Advantest Corp
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Advantest Corp
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Thank you for joining today's Advantest Corporation's financial briefing for the second quarter of FY 2022 taking time out of your very busy schedule.
Let me introduce today's participants from the company. Representative Director, President and CEO, Yoshida; Director, Senior Executive Officer, CFO and CCO, Executive Vice President and Corporate Administrative Group, Fujita; Senior Executive Officer, CCRO, Executive Vice President, Sales Group, Sakamoto; Senior Executive Officer, Co-CSO, Executive Vice President, Corporate Planning and Stakeholder Relations Group, Mihashi. I shall serve as a moderator for today's session, Kobayashi, IR, Corporate Planning and Stakeholder Relations Group.
First, Fujita will present financial results for the second quarter of FY 2022, followed by Yoshida's presentation on business outlook for FY 2022, after that we will take your questions. The meeting is scheduled to end at 5 p.m. Today's presentation materials are available on TDNet and our website. Please download the presentation material separately if you are attending via telephone line. Prior to the presentations, we would like to remind you a few points, in this presentation, we may state forward-looking statements based on our current forecast, which are subject to risks and uncertainties. Please be aware that actual results may differ from our forecast.
Now Fujita will start the presentation.
This is Fujita. I will explain the financial results for FY 2022 second quarter. Please turn to Page 4 of the presentation material. Second quarter sales set a record high on a quarterly basis, exceeding the record set in the previous quarter. Operating income, income before income taxes and net income grew dramatically year-on-year but declined quarter-on-quarter due to higher SG&A expenses.
Advantest's business environment grew increasingly uncertain due to concerns about global recession and signs of a slowdown in the semiconductor market, but sales of testers for high-performance semiconductors were strong in the second quarter, driving sales results in line with our plan.
Details of these achievements will be explained in the following slides. Please turn to the next page, Page 5. This is the second quarter sales by segment. First, semiconductor and component test systems. Sales were JPY 98.8 billion, a slight increase from the previous quarter. SoC tester sales were JPY 79.8 billion. While tester demand for smartphones and other consumer electronics decreased, tester demand for high-performance computing, HPC, and AI-related semiconductor development and production continued.
Memory tester sales were JPY 19.0 billion, with the customers' long-term strategic capital investment plans supporting demand on a similar high level to the previous quarter. Mechatronics Systems was JPY 12.8 billion, minus 17.5% quarter-on-quarter. Sales of nanotechnology products decreased quarter-on-quarter.
Service, support and others, JPY 27.3 billion, plus 11.8% quarter-on-quarter. Maintenance and system level test, SLT, sales were stable, supported by high demand for semiconductor testers.
Please turn to Page 6. This shows the second quarter sales by region. China is shown in yellow. Sales grew led by SoC testers. Taiwan, orange. Sales of testers for smartphone-related applications slowed down. Advantest percentage of sales to overseas customers remained high at 97.0%.
Please turn to Page 7. This shows the second quarter sales, gross profit and operating income. Gross margin was 57.5%. Despite the impact of rising parts procurement costs, our sales mix remained favorable and gross profit margin stayed high.
SG&A, including all other income and expenses, was JPY 36.8 billion. SG&A expenses increased quarter-on-quarter due to increased hiring and development-related expenses. Operating income was JPY 43.1 billion. Operating margin was 31.1%. As in the previous quarter, we maintained an operating margin of over 30%.
Please turn to Page 8. Second quarter R&D expenses and others. As for the R&D expenses, JPY 14.8 billion; CapEx, JPY 5.3 billion; depreciation and amortization, JPY 5.0 billion. As for the cash flow, in terms of free cash flow, JPY 33.7 billion; operating cash flow reached the high figure of JPY 42.4 billion. On the other hand, regarding investment cash flow, the acquisition of CREA in August and other factors resulted in expenditures of JPY 8.7 billion, bringing free cash flow to JPY 33.7 billion.
Please turn to Page 9 on financial positions. Total assets were JPY 567.3 billion. Cash and cash equivalents were JPY 114.9 billion. Inventories were JPY 133.2 billion. Regarding inventories, while parts procurement challenges continue, we are building sufficient inventory assets to meet solid customer demand. Goodwill and intangible assets were JPY 104.4 billion. Goodwill and intangible assets increased due to exchange rate fluctuations and acquisitions of CREA. Equity attributable to owners of the parent were JPY 342.4 billion. Ratio of equity attributable to owners of the parent was 60.4%.
Regarding the progress of the share repurchase announced in July, by the end of September, 3.45 million shares of common stock has been acquired for JPY 27.3 billion, equaling 34% over a upper limit of 10 million shares and 55% of our upper limit of JPY 50 billion. In addition, we canceled 8 million shares of treasury stock on September 9.
So much for the presentations on the result. Thank you.
Well then, I, Yoshida, will present on FY 2022 outlook. Please turn to Page 11. Concerns about growing geopolitical risks, higher inflation and rising interest rates have deepened fears of recession. In addition, uncertainties in the semiconductor market is rising due to factors such as the new U.S. restrictions on chips export to China.
In this uncertain global situation, which also affects the semiconductor market, final demand for cornerstone consumer electronics and products such as smartphones, personal computers and televisions is set to decline further and more semiconductor manufacturers are likely to adjust inventories and revise their plans to invest in semiconductor production equipment.
On the other hand, the digitalization macrotrend remains firm, supporting demand for chips used in data centers and AI-related products. Additionally, shortages of automotive semiconductors needed to support electrification and industrial semiconductors continue making for catchy demand picture overall.
In the tester market, some customers are moving to adjust tester utilization rate and review investment plans due to slowing demand for consumer products. However, we expect that the tester demand stemming from higher reliability needs and technological advances and high-performance semiconductors such as HPC for data centers and high-end memory will compensate for the decline.
In the SoC tester market, our latest overall market outlook anticipates a smaller market than estimated 3 months ago. On the other hand, we expect ourselves to progress according to the plan, and we also expect to grow our market share.
In the memory tester market, amidst worsening memory market conditions, some customers are reconsidering their equipment introduction plans, but others are promoting strategic capital investment plans in anticipation of long-term semiconductor demand growth. On balance, considering these varying investment attitude, demand is expected to remain firm and our market size estimate remains unchanged from 3 months ago.
Please turn to Page 12. Here is the full year forecast for fiscal 2022. In light of growing uncertainty about the future, our full year consolidated earnings forecast for FY 2022 remains unchanged from the forecast announced in July 2022. We expect sales of JPY 550 billion, operating income of JPY 170 billion, income before income taxes of JPY 174 billion and net income of JPY 130 billion.
Due to the difficulty of predicting movement in foreign exchange markets, exchange rate assumptions for our second half forecast remains unchanged at USD 1 to JPY 130 and EUR 1 to JPY 140 as previously announced. Our latest forecast for the impact of exchange rate fluctuations on FY '22 operating income is plus JPY 1.3 billion per JPY 1 of yen depreciation versus U.S. dollars and minus JPY 0.2 billion per JPY 1 of yen depreciation versus the euro.
Gross profit margin for the full year will be around 58%, unchanged from our previous forecast but we expect that operating margin will decline in second half because of increased hiring and future-oriented R&D spending.
Although we are paying close attention to changes in the external environment, such as the new U.S. restrictions on chip exports to China and changes in the macro economy, we continue to reinforce our parts procurement capabilities and expect to set new annual record for both sales and profit for the third consecutive year.
On Pages 13 and 14, these are the outlook by the business unit. First, please turn to Page 13. We have raised our full year SoC tester sales forecast for FY 2022 by JPY 5.5 billion from our July forecast to JPY 320 billion. Tester demand for applications processors APU and display drivers ICs, DDIC used in consumer electronics, such as smartphones and PCs is declining due to the impact of reduced production plans.
On the other hand, tester demand for devices used in data centers and AI-related product is certainly increasing due to the adoption of advanced processes for manufacturing high-performance semiconductors. In addition, the increase in semiconductor productions accompanying quicker and wider adoption of electric vehicles is also expected to drive tester demand.
We have lowered our full year sales forecast for memory testers for FY 2022 by JPY 1.5 billion from our July forecast to JPY 69 billion. In the memory semiconductor market, there are signs that some of our customers are revising their aggressive investment stances due to the trend of inventory adjustment and revised capital investment plans. However, we expect that tester demand from customers, who continue to actively invest in anticipation of long-term growth in high-end memory semiconductors will remain firm regardless of the present fluctuations.
Please turn to Slide 14. Our full year Mechatronics-related business sales forecast for FY 2022 is JPY 50.5 billion. Although we have slightly lowered our forecast from July, we expect continued high demand for device interface products. While demand for SEM metrology will be supported by the wider adoption of EUV lithography and increased demand for masks for material processes, maintaining an overall high level of demand for the segment.
We have also slightly lowered our services and other sales forecast from July to JPY 110.5 billion. Higher demand for device reliability is driving the adoption of system-level test for an increased number of product types and spurring growth in demand for high-precision consumables. Demand for maintenance services is also increasing due to steady growth in our installed base.
Please turn to Slide 15. This is our summary. Since the beginning of the fiscal year, semiconductor market trends have changed rapidly. Uncertainty about the future of the global economy has increased further, as has uncertainty in the semiconductor market due to factors such as the new U.S. restrictions on chip exports to China announced this month.
Tester demand for cornerstone consumer electronics will be affected to some extent by production plan revisions triggered by semiconductor inventory adjustments, which are expected to lead to lower tester utilization rates and may cause customers to revise their capital investment plans.
In light of the growing uncertainty about the future, we have not changed our previously announced full year earnings forecast for FY 2022. However, demand driven by the reinforcement of test capabilities, amidst semiconductor performance gains and demand for customers planning strategic capital investments in anticipation of the long-term expansion of semiconductor demand, is expected to compensate for the present decline in demand for certain applications.
Due to ongoing difficulties with parts procurement, our product supply is still unable to keep up with customer demand. But we expect to achieve our plan for the fiscal year through measures such as reallocating capacity from some customers whose demand has decreased to other customers.
This is the end of the explanation for the financial results for FY 2022, Q2 and FY 2022 outlook.
Although uncertainty is growing in our business environment, finally, in the following slide, I would like to explain briefly about how we perceive tester demand, how we maintain a competitive advantage in the market and how we are providing value to our customers.
Now please turn to Slide 16. Semiconductors are becoming part of our social infrastructure. More new applications such as the Metaverse are expected to appear. Unlike the market environment for front-end process equipment, the semiconductor tester market has a wide range of customers, including fabless and OSAT. Additionally, more new players are entering the semiconductor market, such as U.S. hyperscalers. Now these are different from front-end process equipment manufacturers. We believe these people can become our new customers.
In response to the dramatic increase in the amount of data being processed, semiconductors need to achieve higher functionality through improvements in circuit integration such as miniaturization and the adoption of advanced packages. At the same time, there is a need to improve energy efficiency such as by lowering power consumption to reduce the burden on the environment.
In our view, the cost for innovation in the semiconductor market is leading to increases in semiconductor production, increases in test volume due to technological evolutions and customers' investment based on their long-term perspective.
In response to these structural changes in the semiconductor and semiconductor tester markets, we contribute to the expansion of our customers' profits by leveraging our accumulated strengths and assets to offer value in both hardware and software. Our product portfolio, that supports a wide range of applications, is the source of our continued competitive advantage.
Test used to be regarded as a manufacturing cost, but customers now see it as not merely guaranteeing semiconductor performance and quality, but also as a process that can boost their competitiveness through faster time to market, time to quality and time to volume. We have been looking at the very high demand for the past 18 months. We know lead time is becoming longer. And so therefore, business negotiations with customers have already shifted out to 2024 and beyond.
As a part of enriching our power semiconductor test solution lineup, we have already begun offering our major customers' products from CREA, which we acquired in August. In the evolving semiconductor value chain, we will add customer value through test at key points throughout the whole semiconductor development and manufacturing process.
Please turn to Slide 17. We have issued our integrated annual report 2022, we published this last weekend. And so I would like to introduce some of the highlights. In the 2022 addition, we delivered an enhanced progress, a progress report on our second midterm management plan as well as fuller descriptions of Advantest's strength that lead to nonfinancial capital value creation and a conversation with outside directors that shed new light on our corporate governance. I hope you'll be able to look at this report through our website, and thank you for your attention.
Thank you very much. We will now move on to the Q&A session. From CLSA, Mr. Yoshida.
So in the second half, your sales and operating profit remained unchanged from the previous forecast. So why is this based on your forecast of the Q3 and Q4? And next year, what kind of business environment do you expect? Do you have any updates? Please share that with us.
Thank you. Yoshida will take that question.
So in Q3 and Q4, I think sales will be generated 50-50. I say that because the supply chain has been stabilized to a certain extent, but post procurement remains a challenge, and we don't have production level at the point where it should be. So we see that the sales would remain pretty much the same in Q3 and Q4. We have procured some parts and we have maximized our production level accordingly. And I think in the third quarter and fourth quarter, this situation will continue.
In Q4, if the procurement situation improves, probably, we can build on the current figure. But right now, I think it would remain 50-50.
Second question, in 2023, what is the outlook?
I'm sure you share this understanding that the state of the world economy is unforeseeable. In addition, as I mentioned earlier, the restriction on exports to China by U.S. is an additional factor that can impact the market. And the market size is hard to predict. As I mentioned in July, our outlook remains from negative 15% to positive 10%. This is the range that we gave you.
Based on the current state of -- current weak state of the world economy, maybe this plus side -- positive side is shrinking. However, this negative 15% maybe too pessimistic, we are not that pessimistic. We have some order backlogs. And therefore, maybe slight decrease, slightly on the negative side or slightly on the positive side would be our forecast right now. The current visibility remains low. That's my honest feeling. So that is my answer to the first question.
I have a follow-up question. You mentioned the restriction on exports to China. In Q2, sales increased, which -- in the Chinese market. And the U.S. restriction will be tightened. So what kind of impact could this have? Do you have any concrete figures that you can share with us?
Regarding this restriction, this was announced on 7th of October. There are many restrictions announced, but I think those that are related to our products are limited. We are not using U.S. technology. We are developing our products in Japan and Europe. And we are producing in Japan or in other parts of Asia, these are applied to our core products. Therefore, we are not using U.S. developed technology. Well, this portion remains very small. So I think the impact will be limited at the moment.
However, going forward, this move of the U.S. to tighten the restrictions, maybe there could be additional actions taken or maybe China would react to this in a different way. So I think the current situation is quite unstable. And therefore, from our point of view, we need to collect as much information as possible and prepare and plan so that we can take actions if needed. That is what we are trying to do right now.
We don't have any calculations regarding how much impact this could cause. But if the restriction level remains as is, I think the impact will be limited. However, if additional restrictions may apply, then this impact could change.
Next question from Goldman Sachs, Mr. Nakamura.
My first question is regarding the tester market perspective, in 2022, you have made a downward revision. I would like to know the background, what kind of applications did you have in mind when coming up with this outlook? And your sales figures remain the same. So that means your share would increase, as a result, I would like to know why?
Mr. Nakamura, you said that we made a downward revision, so you are asking a question about this in particular?
Yes, for the tester tab 2022, SoC tester, this has been revised downwards, Page 11. So I would like to ask you a question regarding this point, what is this based on?
You are right, regarding SoC from August, USD 350 million downward revision was made. It is because our competitors also made downward revisions regarding their sales. And regarding our procurement, we had some upside prospects, but that was not the case. So we had to bring the figures down. So midpoint has gone down. And regarding share. For this, since last year, we have been expecting that this will go up, around 55% more or less. So this was the market share SoC. In terms of SoC, memories are stronger. But because of the depreciated yen, when we calculate by dollars, then this would come down. So the share -- market share will remain flat, 50% roughly speaking. So this is what we predict.
A follow-up question. So you talked about the order backlog at the moment, and you showed some outlook into next year. So what is your delivery time right now? And push out and cancellation, do you hear anything about these movements compared to previous cycles. What is the current situation?
Sakamoto will take that question.
Regarding the orders, we have not disclosed specific figures, so we cannot answer that. But as I mentioned earlier, there is a certain amount. This is related to the high performance of semiconductors and the testing demand has gone up. And in midterm- and long-term prospect, the market is expanding. And therefore, a lot of our customers would like to expand on their capacity, and there is a high testing demand, which remains to continue. And because of this, we have lots of orders, and we are being very busy as a result. That's my answer.
Regarding cancellations, partially related to smartphones and PCs, these are consumer products. And our customers, who are manufacturing these products, asked us whether cancellation or delivery postponement is possible. However, even if such cancellations happen, the parts that would have been required for the production could be allocated to other clients. So we have been very flexible. So this JPY 550 billion sales guidance can be maintained. That's our thinking.
So you asked a question about lead time as well, sorry. It's long still 9 months to 12 months currently. So a long lead time continues. That is the current situation.
So that means no major change from 3 months ago.
Yes, because of the post procurement situation has not improved. Lead time has not improved drastically either.
Next question. BofA Securities, Mr. Hirakawa.
Can you hear me?
Yes, we can.
I have a question regarding the system level. So many applications include smartphones for your products in Q2 and your year-round forecast, you don't see any dip in demand. Of course, smartphones have demand for tests -- testing. And I would like to know how this is expected to shift?
Hirakawa, thank you for your question. This is Mihashi. So system-level related question on smartphones and applications. So regarding this, the smartphone volume in general has decreased. And our SLTs and services and consumables, of course, there are impacts. However, semiconductors are evolving, and we are providing more reliability. This is happening in parallel. Most currently, the demand has slowed slightly. However, with our customers, we are talking about technological improvements and ILT quality assurance. So we are in continuous business discussions with our customers.
Regarding consumables, currently, and this does not apply only to smartphones, but all consumers, consumer products like PCs, for example, on sockets. The volume for that has slowed down currently. That said, towards next year, many companies in this space will be putting new processors. So in the next quarter and the quarter after that, I think the demand will improve.
As a follow-up, outside of smartphones, what kind of demands are you seeing and into next year too for that system level related products?
So in terms of volume, it's different from smartphones, but EV in automotive industry, the quality assurance factor has become very much highlighted. Given that kind of situation next year, automotive and HPC application business is expected to steadily increase, so servers that means.
Moving on to the next question, Mitsubishi UFJ Morgan Stanley, Yoshihito Hasegawa.
Well, I read the integrated report, and it was a very good publication. So let me confirm as the forecast for next year. Well, there has been some decline in the consumer product judging from the current situations next year, you said the range shall be slight decline or slight increase. HPC growth or along with the high-performance needs, is the testing time being prolonged. Compared to 3 months ago, the current situation seems to be worsening, but on the other hand, you do have a very strong demand outlook or the order seems to be robust. Could you once again explain your view on the next fiscal year is my question.
This is Yoshida speaking. Order may be softening, I'm sure that you are assuming the softening of the order. However, we no longer disclose the order. So I will be sharing with you the specific numbers. However, in Q1 and Q2, order is at a higher level compared to the sales. So compared to March this year, we have higher order backlogs. What does this mean? In the past 1 year, we have not fulfilling the demand coming from our customers. And this situation is still continuing.
So in the second half as well as toward the next year, there may be some softening of the demand. However, because of the high level of order backlog as well as the service revenue as well as the revenues from the consumables compared to the sales in 2022, there will be a decline of 15%, 20% or 30%. That chance is very low. That's how I feel.
Now with the slowing down of the global economy and for the situations may be dramatically change for auto industry as well, take, for example, there may be some excess semiconductor for the automobile, if such situations will prevail, the things may start to change. However, for now, from the auto device manufacturers, the things are still escalating.
By responding to those demand, we believe that we will be able to maintain the high level of demand. And as I mentioned in the final page of the material, the new customers are entering with new devices, that is happening for sure. And in fiscal 2023, starting from the second half of 2023, but there will be the addition of the new type of demand. From those perspective, I don't think we should be that pessimistic. That is how I view at the moment. This concludes my response. Thank you.
If that will be the case, now flip side of the picture, not just for next year, however, in 2023, 2024, there may be slight recovery of the market or you acquire CREA and should there will be the growth of the new business? How about the supply capability, do you need to be concerned about your supply capability?
Supply capability on a global basis, resilience of the supply chain is becoming an issue. From the end of the previous year in order to increase the supply capabilities, there are key parts, which is in the shortest whereby we will not be able to produce testers. And we are implementing various measures, mainly while customers who are manufacturing semiconductors. Those suppliers, we are closely cooperating with those suppliers, and we are strengthening our procurement team on a global basis and not just the semiconductors, however, raw materials used to produce consumables.
If there are any weakness in the supply chain, we try to strengthen them so that we can respond when the production increase. As I have explained in the midterm plan toward the 2030, semiconductor market will hit $1 trillion. With that outlook our production capacity have to be enhanced. Based on such view, we are taking various measures. As a part of the long-term measures, with the availability of the part, our production capacity or the sales can further go up. However, it is important to implement measures so that we will be able to procure parts, but that is what is needed for us to increase our production capacity. That is what we are currently strengthening.
Understood. I have one more follow-up question. Advantest Cloud Service. You have to wait before it starts contributing to the revenue. Anything that you will be able to share at the moment?
In 2020, PDF Solutions, which is a software company, the public company in the United States, we partnered with that company so that the platform that we can provide to the customers is something that we are working with that American company. And the software to be utilized on that platform is -- starts to be produced by ourselves and which is already delivered to the customers, and some are already generating revenue. However, the sales level is still slow in view of the total sales. We are making the upfront investment. So the business is still generating deficit.
However, our cutting-edge customers, from the test data, the devices to be tested. And in view of the entire process, inclusive of the front-end processes, there are various devices being involved. We would like to connect to the different pieces of data to conduct some analytics so as to improve the quality as well as the yield. This movement is already underway. That is something that we have already been discussing with some of our customers. So that is what the major progress that we have made.
On top of that, inclusive of various experts, we are trying to secure the talent on a global basis. So soon, we can provide to you the topics related to this, either in 2023 or you may have to wait until 2024, but the new service, the new type of support is something that I hope the day will come so that we can start to introduce about these new services. It is not that we are deemphasizing on this. However, we are placing much emphasis on these new services. And please wait.
And so you are making a steady progress in line with what you are aiming to achieve?
Yes. As well as, that's limited to what we will be able to do just by ourselves by developing the software ourselves. There are some outside software development companies that shall be involved in the ecosystem. In other words, we would like to increase the numbers of the partner companies so that we can increase the numbers of the applications that will be utilized on our platform. That is another thing that we are working on.
From Daiwa Securities, can we ask Mr. Sugiura to ask your question.
Yes. I want to ask about your outlook to the tester market next year. You earlier talked about your performance for the next fiscal year. But then when you look at the tester market, what is your perspective? Can you share your view with us? You said that you -- I believe you have a large order backlog. And so I do believe there must be something that you can see. So that's what I would like to be shared. For example, SoC, HPC and industrial equipments or anything on the consumer side, what is the -- what do you see in DRAM, NAND, even for these memories? What kind of market change do you perceive or do you expect? So can you share your view with us to the extent you can?
Thank you very much. I, Sakamoto, will answer your question. Now we did earlier hear this from Mr. Yoshida, but we have low visibility into the next year, but then I would like to speak based on the assumptions that we currently have.
First of all, as for the tester market, TAM is what would determine the outlook. And in calendar year '23, at the moment, what we find, when we look at our competitor as well as how we're doing, DV is limited. And so we can't really speak specifically, but compared to calendar year '23, SoC, calendar year 2022, we expect that SoC, TAM will grow at a single-digit level.
For memory side, for the consumer market, I believe that there is going to be a further decline. And if that is going to be the case, again, compared to year '22, there is a chance that we will see a decline. However, when we look at our major customers, there seems to be proactive investment based on the assumption that semiconductor market will be growing. And so we find -- we do hear from customers about this proactive investment. So we're not expecting a large dip. And I think this expresses what kind of outlook we'd be able to have.
Now the tester market that we see, this is something that we have already expressed. But then when it comes to production volume, if it is going to be flattish, even if that is going to be the case, high-end device, there's more miniaturization going on. And also for high-end products, there will be more quality required. And in other words, the demand for testing will increase. This is something Mr. Yoshida did mention earlier, but time to market, time to volume. This needs to be captured before, ahead of the competitors.
In other words, our customers want to make sure they'd be able to have their products be launched ahead of the competitors. And it needs to guarantee good quality. And so that means the customers need for doing test to ensure higher quality products ahead of their customers -- their competitors is on the rise, and we are seeing more needs from more customers. This is something that we often say. But with the evolution of semiconductors, the coverage, the need for testers become large, the test -- the time required for testing becomes longer. In other words, the technology, the evolution and -- is increasing.
And when we see this from the customer's perspective, for example, at the moment, any customers around smartphone area, we are seeing an overall decline, for example, in tester utilization around OSAT that itself is on a decline. However, HPC or AI and automotive, which is very strong, applications in these areas would be able to compensate any drops we're seeing in, for example, OSAT.
In other words, we have a very wide coverage of customer base. We have a wide product portfolio. And that even though we're seeing some difference depending on application, we do believe that some of the declines seen in some applications could be well compensated by customers and other applications. And so therefore, we're not expecting a large dip.
We believe that together with the market growth and with the baseline of increasing tester demand, just like we expressed before, we see that even in '23, we don't expect a large dip in the tester demand, it will be flattish or perhaps a slight increase. That is something that we foresee when we look at the market environment.
Thank you. My second question is more like a follow-up to my earlier question. So you did express about new customers who will be joining in your customer base from next year. So when you look at your SoC, you mentioned that single-digit growth can be expected in the market. So your expectation, how much would these new customers be contributing to your own expectation? And also, when you look into next year, like the largest customer for your competitor, when they go into the next node, I expect there will be more increase in the tester side. So that means, is it correct to understand that your share in this tester side is going to stall at some point next year, tentatively?
Thank you. This is Yoshida. In calendar year '23 or FY '23, we have lower visibility, and we're still trying to express our story, and it will depend on how much you'll be able to believe or rely on what we say. But when we look at our new customers, we certainly would not be able to speak, what we're speaking today if we did not -- if we had not been speaking with these customers from before. And so that does tell you that there is some expectation that we do have in terms of the demand.
Now based on that, how are we looking at the market? We're expecting some growth in SoC. And that, of course, includes some of the demand expectation that we've been able to aggregate through the conversation with the customers. Within the customers, there are some that would have strong peers. And if their peers increase their presence, their -- naturally, that may mean that our share would drop, which is a reversal trend of what we have been seeing for this year. But then do we not have any transaction with our peers customer? I would not say so, for example, even in the smartphone display driver or even for a camera, we are trying to have these transactions on a very multifaceted phase. So it's not that the peers will be able to take away everything. There are some that we still will be able to enjoy our presence. So it's not like a 0 or 100 in terms of the share. I hope I have answered your question. Thank you very much.
I understand that there are some more questions, however, time has come to end the financial briefing for the second quarter of 2022 for Advantest Corporation. Thank you very much for your participation. Thank you.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]