Advantest Corp ((ATEYY)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Advantest Corp recently held its earnings call, revealing a mixed sentiment amidst the company’s current market conditions. While strong market positioning and signs of recovery were noted, challenges such as delayed recovery in certain segments and manufacturing capacity issues present hurdles. Despite these obstacles, there are positive forecasts for the future.
Quarter-on-Quarter Sales Growth
Advantest Corp reported an increase in sales across all segments quarter-on-quarter, with memory tester sales particularly benefiting from high-performance DRAM for generative AI. This growth highlights the company’s ability to capitalize on emerging technology trends.
Revised Sales and Operating Income Forecast
The full-year sales forecast has been revised upwards by JPY 10 billion to JPY 480 billion, reflecting increased demand for memory testers. Additionally, the operating income forecast saw an upward revision of JPY 5 billion, indicating financial optimism amidst market challenges.
Strong Market Position
Advantest Corp maintains a robust market position, estimating its market share for both SoC testers and memory testers to be in the upper 50% range for the calendar year 2023. This strong market presence underscores the company’s competitive edge.
Future Demand Expectations
Looking ahead, the company anticipates increased demand for high-performance semiconductors, including HPC and AI, expected to rise in the second half of 2024. The memory tester market size is projected between $1.3 billion to $1.6 billion, driven by AI advancements.
Year-on-Year Decline in Sales
Despite quarter-on-quarter growth, sales are trending negatively year-on-year due to a sluggish semiconductor market. This decline highlights ongoing challenges in achieving a full recovery.
Delayed Recovery in SoC Tester Demand
The recovery of SoC tester demand is progressing slower than anticipated, impacted by weak smartphone-related business. This delay signals a potential area of concern for the company’s future growth.
Challenges in Meeting Memory Tester Demand
While demand for memory testers remains robust, Advantest faces challenges in scaling its manufacturing capacity to meet this demand, presenting a significant operational hurdle.
Flat Year-on-Year SLT Business
The system-level test business is expected to remain flat year-on-year, influenced by specific customer investment trends and broader sluggish semiconductor market conditions.
Elevated Inventory Levels
Inventory levels remain high, with the company addressing customer requests for pushouts. This situation impacts supply chain management and could affect future performance.
Forward-Looking Guidance
For the third quarter of FY 2023 and looking into 2024, Advantest Corp reports increased sales quarter-on-quarter in all segments. Notably, Semiconductor and Component Test Systems reported a rise in SoC tester sales to JPY 63.3 billion and memory tester sales to JPY 25 billion. Despite a year-on-year decline, recovery signs are evident. The full-year sales forecast has been adjusted upwards to JPY 480 billion, with a stable gross profit margin of about 50%. Operating income expectations have been increased by JPY 5 billion. The company foresees a SoC tester market size of $3.3 billion to $3.6 billion and a memory tester market size between $1.3 billion to $1.6 billion for 2024, driven by demand for high-performance DRAM related to AI.
In conclusion, Advantest Corp’s earnings call depicted a landscape of mixed sentiment with notable strides in market share and future demand expectations. However, challenges such as delayed segment recovery and capacity limitations underscore the hurdles ahead. The company’s upward revisions in sales and operating income forecasts reflect optimism, but the year-on-year sales decline and elevated inventory levels highlight areas requiring strategic focus. Advantest remains well-positioned to leverage future opportunities despite current challenges.
