-venture company to conduct the 12-inch reclaimed wafer andprime wafer businesses with Grinm Advanced Materials, a state-owned company, and a Chinese government-related
investment fund (the Company’s investment ratio is 19.99%). For reclaimed wafers, the Company plans to invest¥3.8bn in a new plant in Dezhou for the first investment period and to start operations in FY2022, with monthly
production capacity of 50,000 wafers. Conversely, for prime wafers, it will invest ¥5bn by FY2021 to establish atest line for R&D in the Beijing plant (monthly production capacity of 10,000 wafers), and in the future, it is aiming
to establish a mass production system with a monthly production capacity of 300,000 wafers. As the total for bothbusinesses, it will be necessary to invest ¥8.8bn up to FY2022. But of this amount, the Company plans to invest
only approximately ¥1bn, and its strategy is to expand its businesses while keeping down risk in the initial period.
The targets in the medium-term management plan are net sales of ¥31,600mn and operating income of ¥6,800mn in
FY12/23, and at FISCO, we think these targets are fully attainable if the new plant in Dezhou makes a smooth start.
Key Points
Results for FY12/20 1H surpassed the Company’s initial plans due to a smaller-than-anticipated downturn inthe prime wafer business.
• Temporary downturn in earnings expected in FY12/20 2H in connection with plant relocation in China.
• Results forecasts for 2021 could slow down slightly against existing targets due to the impact of active
investment in production expansion in the Chinese prime wafer market.
•

Results trends
Net sales (left)（¥mn）

Operating income (right)
5,751

30,000

6,000

4,717

25,000

（¥mn）

4,300

20,000

5,000
4,000

2,982
15,0003,000
25,47810,000

1,585

5,000

8,864

24,501

23,5002,000

10,932

1,000

0

0

FY12/16

FY12/17

FY12/18

FY12/19

FY12/20 E

Source: Prepared by FISCO from the Company’s financial results

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02 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html█ Company overview
The Company started out as a reclaimed silicon wafer business andexpanded its operations to the prime wafer manufacturing and sales
business in China
1. History
RS Technologies (hereafter, “the Company” or “RST”) was established in December 2010 in order to take over thewafer reclamation business of Rasa Industries <4022>, which had withdrawn from the business. Since then, it
has been developing its silicon wafer reclamation processing business and currently has two plants, the Sanbongi
plant in Osaki City, Miyagi Prefecture (formerly Rasa Industries’ plant) and the Tainan plant in Taiwan (completed in
December 2015), which is owned by a subsidiary, RSTEC Semiconductor Taiwan, established in February 2014.
Also, in December 2017, the Company announced that it would be launching a prime wafer business in China.
In January 2018, together with Chinese state-owned company General Research Institute for Nonferrous Metals(currently, Grinm Advanced Materials, hereafter, GRINM) and Fujian Kuramoto, it established a joint venture, Beijing
GRINM RS Semiconductor Materials Co., Ltd. (BGRS). At the same time, BGRS invested in GRINM Semiconductor
Materials Co., Ltd., (hereafter, GRITEK), which was a subsidiary of GRINM that manufactures and sells silicon ingot
and prime wafers, and it was made a wholly owned subsidiary. The investment ratios in BGRS are 45% for RST,
49% for GRINM and 6% for Fujian Kuramoto. So although RST’s investment ratio is below 50%, Fujian Kuramoto
is an investment company managed by a relative of RS Technologies’ President Nagayoshi Ho, so in actual terms,
RST owns more than 50%, and moreover, RST appointed three of the five directors that comprise the BGRS Boardof Directors. Therefore, RST effectively holds the management rights and BGRS is deemed to be a subsidiary within
its scope of consolidation.
The reason for the complex investment scheme for BGRS is that, if a Chinese company’s investment ratio fromlocal capital is 50% or above, it is treated by the Chinese government and local governments as a domesticallyfunded company and is eligible to receive various types of subsidies and other funding from them. Such companies
also receive preferential treatment in areas like capital investment and taxes, giving them competitive advantages
over foreign-funded companies. In August 2018, together with the City of Dezhou, Shandong, GRITEK established
Shandong GRINM Semiconductor Materials Co., Ltd., (hereafter, Shandong GRITEK) as a joint venture to be a new
manufacturing base (investment ratios: GRITEK 80% and Dezhou 20%).
In addition, in 2013, RST started a purchasing and sales business mainly for semiconductor-related manufacturing
equipment and parts. It also acquired the shares and made wholly owned subsidiaries of Union Electronics Solutions
Co., Ltd., a semiconductor trading company, in May 2018, and then DG Technologies, which manufactures andsells semiconductor manufacturing equipment consumable parts (quartz glass and silicon parts) in January 2019.
Moreover, RST has been expanding its business fields in 2020 through such means as establishing Shanghai
Union Semiconductor Co.,Ltd. and Beijing Gritek & IVT Valve Technology Co., Ltd., in order to expand sales ofsemiconductor-related materials in China.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html

Company overview

The Company’s strength in reclaimed wafers lies in the large numberof times they can be reclaimed through precision inspection andpolishing technologies
2. Reclaimed wafers and prime wafers
To appreciate the strengths and growth potential of the Company’s mainstay reclaimed silicon wafer business andprime wafer business, it is essential to understand the manufacturing process of and role played by silicon wafers
as well as the manufacturing methods used to produce them. We provide an explanation below.
(1) Silicon wafers“A semiconductor” is a substance that has intermediary electrical conductivity properties between a conductor,
which conducts electricity, and an insulator, through which electricity cannot pass. Using these properties, integrated circuits (IC) are manufactured to fabricate highly dense electric circuits. The Micro-Processing Unit (MPU),
which is ‘the brain’ of the PC, and memory to store information (such as flash memory and DRAM), are typicalexamples of semiconductors. They are installed in various applications, including home electrical appliances,
information-communication devices, and automotive electrical equipment, and are also known as the “rice ofindustry.”
Various materials are used as the substrates of these semiconductors according to the required performance,with silicon being among the most widely used. An ingot of a single crystal silicon is pulled out of high-purity,
melted polycrystalline silicon and then sliced thinly into wafers, and these wafers are called “silicon wafers.”
Semiconductor manufacturers fabricate detailed circuits on silicon wafers and manufacture semiconductor chips.
*	The thickness of a single 12-inch wafer is determined as 775 μm ± 25 μm, and several hundred silicon wafers can beobtained from a single ingot.

Semiconductor manufacturing process

Source: Prepared by FISCO from the Company’s results briefing materials

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html

Company overview

Currently, various sizes of silicon wafers are mass produced, and by size, they range from 5 inches (125 mm) indiameter to 6 inches (150 mm), 8 inches (200 mm), and 12 inches (300 mm). For state-of-the-art semiconductorsthat require high integration (miniaturization), 12-inch wafers are mass produced. This is because if miniaturization
can be progressed and more semiconductor chips manufactured from a single silicon wafer, it becomes possible
to keep down the manufacturing costs per item. Alongside this trend toward a large diameter for the wafer size,
wafer-manufacturing technologies are also tending to become more complex, which is raising the barrier to entry.
In the last few years, there has been a movement to explore the possibilities for an 18-inch (450 mm) wafer as thenext generation of wafers, but currently this movement has subsided. This is because, the technological aspect
as seen from the manufacturing-equipment side is becoming increasingly complex and the capital investment
costs for mass-production lines are rising, yet it is unknown whether there is sufficient demand to recover theinvestment costs. Therefore, for the time being, the 12-inch wafer is expected to remain the main product.
Also, not all silicon wafers introduced into the semiconductor manufacturing line are used to manufacture semiconductor chips. Semiconductors are completed by repeatedly creating fine circuit patterns on the silicon wafer,so the manufacturing process is carried out in tandem with tests and evaluations to check the finishing conditions
in each process. The silicon wafers used for evaluation purposes have names including “test wafers,” “dummy
wafers,” and “monitor wafers,” (hereafter, in this report they are collectively referred to as “monitor wafers”), andreclaimed wafers are used for these monitor wafers. Conversely, the wafers that are actually processed for thesemiconductor chips are generally called “prime wafers” (in the name of the Company’s business segment, they
are called “prime silicon wafers,” but they refer to the same thing).
(2) Reclaimed wafers
Currently, the amount of monitor wafers used is estimated to be about 20% of the total amount of wafers
deployed on the semiconductor manufacturing line. Although it is basic to use a new wafer for the monitor
wafer, semiconductor manufacturers often seek to reuse (reclaim) the monitor wafers they have used. This is inorder to reduce the costs of manufacturing semiconductors as much as possible. At that time, semiconductor
manufacturers recycle used monitor wafers with a reclaiming company such as the Company and reuse them. As
the price of a reclaimed wafer is approximately 25% of the price a new wafer, if the number of wafers introduced
remains the same, it is possible to reduce the wafer-introduction costs by around 15% simply by using reclaimed
wafers for the monitor wafers.
In the wafer-reclamation process, an acceptance inspection is conducted and all elements, such as the insulating
film formed in the semiconductor manufacturing process, are removed. After that, polishing is performed in aclean room to ensure that the surface of the wafer is completely flat, followed by precision cleaning, and thenshipment. A strength of the Company is its technological capabilities, as in the film-removal process, it is able
to strip all of the film through a chemical process and perform precision polishing that keeps any damage to thewafer’s surface to the absolute minimum. This increases the number of times a wafer can be reclaimed to 10 or
20 times, which is around double the industry average. The thickness of a 12-inch prime wafer is approximately
775 μm, and it is said that up to around 700 μm can be used for a monitor wafer. Therefore, the less the amount of
the wafer’s thickness that is removed by polishing in a single reclamation process, the higher the number of times
it can be reclaimed. For example, if the wafer thickness is reduced by 10 μm in a single polishing, the number oftimes the wafer can be reclaimed is only 7 or 8 times, but if the polishing can be kept down to a reduction of 5
μm, this number increases to as high as 15 times. Another of the Company’s strengths is that it has technologies
to remove metal impurities. In particular, it has been certified by two semiconductor manufacturers to remove
copper (Cu). Currently, it is not actively receiving requests for this service, but if the environment changes in the
future, such as wafer demand-supply conditions becoming tight and costs increasing, then demand for it may rise.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html

Company overview

The wafer-reclamation process

Source: Prepared by FISCO from the Company’s results briefing materials(3) Prime wafers
Prime wafer has the same meaning as new wafer. Wafer processing consists of front-end processing including
silicon crystal ingot pulling and back-end processing including the slicing of ingots into wafers and polishing thesurface of the wafers (manufacturers that handle both front-end and back-end processes are called integrated
manufacturers). While all these processes require advanced technology, the success of silicon wafer manufacturingbusinesses depends largely on front-end processing yields. Production yield does not merely refer to the numberof units that can be produced in a given amount of time. The more important factor is the number of good quality
prime wafers that can be produced from one silicon crystal ingot (because there is a large difference in pricebetween new prime wafers and new monitor wafers).
GRITEK manufactures and sells prime wafers in China. One of its strengths is that, as previously stated, it canutilize various preferential treatment systems as a domestically funded company, and that the Company could
benefit from various Chinese government measures given that the semiconductor industry is being developed asa national policy. Currently, it conducts sales only to approximately 60 to 70 semiconductor manufacturers within
China. But looking to the future, it is aiming to improve the quality of its products to the global standard and tosell to the whole world through RST’s sales network.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies

21-Oct.-2020

3445 Tokyo Stock Exchange First Section

https://www.rs-tec.jp/en/index.html

Company overview

The reclaimed wafer business has a leading global share of the
12-inch market, at 33%, and its main customers include TSMC andSony.
3. Business description
The Company classifies its business operations into three business segments, specifically the reclaimed wafer
business, the prime silicon wafer manufacturing and sales business, and the semiconductor-related equipment
and materials, etc., business, and other businesses, and discloses information on each segment. Looking at thepercentages of results by business segment in FY12/20 1H, the reclaimed wafer business provided 45.1% of net
sales and 67.7% of operating income, and the prime silicon wafer manufacturing and sales business 34.3% of net
sales and 28.5% of operating income. These two businesses are the Company’s core earnings drivers.

Percentages of results by segment (FY12/20 1H)
0.3%

Reclaimed wafer business

20.3%

28.5%

3.1%
0.7%

Prime silicon wafer manufacturing andsales business

Outer ring: Net sales
Inner ring: operating
incomeSemiconductor-related equipment andmaterials, etc., business

45.1%

Other businesses

67.7%
34.3%

Source: Prepared by FISCO from the Company’s financial results(1) Reclaimed wafer business
The reclaimed wafer business is conducted by the Company and its Taiwanese subsidiary. At the end of 2019, themonthly production capacity for mainstay 12-inch wafers by the Company was 250,000 wafers (it has a production
capacity of 120,000 wafers for 8-inches and below), while Taiwan has a capacity for 150,000 wafers, for a total
400,000 wafers. On a volume basis, it has the top share worldwide, at around 33% (the Company’s estimate). Itscompetitors in Japan are Hamada Heavy Industries Ltd., and Mimasu Semiconductor Industry Co., Ltd., <8155>,and these three Japanese companies have around 60% to 70% of the global market share.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html

Company overview

The Company’s share of the 12-inch reclaimed wafer market

Source: Prepared by FISCO from the Company’s results briefing materials

The percentages of the number of wafers sold by region (FY12/18) are as follows. For 12-inch wafers, Japan
provides 40.0% and Taiwan 29.8%, so these two countries provide around 70% of the total. Conversely, 8-inch
wafers stand out for having higher numbers for Europe and the United States, at 46.3% and 23.5%, respectively. Its main customers are the major semiconductor manufacturers, such as TSMC <TSM> in Taiwan, Sony
Semiconductor Manufacturing Corporation and Kioxia Corporation in Japan, Intel <INTC> in the United States,
and STMicroelectronics <STM> and Infineon Technologies in Europe.

ウェーハ再生事業の地域別出荷数構成比（2018年
年度）
日本

台湾

米国

欧州

中国
1.3%

1.9%

6.2%

4.4%

6.0%

40.0%

17.8%

アジア

4.7%

18.1%
8インチ

12インチ

46.3%

23.5%

29.8%

Source: Prepared by FISCO from the Company’s financial results briefing materials

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html

Company overview

Looking at the market shares by region (FY12/18), the Company’s shares of the main markets for 12-inch wafers
are 43.4% for Japan, 26.4% for Taiwan, and 19.3% for the United States, and also 67.9% for Europe and 35.6%
for China, indicating that it has a high share of the market as a whole. Conversely, in the 8-inch wafer market,
the Company is notable for having high shares in Europe, at 58.0%, and the United States 28.2%, but relatively
low shares in the other regions, including Japan. This is considered to be because the Company is focusing on
12-inch wafers. Looking at the planned construction of 12-inch semiconductor plants in the future, there areseven plants planned for China and five for Europe, which are the top ranked regions for the number of plannedplants. Considering that the Company currently has high market shares in these regions, at FISCO we think that
the Company’s global share may rise even higher in the medium term.
Planned construction of new 12-inch semiconductor plants in the reclaimed wafer business

Source: Prepared by FISCO from the Company’s results briefing materials(2) Prime silicon wafer manufacturing and sales business
The prime silicon wafer manufacturing and sales business is conducted by the Chinese subsidiary GRITEK,
and two-thirds of its sales are prime wafers and one-third of its sales are consumables and ingot. At the end of
2019, the Beijing plant’s monthly production capacity of prime wafers was 50,000 5-inch wafers, 150,000 6-inch
wafers, and 70,000 8-inch wafers. For the 8-inch wafers, it externally procures the ingot for products that require
high quality, but since 2019, it has been gradually increasing the rate of in-house manufacturing. Its prime wafer
customers are mainly Chinese semiconductor manufacturers, and its customer numbers have increased to around
60 to 70 companies. These customers primarily manufacture analog semiconductors for use in home electronic
appliances, automobiles and other products. GRITEK also sells consumables and ingot overseas.
(3) Semiconductor-related equipment and materials, etc., business
The semiconductor-related equipment and materials, etc., business includes sales of semiconductor manufacturing equipment and semiconductor materials and parts that are purchased and sold by the Company, and sales
from the subsidiaries Union Electronics Solutions and DG Technologies. It mainly purchases the semiconductor
manufacturing equipment from Japanese semiconductor manufacturers and others (including some used products), and primarily sells them to semiconductor manufacturers in China, South Korea, Taiwan and other markets.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies

21-Oct.-2020

3445 Tokyo Stock Exchange First Section

https://www.rs-tec.jp/en/index.html

Company overview

Also, Union Electronics Solutions mainly handles the power semiconductors of Hitachi Power Semiconductor
Device, Ltd., as its first distributor, and also the microcontrollers (MCUs) and other products of Renesas Electronics
Corporation <6723>. Its annual net sales are on a scale of around ¥1bn. DG Technologies manufactures and sells
semiconductor manufacturing equipment consumable parts (quartz glass and silicon-related parts), selling themto major domestic semiconductor manufacturing equipment manufacturers and semiconductor manufacturers
such as TSMC. Its annual net sales are on scale of slightly less than ¥2bn, while it purchases silicon-related parts
mainly from GRITEK in China.
(4) Other businesses
The sales of other businesses are comprised of electricity-sales revenue from the solar power generation businessstarted in 2013 (the power generation capacity is approximately 1.59 MW), and also technical consulting services
and other services provided by the Company in the semiconductor wafer manufacturing process. However, its
effect on results as a whole is negligible.

█ Business trends
Results for FY12/20 1H surpassed the Company’s initial plans due toa smaller-than-anticipated downturn in the prime wafer business
1. FY12/20 1H results summary
In FY12/20 1H consolidated results were characterized by slightly higher net sales and small decreases in profits.
Net sales increased 1.1% YoY to ¥12,653mn, while operating income decreased 6.3% YoY to ¥2,580mn. Ordinary
income rose 0.8% YoY to ¥2,898mn. Net income attributable to owners of the parent decreased 2.1% YoY to¥1,686mn. In addition, sales and profits both finished the period above the Company’s initial plans.
FY12/20 1H consolidated results(¥mn)
FY12/19 1H

FY12/20 1H

Results% of sales

Initial plan

Results% of sales

Net sales

12,515-

11,20012,653

-

YoY
1.1%

Vs. plan
13.0%

Cost of sales

8,166

65.3%

-

8,491

67.1%

4.0%

-

SG&A expenses

1,593

12.7%

-

1,581

12.5%

-0.8%

-

Operating income

2,755

22.0%

1,400

2,580

20.4%

-6.3%

84.4%

Ordinary income

2,920

23.3%

1,400

2,898

22.9%

-0.8%

107.0%Net income attributable toowners of the parent

1,723

13.8%

1,000

1,686

13.3%

-2.1%

68.7%

Source: Prepared by FISCO from the Company’s financial results

The Company generated growth in net sales, as an increase in sales reflecting higher production capacity in thereclaimed wafer business and higher sales in the semiconductor-related equipment and materials, etc. businesshelped to cover a decline in sales in the prime wafer business due to the impact of the global economic slowdown.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html

Business trends

Meanwhile, operating income decreased, as an increase in earnings supported by higher sales owing to increased
production capacity in the reclaimed wafer business was unable to fully offset a decrease in earnings due to lower
sales in the prime wafer business. That said, operating income finished the period 84.4% above the initial plan, duepartly to the curtailment of SG&A expenses along with the above-plan net sales. In addition, non-operating income
and expenses improved YoY. This improvement was mainly attributable to an improvement in financial income andan increase in foreign-exchange gain.
Looking at the results by Group company, the Company and its Taiwanese subsidiary achieved higher net sales andprofits due to a solid performance in the reclaimed wafer business at both companies. The Company’s net salesrose 17.1% YoY and its operating income increased 7.8% YoY, while the Taiwanese subsidiary posted a 41.9%
increase in net sales and a 37.2% increase in operating income. On the other hand, the Beijing subsidiary’s net sales
decreased 17.0% YoY and its operating income decreased 31.4% YoY due to the impact of the global economic
slowdown. It appears that all Group companies have surpassed the initial plans.
Business performance trends by Group company for FY12/20 1H
(¥mn)
RST

Taiwanese subsidiaryBeijing subsidiary

Other subsidiaries
Eliminationof intercompany
transactions

Results

YoY

Results

YoY

Results

YoY

YoY

Net sales

5,222

17.1%

2,375

41.9%

4,762

-17.0%

294-

Operatingincome

982

7.8%

767

37.2%

920

-31.4%-89-

Operatingincomemargin18.8%-1.6pt32.3%-1.1pt19.3%-4.1pt--Source: Prepared by FISCO from the Company’s results briefing materials

Demand for 12-inch wafers is strong, surpassing production
capacity in the reclaimed wafer business
2. Developments by business segment(1) Reclaimed wafer businessIn the reclaimed wafer business, net sales increased 8.0% YoY to ¥5,709mn and operating income rose 7.6% YoY
to ¥2,072mn. Major factors behind the increases in sales and profit were strong demand from main customers
both domestically and overseas, in addition to increases in the production capacity of 12-inch reclaimed wafers
in Japan and Taiwan in FY12/19. The monthly production capacity for 12-inch reclaimed wafers was increased
from 340,000 wafers in 2018 (220,000 wafers domestically and 120,000 wafers in Taiwan) to 400,000 wafers
in 2019 (250,000 wafers domestically and 150,000 wafers in Taiwan). The Taiwanese subsidiary has performed
strongly enough to conduct monthly production of more than 150,000 wafers.
While there were concerns about the negative impact of the COVID-19 pandemic, demand for semiconductors
for use in data centers and PCs were favorable due to stay-at-home and telework demand. In addition, amid adecrease in overall production volume of semiconductors for use in smartphones, there was surging demand in
cutting-edge fields such as 5G mobile devices and base stations and strong orders from main customers involved
in semiconductors in these fields. In 12-inch reclaimed wafers, the average unit price also increased slightly due
to growth in demand for high-grade products.

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11 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies

21-Oct.-2020

3445 Tokyo Stock Exchange First Section

https://www.rs-tec.jp/en/index.html

Business trends

Reclaimed wafer businessNet sales

（¥mn）
6,000

5,284

5,491

5,709

Operating income

（¥mn）
3,500
3,000

5,000

2,522

2,761

2,908

2,583

2,741

2,968

2,500

4,000

2,000
3,000

2,155

1,925

2,072

2,000

1,500
1,000

1,000

908

1,017

972

1,183
992

1,080

500
0

0
1H

2H

FY12/191H
FY12/20

Note: Figures in the quarterly graph include internal sales and transfer sales.
Source: Prepared by FISCO from the Company’s results briefing materials(2) Prime wafer manufacturing and sales businessIn the prime wafer manufacturing and sales business, net sales decreased 16.8% YoY to ¥4,775mn and operating
income declined 31.2% YoY to ¥872mn. The main reason for the decreases in sales and earnings was a decline
in production volume at Chinese semiconductor manufacturer customers brought about by the impact of a global
economic slowdown.
However, looking at trends on a quarterly basis, both net sales and operating income have increased for two
consecutive quarters since bottoming out in FY12/19 4Q. The main reason for the increase in net sales appears
to be stronger-than-anticipated demand, a trend driven by factors including moves by customers to build up
inventories. Moreover, profitability has been improving, owing to improving production yields for 8-inch wafers aswell as raw material cost reductions supported by a higher rate of in-house ingot manufacturing. In FY12/20 2Q,
operating income returned to a growth path, increasing 6.5% YoY.
In FY12/19 4Q, the Company posted a downturn in operating income. This downturn mainly reflected provisions
for employees’ early retirement in connection with the relocation of the Beijing plant, along with recruitment costs
for new employees ahead of the launch of the new plant in Dezhou and related personnel costs.

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12 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies

21-Oct.-2020

3445 Tokyo Stock Exchange First Section

https://www.rs-tec.jp/en/index.html

Business trends

Prime silicon wafer manufacturing and sales businessNet sales
（¥mn)
3,500

（¥mn）
7,000
5,736

6,000

Operating income

3,046

3,000

5,000

4,775

4,321

2,690

2,517
2,205

2,500

2,116

2,257

2,000

4,000

1,500

3,000

1,000

2,000

1,268

872

1,000

235
2H
FY12/19

572

537

299

253

0

0
1H

730

500

1H

-18

-500

FY12/20

Note: Figures in the quarterly graph include internal sales and transfer sales.
Source: Prepared by FISCO from the Company’s results briefing materials(3) Semiconductor-related equipment and materials, etc., businessIn the semiconductor-related equipment and materials, etc. business, net sales increased 55.4% YoY to ¥2,582mn,
and operating income rose 20.5% YoY to ¥94mn. Net sales increased mainly due to a solid performance bysemiconductor-related materials in FY12/20 2Q, in addition to a large order received in FY12/20 1Q for ultrasoundimaging equipment and inspection equipment, which are products purchased and sold by the Company. In
FY12/20 2Q, the Company posted an operating loss of ¥18mn. The Company is making capital investments to
expand the production capacity of consumable parts at DG Technologies, and an increase in expenses related
to these capital investments was the main reason for the operating loss.

Semiconductor-related equipment and materials, etc. businessNet sales
（¥mn）
3,000

（¥mn）
1,600

2,582

2,000

1,389

1,369

1,400

2,384

2,500

Operating income

1,212

1,200

1,000

1,662

994
816

846

800

1,500

600
400

1,000

200

500
78

92

94

37

41

18

74

113

0
-200

0

1H

2H
FY12/191H
FY12/20

Source: Prepared by FISCO from the Company’s results briefing materials

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13 20

-18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html

Business trends

Non-current assets increased with progress on investments in theconstruction of a new plant in Dezhou and other projects
3. Financial condition and management indicators
Looking at the financial condition at the end of FY12/20 2Q, total assets increased ¥6,247mn from the previous
fiscal year-end to ¥54,882mn. The main factors behind this change were as follows. In current assets, cash anddeposits increased ¥793mn, trade receivables rose ¥171mn, and inventories increased ¥101mn. In non-current
assets, there was an increase in construction in progress of ¥5,469mn in connection with advances in new plant
construction at the subsidiary Shandong GRITEK.
Total liabilities were up ¥4,406mn from the previous fiscal year-end to ¥17,059mn. In current liabilities, there wereincreases of ¥2,454mn in trade accounts payable and ¥107mn in accounts payable-trade. In non-current liabilities,
there was a decrease of ¥605mn in long-term borrowings and an increase of ¥1,665mn in other. Moreover, net assets
increased ¥1,841mn from the previous fiscal year-end to ¥37,822mn. This increase mainly reflected an increase of¥1,494mn in retained earnings due to the recording of net income attributable to owners of the parent, as well as
an increase in non-controlling interests of ¥420mn.
Looking at management indicators, the equity ratio, which indicates stability, decreased from 42.7% at the previous
fiscal year-end to 40.4%, while the interest-bearing debt ratio rose from 19.1% to 20.2%. The main contributing
factor was the Company’s borrowings from financial institutions to finance the construction of a new plant at
Shandong GRITEK. However, as the Company has abundant net cash (cash and deposits less interest-bearingdebt) of ¥18.0bn, it can be judged to be maintaining a sound financial condition.
Consolidated balance sheets(¥mn)
Increase/decrease amount

FY12/16

FY12/17

FY12/18

FY12/19

FY12/20 2Q

5,348

7,387

26,07432,76034,267

1,952

3,243

14,87922,156

22,949793

Non-current assets

5,333

4,843

10,516

15,873

20,614

4,740

Current liabilities

2,992

3,370

4,979

7,252

10,6783,426

Non-current liabilities

4,317

3,334

2,474

5,400

6,381

980

Total liabilities

7,310

6,704

7,453

12,652

17,059

4,406

5,147

4,033

2,812

3,962

4,469

507

3,371

5,525

29,13735,98137,822

1,841

Equity ratio

31.5%

45.1%

49.6%

42.7%

40.4%

-2.3ptInterest-bearing debt ratio

152.9%

73.1%

15.5%

19.1%

20.2%

1.1pt

Current assets(Cash and deposits)(Interest-bearing debt)
Total net assets

1,507(Stability)

Source: Prepared by FISCO from the Company’s financial results

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14 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html█ Forecasts
Temporary downturn in earnings expected in FY12/20 2H inconnection with plant relocation in China
1. Company forecasts for FY12/20
For its FY12/20 consolidated results, the Company is forecasting net sales of ¥23,500mn, a decrease of 4.1% YoY,
and operating income of ¥4,300mn, a decrease of 8.8% YoY. Ordinary income is forecast to decrease 11.4% YoY to¥4,800mn and net income attributable to owners of the parent is forecast to decline 7.8% YoY to ¥2,800mn. While
there are concerns about a resurgence in the COVID-19 pandemic in FY12/20 2H, business performance throughthe FY12/20 1H period surpassed the Company’s plans. Therefore, the Company upwardly revised its forecasts ofnet sales and profits relative to its initial plans.
However, in its initial plans, the Company had assumed that earnings would bottom out in FY12/20 1H and turnupwards from FY12/20 2H onwards. The Company has now revised its outlook and expects earnings to bottom
out in FY12/20 2H. The main reason for this revised outlook is the relocation of plant facilities to the new plant of
Shandong GRITEK. The assumed foreign exchange rate is ¥108 to US$1 (compared to the actual rate of ¥111
to US$1 in the previous fiscal year). For every appreciation of the exchange rate by ¥1 against the US dollar, theCompany’s earnings will be reduced by around ¥10 to ¥20mn on a semiannual basis.
FY12/20 consolidated results forecasts(¥mn)
FY12/19
Full-year
results

FY12/20% of sales

Initial plan

Revisedplan*

FY12/20 semiannual results% of sales

YoY

1H results

2H
forecast

Versus 1H

Net sales

24,501-

22,70023,500--4.1%

12,653

10,846-14.3%

Operating income

4,717

19.3%

3,200

4,300

18.3%

-8.8%

2,580

1,719

-33.4%

Ordinary income

5,416

22.1%

3,400

4,800

20.4%

-11.4%

2,898

1,901

-34.4%

Profit attributable to owners of parent

3,035

12.4%

2,400

2,800

11.9%

-7.8%

1,686

1,113

-34.0%

Earnings per share (EPS) (¥)

236.98187.07

216.74129.0987.65* The revised plan represents figures announced in July 2020.
Source: Prepared by FISCO from the Company’s financial results

Plans for each company have not been disclosed subsequent to the revisions to the Company’s business forecasts.
Net sales of the Chinese subsidiary in FY12/21 2H are forecast to decrease from ¥4,762mn in 1H because of the
impact of the plant relocation. Operating income is forecast to be positive, but it will decrease from the level in
FY12/20 1H. In order to relocate the 8-inch wafer line of the Beijing plant to the new plant, the Company halted
the operation of the wafer line in the latter half of July 2020. Net sales are planned to gradually start returning inNovember when the new plant will start operations in earnest. The new plant plans to install a new production linewith a monthly production capacity of 50,000 wafers, in addition to the production line to be transferred, which has
a monthly production capacity of 70,000 wafers. For this reason, the production capacity of 8-inch prime wafers in
China will increase to 120,000 wafers, which is 1.7 times the previous production capacity.
With regard to the outlook for the Company and the Taiwanese subsidiary in FY12/20 2H, firm business results are
expected. Current demand for reclaimed wafers remains favorable, and no change in these conditions are foreseen
in FY12/20 2H.

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15 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html

Forecasts

Results outlook by Group company(¥mn)
FY12/19

RS

Taiwanese
subsidiary
Chinanese
subsidiary
Other
subsidiaries

FY12/20

FY12/18
Results

Results

Net sales

10,5579,447-10.5%

9,300

-1.6%

56.2%

Operating income

2,631

1,989

-24.4%

1,700-14.5%

57.8%

Profit margin

24.9%

21.1%

-3.8pt18.3%-2.8ptNet sales

2,904

3,464

19.3%

4,000

15.5%

59.4%

972

1,185

22.0%

1,000

-15.6%

76.7%

Profit margin

33.5%

34.2

0.8pt

25.0%

-9.2ptNet sales

11,91910,058-15.6%

6,900-31.4%

69.0%

Operating income

2,049

1,564

-23.9%

200-87.2%

460.0%

Profit margin

Operating income

YoY

Initial plan

2Q
achievement
rate

YoY

17.2%

15.5%

-1.7pt2.9%-12.6pt

Net sales

-

1,532

-

2,500

63.2%

11.8%

Operating income

-

-21

-

300

-

-

Profit margin

-

-

-

-

-

-

Source: Prepared by FISCO from the Company’s results briefing materials

With increasingly active investment in expanding production in the
Chinese prime wafer market, trends in the future supply-demandbalance will need to be watched closely
2. Medium-term management plan
The Company announced its Medium-Term Management Plan (four year plan) at the beginning of the fiscal year.
The outlook for FY12/20 calls for sales and profits to decrease due to factors including the impact of the plant
relocation at the Chinese subsidiary. However, the Company will transition to a growth stage from FY12/21. It istargeting net sales of ¥31,600mn and operating income of ¥6,800mn for FY12/23. The Company aims to increase
the operating margin from 19.3% in FY12/19 to 21.5% in FY12/23. Depreciation expenses will increase due toincreased investment, but will be offset by the positive effect of increased net sales. The compound average growthrate for the four-year period starting in FY12/19 is 7% for net sales and 10% for operating income. During this period,a growth rate of 5% is assumed for the semiconductor market.
In the prime silicon wafer manufacturing and sales business, there has been increasingly active investment in
expanding the production of prime wafers, along with the deterioration in the global economy due to the COVID-19
pandemic and intensified U.S.-China trade friction. In 8-inch wafers, Tianjin ZHONGHUAN Semiconductor JointSTOCK Co., Ltd. plans to increase its monthly production from the current 200,000 wafers to 300,000 wafers within2020 and 700,000 wafers in the future. Additionally, Ferrotec Holdings Corporation <6890> has unveiled plans toincrease its monthly production from the current 100,000 wafers to 350,000 wafers by the end of 2021. Trends inthe supply-demand balance of 8-inch wafers in the Chinese market will need to be watched closely going forward.
Meanwhile, in the reclaimed wafer business, TSMC, a major customer, has been strengthening its competitivenessfurther in cutting-edge semiconductors. This trend will act as a tailwind for the Company over the medium term. Thisis because TSMC plans to construct a semiconductor plant with a monthly production capacity of 20,000 wafers in
Arizona, U.S.A. in 2024, and when the new plant starts operations, it will be supplied with the Company’s reclaimed
wafers. TSMC has highly rated the quality and technological capabilities of the Company’s reclaimed wafers.

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16 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html

Forecasts

Medium-term management plan(¥mn)
FY12/19
Results

FY12/20

YoY

Initial plan

Revisedplan

FY12/21YoY

FY12/22

FY12/23

Forecasts

YoY

Forecasts

YoY

Forecasts

YoY

Net sales

24,501-3.8%

22,70023,500-4.1%

27,00014.9%

29,80010.4%

31,600

6.0%

Operating income

4,717-18.0%

3,200

4,300

-8.8%

4,800

11.6%

6,100

27.1%

6,800

11.5%

19.3%

-

14.1%

18.3%

-

17.8%

-

20.5%

-

21.5%

-

5,416

-11.8%

3,400

4,800

-11.4%

5,000

4.2%

6,400

28.0%

6,900

7.8%

15.0%

20.4%

-

18.5%

-

21.5%

-

21.8%

-

Operating income margin
Ordinary income

22.1%

-

Profit attributable to owners ofparent3,035-16.2%

2,400

2,800

-7.8%

3,000

7.1%

3,600

20.0%

4,000

11.1%

Earnings per share

236.98-187.07

216.74-233.84-280.61-311.79-

Capital investment

6,752

15,40015,400

6,800

3,500

Undecided

-

1,000

1,000

4,500

3,300

Undecided

1,814

2,400

2,300

3,500

4,300

Undecided

Ordinary income margin(of which, the Chinese jointventure company)
Depreciation expenses

Note: Capital investment and depreciation expenses from 12/20 onward were estimated by FISCO from interviews with the Company.
Source: Prepared by FISCO from the Company’s results briefing materials and interviews with the Company(1) Reclaimed wafer businessIn the reclaimed wafer business, the Company will commence mass production at Shandong GRINM RS
Semiconductor Materials Co., Ltd. (hereafter “SGRS”)*, a joint venture in China, from 2022, in addition to ramping
up production capacity in Japan and Taiwan, with the aim of boosting its market share in the 12-inch wafer
industry. Accordingly, the Group’s overall monthly production capacity of 12-inch reclaimed wafers will increase
from 400,000 wafers in FY12/19 to 500,000 wafers in FY12/22.
*	SGRS was established as a joint venture by the Company, GRINM, and the Dezhou City Government Fund in March 2020.
SGRS will conduct manufacturing and sales of 12-inch prime wafers and the 12-inch wafer reclaim business.

Looking at the capital investment plan, domestically the Company will invest ¥0.2bn in 2020, ¥1.0bn in 2021,
and ¥0.2bn in 2022 to increase the monthly production capacity from 250,000 wafers in 2019 to 270,000 wafers
in 2021 and 280,000 wafers in 2022. Meanwhile, in Taiwan, it will invest ¥0.2bn in 2020 and ¥1.3bn in 2021
to increase the monthly production capacity from 150,000 wafers in 2019 to 170,000 wafers in 2021. In 2021,
the Company primarily plans to introduce inspection and polishing machinery to respond to miniaturization. It
had initially planned to introduce this machinery in 2022, but it decided to bring its plans forward by one year in
response to surging local demand. In China, the Company plans to establish infrastructure and other facilities in the
Dezhou plant in 2020, and to invest ¥3.8bn up to 2022 to construct and start operations of a mass production line
for 50,000 wafers a month. If mass production in China starts from 2022, the wafers currently produced in Japanand then exported to China will switch to shipments from the Dezhou plant, and the resulting excess capacity at
the Japanese plant will be targeting shipments to Japan, Asia, Europe and the United States.
Plan to strengthen the production capacity for 12-inch reclaimed wafers
Plant

Monthly production capacity at period-end
2017

2018

2019

2021

2022

Sanbongi plant

200,000 wafers

220,000 wafers

250,000 wafers

2020→

270,000 wafers

280,000 wafers

Tainan plant

100,000 wafers

120,000 wafers

150,000 wafers→

170,000 wafers

Total

→
50,000 wafers

Dezhou plant*
300,000 wafers

340,000 wafers

400,000 wafers

400,000 wafers

440,000 wafers

500,000 wafers* The Dezhou plant’s portion is from the newly established SGRS (an equity-method affiliate, with an ownership ratio of 19.99%),
and it will be responsible for about 10% of the capital investment amount.
Source: Prepared by FISCO from the Company’s results briefing materials

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17 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies

21-Oct.-2020

3445 Tokyo Stock Exchange First Section

https://www.rs-tec.jp/en/index.html

Forecasts

Capital investment plans
(¥bn)
Plant

2020

2021

2022

Details

Sanbongi plant

0.2

1.0

0.2

Plans to establish a new line to increase facilities in 2021

Tainan plant

0.2

1.3

-

Bring forward by one year the investment in miniaturization(inspection and polishing machinery) planned for 2022

Dezhou plant*

0.5

-

3.3

Total

0.9

2.3

3.5

Invest in plant improvements in 2021, first investment period in 2022

* The Dezhou plant’s portion is from the newly established SGRS (an equity-method affiliate, with an ownership ratio of 19.99%), and it will be
responsible for about 10% of the capital investment amount.
Source: Prepared by FISCO from the Company’s results briefing materials(2) Prime silicon wafer manufacturing and sales businessIn the prime silicon wafer manufacturing and sales business, Shandong GRITEK plans to increase 8-inch wafer
production capacity from the current 70,000 wafers per month to 120,000 wafers in 2021. As noted earlier, theproduction facilities of the Beijing plant will be relocated to the Dezhou plant in 2020 and a line with a monthly
production capacity of 70,000 wafers will start operations in November 2020. In addition, production is forecast
to increase to 120,000 wafers in 2021 through the introduction of a new line with a production capacity of 50,000
wafers. The Company is planning total capital investment of ¥14.0bn.
Moreover, the Company plans to establish a test line at SGRS for R&D, aimed at mass production of 12-inch prime
wafers. In 2021, SGRS will establish a line with monthly production capacity of 10,000 wafers. It plans to makea total investment of ¥5.0bn over the two years through 2021. SGRS will set the stage for mass production overthe next 1.5 to 2 years, and thereafter commence mass production as it obtains certification from semiconductor
manufacturers. In the future, it aims to put in place a mass production system with a monthly production capacityof 300,000 wafers. To realize mass production of 12-inch prime wafers, investment of large amounts of funds
on a scale of tens of billions of yen is required. The Company has held down its initial risk by establishing a joint
venture with GRINM and Dezhou City Government-related fund and confining its investment ratio in the joint
venture to approximately 20%. While there are three investing companies, the Dezhou City Government also
intends to provide support, such as granting subsidies and preferential treatment in infrastructure areas, such as
electric power and gas.
Chinese subsidiary’s investment plan for prime wafers
8 inch2020

2021

Monthly production capacity

70,000 wafers

120,000 wafers¥14.0bn

Undecided

Capital investment
12 inch (test line)

2020

2021

202X

Monthly production capacity

0 wafers

10,000 wafers

300,000 wafers

Capital investment¥0.5bn¥4.5bnUndecided

Source: Prepared by FISCO from the Company’s results briefing materials

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18 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html

Forecasts(3) China is developing its semiconductor industry as a national policy
The Chinese government is developing its semiconductor industry as a national policy, and it is aiming to increase
the rate of domestic production, which is currently only around 15%, to as high as 70% by 2025. However,
the reality is that China is still far behind in terms of semiconductor manufacturing and materials technologies.
The sales of Semiconductor Manufacturing International Corporation (SMIC), which is China’s largest foundry
manufacturer, are still only slightly more than US$3bn. In order to manufacture state-of-the-art semiconductors, itis necessary to have elements such as the manufacturing equipment to form fine-wiring patterns and high-quality
silicon wafers, and the current situation is that Chinese companies rely on overseas procurement for all of theseelements. It seems that the main reason for this is that they are not accumulating mass-production technologies
in the cutting-edge semiconductors field.
That said, in the liquid crystal display market, through active investment in the last 10 years supported bygovernment subsidies, Chinese manufacturers have succeeded in capturing market share from Taiwanese andKorean manufacturers. It is fully possible that the same development will occur in the semiconductor market,
which will undoubtedly prove beneficial for the Company, which is developing a business in China supported by
local government subsidies and other support. In FY12/19, sales to China accounted for 30.0% of total sales.
If the Company starts the mass production of 12-inch reclaimed wafers and prime wafers, it is expected that
this percentage will further rise and contribute to its earnings growth. The Company has deployed U.S.-madeinspection machinery in the reclaimed wafer inspection process. In China, it can support operations with machinerymodels that are not subject to export restrictions. Accordingly, the Company has judged that there will be no
problems with developing the wafer reclaim business in China.
(4) Business areas and the development of sales regions in the future
As its long-term strategy, the Company’s policy is to expand its business areas and sales regions. The newdevelopments it is currently planning include sales to regions other than China of prime wafers produced in China.
It needs to further improve quality to be adopted in the Japanese, U.S., and European markets. The Company isaiming to catch up and to begin sales to the world beyond China. Also, as a trading-company function, it conducts
sales in Japan and China of semiconductors, electronic parts, and consumable materials, and going forward, itplans to sell these products in the European and U.S. markets as well.
The business areas the Company is targeting

Source: Prepared by FISCO from the Company’s results briefing materials

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19 20

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

RS Technologies
3445 Tokyo Stock Exchange First Section

21-Oct.-2020
https://www.rs-tec.jp/en/index.html█ Shareholder return policy
Aiming to continuously maintain dividend payments and improve a
dividend level that reflects results
Making fair returns to shareholders is an important concern of Company management, and the Company’s basic
policy is to return value to shareholders by paying dividends. The Company decides on its dividends after considering
a comprehensive range of factors, including current profits, the targets of its medium-term management plan, andits financial strength.
For FY12/20, the Company plans to pay a dividend per share of ¥15.0 (for a dividend payout ratio of 6.9%), whichis unchanged YoY. The level of the dividend payout ratio is low compared to those of other listed companies but thisis because it is currently prioritizing investment for growth. The Company increased the dividend by ¥5 in FY12/19,
while remaining committed to rewarding shareholders through share price appreciation driven by earnings growth,and stably paying dividends.

Dividends per share and dividend payout ratio
Dividends per share (left)

（¥）
20.0

Dividend payout ratio (right)
10.0%

16.0

6.9%

8.0%

6.3%

6.3%

12.0

6.0%

3.4%

8.0

2.6%

15.0

15.0

10.0

4.0
5.0

5.0

FY12/16

FY12/17

4.0%

2.0%

0.0

0.0%
FY12/18

FY12/19

FY12/20 E

Note: The Company conducted a 2-for-1 stock split on July 1, 2017. Figures for FY12/16 have been retroactively adjusted.
Source: Prepared by FISCO from the Company’s financial results

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20 20

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FISCO Ltd.
5-11-9 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (Financial information Dept.)
Email: support@fisco.co.jp