Advantest Corp
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Advantest Corp
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Thank you for your precious time to attend the FY 2022 Third Quarter Financial Briefing by Advantest Corporation.
Let us introduce who will be attending from our company today. Representative Director, President and Group CEO; Yoshiaki Yoshida. Director, Senior Executive Officer, CFO and CCO, Executive Vice President, Corporate Administration Group, Atsushi Fujita. Senior Executive Officer, CCRO, Executive Vice President, Sales Group, Kimiya Sakamoto. Senior Executive Officer, Co-CSO, Executive Vice President, Corporate Planning and Stakeholder Relations Group, Yasuo Mihashi, and I will be the moderator for today. And my name is Kobayashi from the IR department.
So today, Mr. Fujita will be first presenting the FY '22 third quarter financial results. And then Mr. Yoshida will be talking about the financial outlook for FY 2022. And then later, we will accept questions from the Board, and we plan to close at 17:00 p.m. And today's presentations are available on our website as well as on TDNet. And those of you who are connected to us by the telephone, please also separately download the materials. And before opening our financial briefing, we have a few disclaimers to make.
What we are talking this afternoon are based on our projection and estimations and they are all prone to risks and uncertainties, and the actual results could differ from what we are projecting at this point. So Mr. Fujita will be presenting.
Good afternoon, everybody. My name is Fujita, and I would like to talk about the financial results. So please open to Page 4 of the material. So first, we are taking a look back at our business environment in the third quarter, due to the macroeconomic recessions and anticipation fears, the final demand remains sluggish, especially for PCs and smartphones and the semiconductor market overall experienced some deceleration. Advantest was also affected by the postponement of customer investment, especially for devices used in consumer electronics due to the softer market conditions. However, high-end SoC performance gains and strong demand for analog semiconductors drove higher test demand, which compensated for the impact of the decline in consumer-related demand.
Sales for the third quarter were at the same level as in our record high second quarter, partly due to the yen's depreciation. As for operating income, it increased by 22.8% year-on-year but decreased quarter-on-quarter due to higher SG&A expenses and other factors. Net income decreased by 17%. We had some foreign exchange losses, so net income decreased by 17.4% quarter-on-quarter due to the foreign exchange losses triggered by a stronger yen at the end of the third quarter compared the previous quarter. Details of the results will be explained in the following slides.
Please turn to Slide #5. Now let us take a look at the sales by segment. First of all, for the Semiconductor & Component Test Systems business, this business performed at JPY 98.6 billion, which was flat quarter-on-quarter. Sales of SoC testers [ sell ] strong at JPY 80 billion. Although application processors for smartphones declined quarter-on-quarter in addition to robust demand for automotive and industrial applications. Sales also continued to be strong for high-performance computing and AI-related semiconductor test.
Although the memory semiconductor market is decelerating, customers have stuck to their capital investment plans for both DRAM and nonvolatile memory. And memory tester sales held the high level of JPY 18.6 billion.
Looking at the Mechatronics Systems business. Quarter-on-quarter, we had a positive 11.3% at JPY 14.1 billion. Sales of SEM metrology products grew amidst increased adoption of EUV lithography. Now looking at Services, Support and Others, we were below quarter-on-quarter by 7.6% at JPY 25.3 billion. Demand for maintenance and services continued to be firm due to steady growth of our installed base. On the other hand, system-level test sales declined as customers revised their investment plans against the backdrop of deteriorating market conditions.
Please turn to the next page. Now let us look at the quarterly sales by region. For Taiwan, the tester sales decreased due to lower demand for SoC testers, mainly for devices used in consumer electronics. Now looking at China, the deliveries of SoC testers progressed to meet the growing demand for semiconductors for IoT and industrial equipment. And for South Korea, sales of both SoC testers and memory testers grew.
Next page, please. Going on to Page 7. This is around operating income. First, gross margin, 59.1%. Our sales mix tilted towards higher-margin products, boosting gross profit margin quarter-on-quarter. SG&A, including all other income and expenses was JPY 40.4 billion. SG&A expense, et cetera, increased due to our growing headcount and higher cost driven by yen depreciation.
Operating income, JPY 41.2 billion. And vis-a-vis sales, the operating margin was 29.9%, almost matched our estimates. Next, moving on to Page 8. R&D expenses and others. For the third quarter, R&D expenses was JPY 15.8 billion. CapEx, capital expenditure, JPY 7.1 billion. Depreciation and amortization, JPY 5.4 billion. And on the right-hand side shows the cash flow. Free cash flow dipped into negative territory to minus JPY 6.9 billion due to higher inventories and payment of income taxes and bonuses.
Next page, Page 9, please. This is about the balance sheet and financial position. Total assets, JPY 552.4 billion. Cash and cash equivalents, JPY 84 billion, decreased by JPY 31 billion quarter-to-quarter due to negative free cash flow, dividend payments and share buybacks. Inventories JPY 156.7 billion. In response to the ongoing difficulty of procuring parts and longer manufacturing lead times, we are building up inventories to keep up with the customer demand. Goodwill and intangible assets, JPY 96 billion. The appraised value of our dollar-denominated goodwill and intangible assets decreased due to yen appreciation at the end of December compared to the end of September.
Short-term borrowings JPY 35.2 billion. In light of the increase in our working capital and debt repayment in the fourth quarter, we raised an additional JPY 15 billion. Equity attributable to owners of the parent, JPY 330.6 billion and ratio of equity attributable to owners of the parent, 59.8%. The share buyback announced in July was completed in December last year. The total number of treasury shares acquired was 6.33 million for a total cost of JPY 50 billion. That was about the actual figures and numbers. Thank you.
So next from myself, I would like to talk about the business outlook for fiscal 2022. Please turn to Page 11. Business environment and semiconductor tester market trends. In 2022, fears of a global recession mounted. The semiconductor market showed increasing signs of slowing down as the year progressed. Inventory adjustments of semiconductors for cornerstone consumer electronics and moves to revise capital expenditure plans have become visible. On the other hand, there are still chips shortages in sectors such as automobile, where EV adoption is progressing and industrial equipment.
In 2022 SoC tester market demand for testers for high-performance semiconductors grew due to ongoing miniaturization and demand for testers for automotive and industrial applications remain firm. However, softer demand for testers for devices used in consumer electronics impacted overall market growth. We estimate the market to have declined year-on-year to between USD 3.9 billion and USD 4.9 billion. We believe our market share rose into the 55% to 60% range. The 2022 memory tester market is estimated to have been worse, USD 1.2 billion to USD 1.3 billion, flat year-on-year due to continued strategic investment by customers despite the deterioration of the memory semiconductor market. We believe our market share was around 50%.
Unlike in past cycles when demand fell across the board, resulting oversupply and overall market deterioration, the current status or situation is characterized by uneven or mixed demand. In 2023, we expect semiconductor to continue to be a mixed picture with the extent of investment plan adjustments varying by application and customers. The factors that drive tester demand are also more diverse now than in the past. We expect semiconductor technology evolution, upfront investment by customers in anticipation of the future, new players from other industries entering the semiconductor industry and other factors will boost tester demand and to mitigate the demand fluctuations caused by macroeconomic softening. However, if the recovery of the global economy is delayed, the tester market in 2023 may shrink up to 20% year-on-year.
Please turn to Page 12. This is a forecast for fiscal 2022. Though the semiconductor market is in an adjustment phase in view of our large order backlogs, we have not changed our full year consolidated earnings forecast for fiscal 2022. As published in October 2022, we expect net sales of JPY 550 billion; operating income, JPY 170 billion; income before income taxes of JPY 174 billion and net income of JPY 130 billion. This forecast is based on exchange rate assumption of $1 to JPY 130 and EUR 1 to JPY 140 for the fourth quarter.
Our latest forecast for the impact of exchange rate fluctuations and fiscal '22 operating income is plus JPY 1.3 billion per JPY 1 of JPY depreciation versus USD, minus JPY 0.2 billion per JPY 1 of JPY depreciation versus the euro. Gross profit margin is expected to be around 58%. Regarding capital expenditures, extended supplier lead times have caused the delivery of equipment to be delayed. We have consequently lowered our CapEx forecast by JPY 5 billion from our October forecast to JPY 22 billion. Our business environment is becoming increasingly uncertain but by responding nimbly and flexibly to demand fluctuations, we expect to set new record highs in fiscal '22 for both sales and profits for the third consecutive year. Our year-end dividend is expected to be JPY 70 combined with the interim dividend of JPY 65, our annual dividend is expected to be JPY 135, an increase of JPY 15 from the previous fiscal year.
Please look at Page 13. I will talk about the outlook by segment. Regarding Semiconductor & Component Test System, we have raised our FY 2022 full year SoC tester sales forecast by JPY 4.5 billion from our October forecast to JPY 324.5 billion.
In data center and AI-related applications, tester demand is expected to continue due to the adoption of advanced device manufacturing processes. On the other hand, demand for testers for major consumer devices such as APUs, display driver ICs used in smartphones and PCs is declining due to the impact of customers' production plan divisions and the postponement of investment plans. However, in the automotive and industrial sectors, we expect that demand for testers will continue to increase, driven by factors such as the shift to EVs, which requires higher numbers of semiconductors to be used in vehicles and that will compensate for weakness in consumer-related demand.
We have raised our FY 2022 full year memory tester sales forecast by JPY 3.5 billion from our October forecast to JPY 72.5 billion. In the memory semiconductor market, more semiconductor manufacturers are moving to adjust inventories and restrain their capital investments. However, other customers continue to make aggressive capital investments in anticipation of long-term growth in demand for high-end memories. Regardless of the current situation, we expect the market to remain firm.
Next page, 14, please. Mechatronics and Services & Others businesses outlook for FY 2022. We have raised our FY 2022 full year Mechatronics System sales forecast by JPY 2.5 billion to JPY 53 billion. Demand for device interface products correlated with tester demand is expected to stay strong. Additionally, the spread of EUV lithography and the increased demand for mature process masks will drive demand for SEM metrology products.
We have lowered our FY 2022 full year Services & Others sales forecast by JPY 10.5 billion to JPY 100 billion. Steady growth in our installed base is expected to drive robust demand for services and maintenance. On the other hand, in the midst of a weak market for semiconductors for consumer electronics, demand for system-level test, including consumables, will decline due to the revision of investment plans by some customers. We have reviewed our full year sales forecast.
Please turn to Page 15. This is regarding the acquisition of Shin Puu in Taiwan. We made announcement through the press release today. In January 2023, our U.S. subsidiary concluded an agreement to acquire Taiwanese company Shin Puu. Shin Puu is a manufacturer of printed circuit boards used in electronic devices. Subject to regulatory approvals, we expect to close this transaction by the end of April 2023. Through this acquisition, we will be able to secure a production base in Taiwan for high-end test parts designed by R&D Altanova, which we acquired in November 2021, enabling us to meet ever-increasing customer demand for these products.
In addition, the acquisition will contribute to strengthening the turnkey solutions that one of our focus is to deliver further customer value. The high-end test boards used with testers have hitherto being sold mainly to U.S. customers, but we will now be able to offer them to major customers in Asia as well.
Please look at Page 16. At the end of last year, Advantest Board of Directors decided to shift to a system with 3 representative directors and the transition was executed in January. As our business expands, the 3 of us will lead Advantest expansion on a global scale by responding more quickly to changes in our business environment. In addition to myself, Douglas Lefever and Koichi Tsukui will serve as the Representative Director and Corporate Vice President.
Business environment is becoming more complex, underlining our belief that we need a system with a clear denudation of roles and responsibilities so that we can manage for overall optimization of our company. Looking ahead to FY 2023 and 2024 when our third midterm management plan will be launched, we plan to build a strong management team that will be able to lead Advantest to even greater strides forward. We will continue to reinforce our management system for sustainable growth.
Now please look at Page 17. This is the summary for today's presentation. So far in FY 2022, fears of global recession driven by ongoing inflation and the interest rate hikes have been mounting with each passing quarter. In addition to concerns about growing geopolitical risks such as the tightening of U.S. export restrictions on China, the outlook for Advantest business environment is becoming increasingly uncertain. We will respond swiftly and flexibly by implementing initiatives, coping with changes in the environment. The semiconductor market at present is a mosaic of oversupplied and undersupplied sectors and tester demand has become more uneven as compared to the recent past. We will continue to pay close attention to the list of demand fluctuations that may occur due to prolonged inventory adjustments in the semiconductor market and the customers' investment plan divisions.
For the remainder of FY 2022, we have a large order backlog, and we'll strive to achieve our full year forecast by responding swiftly and flexibly to changes in demand. Our business environment is changing rapidly and becoming more complex. We see a need to improve our management capabilities for the future. As a first step, we have increased Advantest number representative directors from 1 to 3.
Semiconductor innovation is indispensable for making people's lives more convenient and resolving society-wide issues. In the mid- to long term, the semiconductor market will march steady upwards. As a participant in that market, we will leverage our product portfolio, which covers a wide range of applications and our unique platform strategy to strengthen ties with customers who are at the forefront of a technological innovation.
To that end, we will continue to pursue a disciplined program of investment in human capital and plant and equipment. Lastly, please turn to Page 18. This is our ESG and external evaluation-related topics for the current fiscal year. As I mentioned in the fourth [ bullet ] point, we are planning a briefing session in late March as an opportunity to deepen stakeholder understanding of our sustainability management. Please stay tuned for more information on this and other topics. Thank you for your attention.
Now we would like to move on to the questions-and-answer session. So from Mitsubishi UFJ Morgan Stanley, Mr. Wadaki, please?
Is everybody able to hear me? My name is Wadaki from Mitsubishi UFJ Morgan Stanley, and it's nice to see you again. So first -- so one question at a time per person. So we have -- we understand that the testers are doing very well. And I would like to know some more of the background and maybe it's not that really strong at, but it's just the backlog. So if you can highly elaborate on that situation, please.
So I was not able to hear your first part of the question. So if you can kindly repeat your question?
Yes. So the other devices are decelerating, but the testers and the sales by your company are very strong. So I would like to know the background? And also, maybe it's not that strong, but it's just that you have plenty of order backlogs. So if you can kindly comment about the situation, please?
Yes. So as for the orders, we are not making the information available to the public, so I'm not able to talk about backlogs. But up to the third quarter, when we look at our accumulated basis, the orders coming in are still bigger than the backlog. So that is the situation. And as you know, with the consumer electronics demand, we are in the stage of adjusting the inventory. So that means for the short term, the orders coming in are slowing down, I must say that.
And given that kind of circumstances, when we look at the -- your question was why we are able to maintain a high level of sales is because, as you said before, we have a lead time and we have a rather long lead time. It's about 10 months to about 1 year. So from the customer side, there are some request for cancellations from part of the customers. But for big cancellations that are impacting to the level of our sales, we have not had such cancellation so far. And also for the pushout or the extension of the lead time, shorter [ delivery ] lead times, we do have some requests for such. But we are still on the same platform and by each application, we are able to add new models and do the test.
So we have a very flexible model in that sense. So for the orders that are coming in and for the customers who need our delivery right now, we are able to make the adjustments and make the allocations as needed, and that is why we are able to maintain our sales performance. That is my answer.
And as a follow-up question, if I may?
Okay, go ahead, please.
So it's difficult to make cancellations. I now understand that. But one thing that I'm concerned about is China. So if there is any big cancellation coming in, it would be a Chinese manufacturer. But what is the situation surrounding Chinese manufacturers?
Well, as you say, geopolitically, there are some risks regarding China. And the sales performance vis-a-vis China is about 20% to 25% of our total sales that we -- so that is the scale of our sales to China. And when we look at the risk of -- geopolitical risk of China for the immediate effect of market regulations and restrictions with our -- if our -- I think the risk for us is minimal for -- regarding the risk of us not being able to sell directly to Chinese customers. But indirectly, for things that our Chinese customers were formally able to do might not be continuing in the same way due to the restrictions that are coming in. So the customers' businesses might be forced to go through -- undergo some revisions and adjustments. So we have to keep a close eye on that kind of development, and that is why we are engaged in managing the business situation regarding our Chinese customers.
From CLSA, Mr. Yoshida, please.
Do you hear me?
Yes. Yes.
In 2023, tester market outlook -- memory, for SoC has been shown here. SoC, this is minus 4% memory, minus 16%. So with the competitor, Teradyne, so see a midpoint is minus 4%. Memory is flat or a bit of increase. So I think by different applications, the view is different. This year, what would be the market share for your company? And visibility of the market. Can you comment on that?
Yoshida, this is Mihashi. Nice to have you. So to your question about market share for this year. You mean by '23 -- 2023? Or are you talking about 2022?
I'm talking about 2023.
2023. Then for 2023, the visibility, whether it's high or not, President Yoshida has been mentioning that we have more uncertainty in front of us. So to be more sure center point, whether that is a center, whether that is our point, I think that is not the level to say. So therefore, we have given you the range of the market size. When you look at the market size, SoC is about 10% plus or minus or flat, a bit of a surplus, that is the outlook. And for memory, the center is minus 16%, you mentioned. Yes, minus [ 30% ] to minus [ 5% ] in the best position. So that is the range that we're talking about for 2023.
The market share what application and what customer, who is the driver, then that view is going to be different. But for 2023, the major driver would be automotives and industrial equipment or high-performance computing and AI in those areas. We think that our business platform that we have could be fully utilized, that is for 2023. We can say that. Thank you.
So in that sense, compared to competitor SoC testers, you have a higher view. So the reason for that is that you have a stable market environment compared to others. And your orders are stable. Is that what you're saying?
Yes, yes. For market drivability of 1 North American company is a big factor driving the market. But I think the different view of competitor vis-a-vis us is, I think, the different view of business plan that they have. That's my personal opinion. Thank you.
And another point, China. This is a question about China this time. The sales shipment base, 33% is the market shipped to China for your products. Fabless direct investment. You mentioned that this is supporting the market and demand for fabless, the structure, what is a percentage in China. Is the demand still continuing?
Fabless, you're talking about the Chinese fabless breakdown? Have we ever disclosed? No, honestly speaking, not.
But I think the OSAT investment, fabless manufacturers are directly investing, and that is supporting the demand. I think that was a comment you made in other meetings. So I want to see whether that is visible in Chinese market?
In China, 33% is a bit high throughout the year for the sales in China is in between 25% to 30% and for third quarter, this is 33%. For the first quarter to third quarter, the plan is 25% that is the shipment of our sales to China. This quarter is a bit higher than others but in an ordinary case, I think the China percentage is 25% to 30% level. This volume is supported by Chinese local customers? Yes, definitely. We have the Chinese fabless and Chinese OSAT and in addition, foreign companies in China. So 3 players. They are making the numbers, I think, the 3 players.
Next, from Goldman Sachs Securities, Mr. Nakamura.
Can you hear me? I have a question regarding how you are looking at your performance next fiscal year? Two earnings briefing sessions ago, you were saying minus 15% to plus 10% -- and in last earnings briefing session, you were forecasting a flattish business. So I'd like to also confirm what is your current view for 2023?
This is Yoshida speaking. In summer of last year, we reviewed our midterm management plan, and our next fiscal year's forecast is minus 15% to plus 10%. But since the business environment has changed significantly, that is for sure. And we have order backlog and its related lead time taken into consideration. From the order backlog, we can convert them to revenue. We are hopeful for that.
Looking at the latest market condition, which is in the declining, deteriorating trend, but depending on the degree of the deterioration that will impact on our full year forecast. Currently, our forecast is negative 15% at the worst. But if the global economy deteriorates unexpectedly or recovery may be delayed by some unexpected events then we may have to review our plan, but plus 10% possibility is getting [indiscernible].
At this point in time, we are not in a position to talk about the specific numbers, but compared to July last year, the market condition has deteriorated and then we have to also prepare ourselves for a potential decline. But looking at the level of the order backlog, maybe this impact may not be as big as what we anticipate.
So Mr. Hirakawa from BofA Securities.
My name is Hirakawa from BofA Securities. So in 2023, I would like to ask a question about the 2023 market projections. So in the last review, for -- the '23 market was expected to be rather flat. I think that is what I recall. And this time, so I know that you are seeing that to be basically flat, but there are some possibilities for a downside. So when we look at a data center, for mass production in smartphones and also for -- we have the hyperscalers and the AIs and those we have like 5 items. And of those 5 items, what was the changes in the supply and demand situation. So if you can kindly elaborate about that situation, that is my question.
Okay. Sakamoto will answer your question.
So you talked about the 5 items. And as I actually put in the materials. So for the tester markets for next year, we are looking on the negative side. And for SoC and memories we'll be -- have a risk of going minus. And for the mobile-related items, which you mentioned in the immediate short term, the supply is somewhat stagnating. I think that is our frank observation.
And so in year 2023, whether what time it will start to recover is something that everybody is wondering about, including yourself. So when we talk with our customers, we do not really receive any clear responses as of yet, but for our OSAT when we look at the efficiency rate and the operation rate, when we look at around summer time of this year, probably we should be able to start to turn the corner and start recovering.
So for 2023 in the latter half of that fiscal year, probably we will start seeing some new test market tester demand. And also for HPCs, HPC-AI, we have a very high share, and we have about more than 40 customers. And as we mentioned earlier, for the conventional customers or the hyperscalers who are our new customers and the 5Gs with the advancement of the 5, we have the IoT devices and AI. So we have more applications that are expanding, and we are seeing an increase in customers and we're able to pioneer new customers.
So in 2023, I think this is where we have the bright side in terms of possibly for expansion. And also for the 3 areas, we have a very weak side here, but we have a shortage of semiconductors here and for our major customers here, our customers are requesting us to really shorten the lead time and we're getting such a request. So this is where we have strong demand. So that is the SoC situation.
And for the memories, we have ASP and DRAM and [ NAND ] going down and maybe people have questions whether the investors -- where the customers are investing. But for our customers from a mid- to long-term standpoint, when we look at the high-end side for memory devices, we're looking at more miniaturization and looking at the fab situations then the customers will be investing in those areas. So there is still a possibility of going negative and there is also a possibility of the business being flat. That is how we see the market at this point. That is all from me.
And I have 1 follow-up question for the SoC tester market. So with the range, the upside limit and the downside limit. So what are the causes that pull this to the bottom side? And what are the elements that could [ pull through to ] maximum or upside? What's the range that you have in mind?
For the lower limit, let's say, we have the customer -- the consumer-related devices and the weakening economy if this becomes longer, then we will start seeing some impact from the economy. But whether we will have a major fluctuation like what we saw in the past, but the high-end devices, as I have been repeatedly telling is that we have very high functions and also with the miniaturization going on, then we will be able to cover more, and the test time will also be expanded. So I think we will be able to take care of those parts. And so there is still a possibility of the market going minus, but I don't think there will be a big impact yet.
Next question is Mr. Sugiura from Daiwa Securities.
Earlier, I think similar question was raised. Once again, I would like to ask 2023, your way of thinking about the tester market, FOC, it is 25% range for 2022, but 2023 range. What would be the market share as well as what do you see the trend of the market share?
Yes. This is Yoshida speaking. For 2022 fiscal year or calendar year '22, dollar base market itself compared to CY '21, it's a decline there. But under such market circumstances, we were able to increase the market share. One reason for that is that the customer base is completely different from others. We have a wide range of customers and our tester has been accepted by a wide range of customers. As a result, we were able to exceed the 50% -- and exceed the market share of 50%. Of course, yen depreciation -- as a result of yen depreciation, we were quite beneficial maybe that's one factor, that may be one factor. But so what would happen for the next year?
I think if everybody is going to do the same pace of investment or same timeline of investment, then we can keep the market share. But one factor here is that 1 big mobile company in U.S., if that is going to be making a big investment or not. So if they are making a big investment, then it will go up but then in that case, our market share may dip a bit. So I think if all the customers were decreasing their investment, then the market share would not change. But 1 big player's movement may change the situation then our market share may decline. But it is not that we will go below 50%, lower than that.
A follow-up question. According to your explanation, so in 2022 you were able to increase the market share through HPC and AI. So those customers you assume that they would continuously make investment. On the other hand, the APU and so forth, they would probably restrict the investment in 2023. So that's indication. So in that sense, the sales of 2023 for your company, PC, smartphones towards the first half, it will decline. But in the second half, it will recover. Then I think it will not pressure -- put a downward pressure on your sales and performance, right?
Well, with the strong wish, yes, we hope so. But the downward pressure of the global economy, we don't know where it lies. So what would be the factor? Nobody knows actually. So in a normal base with an economic adjustment phases, if you say semiconductor, as you say, in the third -- from the second quarter to the third and the fourth quarter and first quarter, there should be recovery. So from -- if that downward trend had started from last year -- second half of last year, then this year, so to speak, from second half from our side, the recovery will start and it will cover the first half of 2023 and we then have opportunity to recover our sales.
Next question is from Tokai Tokyo Research Center, Mr. Ishino.
Can you hear me?
Yes, we can hear you.
I have one question regarding SoC tester demand. When thinking about that, excluding a certain 1 company, and considering its applications for 2023 and 2024 taken into consideration, according to your estimate, what would be the industry's environment? As we discussed, do you believe that the recovery will start from the second half or depending on the situation, maybe recovery could start earlier? At this point in time, as far as you can tell from this point in time, HPC and automotive and the development happening in major applications will be appreciated.
Sakamoto speaking. The visibility is very low at the moment. As we have been discussing the second half, demand will recover for different applications. We have been talking with customers, and that is the consensus. And some people are confident about that, and some people are having wishful thinking. And whether the demand recovery will start earlier than that. But for the time being, our view is that we are going to see the similar condition to continue for the first half.
So in terms of our revenue, we have order backlog -- we have a large amount of order backlog. So we'd like to steadily ship those orders. And in that manner, we'd like to post our revenue for the first half.
I see then the industry environment, may be difficult. However, depending on your condition, you may be able to consume the order backlog and may exceed -- grow in the first half year-over-year.
You mean the -- talking about FY 2023 as a whole?
No, I'm talking about the first half of FY 2023.
Considering first half and the second half, second half visibility is low -- 50/50 or maybe more weight in the second half. So first half, may not be bigger than the second half.
Thank you very much. So now we are getting close to the closing time. So this will be the last question that we will be taking. So from Jefferies Securities, Mr. Nakanomyo, please.
Is everybody able to hear me? My name is Nakanomyo from Jefferies Securities. So this might be a challenging question. So now the lead time is like 9 months, about 1 year, I think that is what you said. And in 2023 or in the midterm, how will this change going forward? So of course, it could depend on the demand side as well, but also on the production capacity and also the procurement capabilities will also be changing. So before the lead time was not so long, before. So at which timing will we start to see some changes or with this high level of demand continuing for some time, are we going to see a different picture. So what is the image that you have in mind?
So Mr. Nakanomyo, thank you, and hello. Thank you for your question. So yes, in the immediate short term, the lead term is still quite long, that is continuing. And that also is based on our procurement capabilities as well. So that is why we continue to see the situation, and we continue to discuss with our suppliers from many different angles, and we are engaged in many, many discussions. And also from the suppliers, the procurement environment is gradually starting to improve. We're starting to see some indications of that. But in the long term, when we look at our business, for the tester demand growing, the market will continue to grow. It's how we observe this. So we have these 2 factors that come in. And by combining these 2 factors, we would like to somehow manage so that the lead time would go back to 3 to 4 months as we had before.
So that is the activities that we are engaged in right now. And for the time being, as for the timing of when we can revert to the original lead time, timing of 3 to 4 months, we do not have sufficient data yet. But in fiscal 2024, once we guide into that fiscal year, probably our lead time could probably gradually start to improve given the improvement that we foresee in the procurement situation. And so the demand and the procurement and the -- depending on the situation, we should start to see a gradual shrinkage of lead time towards FY 2024.
And this is related to that. But for the performance of next year, so you said it's between minus 15% to plus 15%. But last time, I think you had a narrower range, which you announced where you said slightly below is not slightly above. But -- so in these 3 months -- is that because the visibility is deteriorating in these past 3 months?
Well, I must say so. So basically, when we look at the inflation, and the situation of the economy on a global basis, I think our products are being greatly impacted and so especially with the consumer electronics and so with infrastructure-related items and the investment towards data centers is also changing. So that is when we compare January right now and also the summer of last year, we started to see the situation differently because of this changing environment.
So for our opinions for next year is somewhere around plus 10%, minus 15%. And as for the plus 10%, as Mr. Yoshida mentioned earlier, the visibility is becoming somewhat weaker. So on the positive side, we do have less expectations for the plus side, and we need to be more prepared for the negative side, and we really need to start preparing for that. So that is the kind of mindset that we are having right now.
Thank you. And we also have many more questions that came in, but it is time to close our session. So thank you very much for joining us at the FY 2022 third quarter financial briefing of Advantest Corporation. I once again extend my gratitude for convening through this session. Thank you very much.