Advantest : Third Mid-Term Management Plan Presentation (Slides and Notes)

Briefing on Mid-/Long-term Management Policy

The "Grand Design" (refreshed in FY2024)

and the Third Mid-term Management Plan (MTP3)

June 25, 2024

Douglas Lefever, Representative Director and Group CEO

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• Today, we are presenting our MTP3.

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NOTE

Accounting Standards

• Our results and outlook, described in this presentation, have been prepared in accordance with IFRS.

Cautionary Statement with Respect to Forward-Looking Statements

• This presentation and any information provided orally by Advantest representatives contains "forward-looking statements" that are based on Advantest's current expectations, estimates and projections. These statements include, among other things, the discussion of Advantest's business strategy, outlook and expectations as to market and business developments, production and capacity plans. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "anticipate,""believe," "estimate,""expect," "intend,""project," "should" and similar expressions. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause Advantest's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements.

Use of These Materials

• The information contained in this presentation is protected under intellectual property laws, such as copyright law, patent law, trademark law and design law, and other laws and statutes of each country and various treaties. Any use (modification, copying, diversion, etc.) of this information that goes beyond that which is clearly authorized by law and statutes, and is not approved in writing by our company in advance, is forbidden.

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Contents

Global Semiconductor Revenue

"Era of Complexity"

Megatrends and our new vision

The Third Mid-term Management Plan

Four Key Strategies

Financial Targets

1 Trillion

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032

Source : TechInsights Inc.

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• The contents of what I would like to share with you today are the following.
• First of all, we are going to be talking about the "Era of Complexity".
• Then, I will talk about the key strategies that we are going to employ during the next three years.
• Then, we will talk about the financial targets associated with those strategies.

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Megatrends Bring Greater Complexity to the Semiconductor Industry
	High-end /	Era of
	High-Technology	Complexity
Megatrends	Semiconductor Devices
Technological breakthrough	X
Rising environmental issues
Geopolitical risk	Supply Chain /
	Ecosystem
	Re-distribution	AI Everywhere
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• The environment surrounding the world is changing fairly drastically now.
• There has been breakthroughs in technology combined with efforts to improve the sustainability of the global environment are driving innovation and driving demand for high-performance semiconductors.
• On the other hand, there is rising geopolitical risks have led to increased semiconductor production capacity and geographical re-distribution.
• The growing demand for high-performance semiconductors, which require high technology for manufacturing, and the diversification of value chains are bringing this "Era of Complexity" to the semiconductor industry.
• Actually, we have been focusing on this now since the 2010s and we recognize that the complexity will have a significant impact on the direction of our business.
• To respond these, we formulated our "Grand Design" in 2018 and have implemented two medium-term plans over the last six years.
• This picture illustrates the multiplying effects of both the complexity of the devices and the complexity of the supply chains and put together creates a lot of opportunity for our industry and for the company.

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MTP1&2 : Invested in ATE, Adjacent, and Global Footprint
1 Product portfolio	2 Adjacent Markets	3 Global Footprint
	Data Center	Automotive Industrial	Phone/PC					>1,000
	/ AI	/ IoT	/AR-VR					customer sites
	Cloud		Edge					>7,000
HPC		V93000 Digital
						employees
Power					Go			>50
	V93000 PAC			UP
Device
								offices in 18 regions
RF		V93000 WSRF	Go	Tester	Go	SLT
				Left	Right
HBM	T583X
DRAM/		T583X / T5503HS2			Go
NVM				Down
Image		T2000 ISS
Sensor
Display		T6391
Driver
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• In the past two mid-term plans, we accomplished three major achievements.
• The first achievement was the creation of an unparalleled product portfolio by investing in the development of semiconductor test equipment.
• • It is no exaggeration to say that there is no semiconductor that cannot be measured by our semiconductor test equipment, such as:
  • cutting-edgeHPC/AI devices and HBM used in data centers for generative AI,
  • and power management ICs, which are in growing demand for automobiles and industrials,
  • and image sensor, display drivers, and others that are widely used in automotive and consumer electronics.
• The investments in our core businesses during the mid-term plan 1 and 2 over the last six years have created the foundation for future growth.
• Second, we made strategic and complementary investments mainly in the field of adjacent areas. As a result, in addition to strengthening our existing core markets we have expanded our business scale into the areas of "system-level test", "test interfaces and sockets", and "data infrastructure".
• Thirdly, we have meticulously placed our bases where semiconductor-industries around the world have expanded and we have strengthened our personnel in the development area and R&D, sales, and support in each of these regions.
• This has enabled us to build strong relationships with our customers, which had led us to a very advantageous position.

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Customer and Market Trust

Semiconductor Tester Market Share	Sales
CY17	CY23	FY17	MTP2 Results
	58%		(FY21-23 Average)
36%	¥207.2B	¥487.9B

Market Capitalization	Industry Leadership
Mar. 2018	May 2024

¥400B ¥4,000B

The 5th Consecutive Year Ranked the #1 Large Supplier of Chip Making Equipment

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• This is what it all resulted in. We have been able to earn the trust of our customers in the market, and we have recorded significant growth in market share, revenue, and market capital.
• We have recorded significant growth in market share from 36% in 2017 to 58% last year.
• Our revenue has multiplied by 2.4 times and our market cap has gone up 10 times.
• In addition, we have become the No. 1 market leader in research company's customer satisfaction surveys for five consecutive years from 2020 to 2024.

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Change of Semiconductor Industry
(B$)						Global Semiconductor Sales
1,200													Era of
		Era of
											Complexity
1,000		Capital Scaling
800
600
400
200
	PC & Internet		Smartphone						AI Everywhere
0
2000	2001 2002	2003 2004	2005	2006 2007	2008 2009	2010 2011	2012	2013 2014	2015 2016	2017	2018 2019	2020 2021	2022 2023	2024	2025 2026	2027 2028	2029	2030 2031	2032 2033
	Source: TechInsights Inc.
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• Let's look at semiconductor market growth and the driver of the market.
• As you all know and expected, the Semiconductor market will reach to 1 trillion US dollars in 2030s.
• In late 1990s with personal computers and the internet, then mid-2010s with widespread of smartphones adoption, the semiconductor industry was already in the "Era of Capital Scaling", which then turned into now what we call the "Era of Complexity".
• The "Era of Capital Scaling", was needed to keep up with the evolving technology, increasing demand, and the more you needed equipment, the more you needed to scale.
• However, there have been increased calls now for technical constraints such as slowing of Moore's law, and growing technical and social demands to reduce power consumption.
• On the other hand, the rapid social implementation of AI, generative AI, requires more advanced computing power.
• To meet these conflicting demands, the semiconductor industry is working to combine and optimize a variety of technologies, giving rise to what can be described as the "Era of Complexity."
• And that complexity is accelerating.

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Acceleration of "Era of Complexity" - Technology

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	Exploding	3D CHIPLETS
	HETEROGENEOUS
Memory	Test Complexity	INTEGRATION
TEST CHALLENGE
Wall
	Power
IO Wall	Wall
Interdependency
Scaling	Energy
Wall
Efficiency
Device
Complexity

ADVANTEST TECHNOLOGY / ASSET INVESTMENT

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• Now we are talking specifically about the "Era of complexity" first, from the technology side.
• The issue is that somebody can be summarized in the diagram on the left, for example all six circles are issues that are connected. It means that they are interdependently important for the complexity, but they're also interrelated.
• There is a multiplying effect. The connection and dependency becomes much stronger and tighter for more advanced computing like AI.
• Therefore, test intensity grows in the "Era of Complexity" and this will be driving a degree of interdependency, for which test solutions will be needed.
• Then, if we move to the right side now, we can look at the value that advance test brings.
• The proliferation of AI, the value chain is driving challenges of integrating the advanced computing capabilities such as learning, inferencing, and generation into a single device.
• In order to address all of these challenges, there are more interdependencies and more value that Advantest can bring with our assets shown in the brighter wine red circle.

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Acceleration of "Era of Complexity" - Supply Chain

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Semiconductor Manufacturing Equipment Billing Increase by Region (CAGR)

26.64%

11.73%		14.13%	12.62%
	8.51%			7.37%
					6.06%
	5.69%				4.07% 4.43%
			1.79%
Europe	Taiwan	China	Korea	Japan	North America	ROW
-3.44%						-3.12%
			2005-20142014-2023	-7.19%			Source: SEAJ, SEMI, SEMI Japan
						Advantest Location
							Regional Headquarters
							R&D / Manufacturing
						▲ Sales and Support Office
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• Also, as I mentioned earlier about the world complexities, this picture illustrates some of the changing dynamics.
• Today, the environmental requirements, demographic shifts, and political issues are driving the reorganization of semiconductor production bases and capacity.
• Global supply chains continue to expand and strengthen, there is a mix of directions closely related to supply chains within countries and regions, increasing the complexity of semiconductor production.
• I would say Advantest, over the last many decades already has worked to place ourselves strategically around the globe and now we are re bearing the fruits of the good fortune of having mapped ourselves to where the semiconductor supply chain is moving.

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New vision statement

Be the Most Trusted

and Valued

Test Solution Company

in the Semiconductor

Value Chain

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• So, all of this is meant to say that we are in good shape and we are continuing the efforts that we put in place already.
• To respond to the "Era of Complexity" that we have just discussed, we have updated our vision statement as a company, which is to be the most trusted and valued test solutions company in the semiconductor value chain.
• So, let me just highlight the three important words in that statement, which is "trusted", "valued", and "solutions". We selected these three essential words to walk through the "Era of Complexity".

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