Precision Equipment Company

• Overview
• Business Strategy
• An Interview with the Company President

As of July 19, 2013

Overview

Main Products

IC steppers and scanners, LCD steppers and scanners

Consolidated Financial Results

Market Environment and Business Trends

The market contracted as capital investment by manufacturers cooled for both IC and LCD steppers and scanners. We anticipate a recovery in market conditions for IC steppers and scanners from the second half of the fiscal year ending March 2014, and market expansion for LCD steppers and scanners, centered on 6th-generation plates.

See Financial and Business Data for the Year ended March 31, 2013 (May 9, 2013)

Sales and Forecast Units of Nikon Steppers & Scanners

• IC Steppers & Scanners by technology
• LCD Steppers & Scanners by Generation

• PDF File (PDF:88KB)

Business Strategy

Objectives

Priority Measures

• *Objectives and Priority Measures for Business Strategy are at the time of Medium Term Management Plan announced on May 9, 2013.

An Interview with the Company President

Q2:What is the market outlook for IC steppers and scanners, and the key to expanding Nikon's market share?

A2:

We expect the harsh market conditions for IC steppers and scanners to continue through the first half of 2013 and, for the market as a whole, full-year unit sales to decline to around 200 units from 222 units in 2012. However, we foresee a resumption in capital investments among semiconductor manufacturers from the second half of 2013, and so expect a recovery in sales to around 230 units by the fiscal year ending March 2016. For the fiscal year ending March 2014, we expect Nikon’s sales to increase from 40 units (including refurbished equipment) in the fiscal year ended March 2013, as a result of greater product competitiveness and other factors.

Product competitiveness is key to boosting sales of IC steppers and scanners, for which reason it is important to focus on three aspects of their performance: higher resolution, overlay accuracy and throughput. Nikon's leading ArF immersion scanners already surpass competing systems in several aspects of their performance. By exploiting this advantage, we hope to increase to 30% our share of the market for ArF immersion scanners by the fiscal year ending March 2016.

This 30% goal is a step on our way to the position of industry leader. Beyond that we are preparing for a transition to next-generation systems for 450 mm wafers. At the start of calendar year 2013, Nikon received its first formal order for a prototype ArF immersion scanner for 450 mm wafers. Further, in July 2013 we announced the receipt of an order for this prototype scanner from the U.S. research institution Global 450 Consortium. We plan to begin shipments of this prototype at the start of calendar 2015, and to start shipments of mass-production models in calendar 2017, about a year ahead of the competition. By drawing on this advantage, we hope to quickly regain our position as the company with the top market share.

Q3:What is the market outlook for LCD steppers and scanners, and the strengths that underpin Nikon's market advantage?

A3:

In the LCD scanner market, we anticipate continued brisk investment for small to medium-sized high-definition panels. In the second half of calendar 2013, meanwhile, we expect to see signs that investment in large-screen televisions is recovering. For the market as a whole, we foresee sales in 2013 increasing to around 80 units, compared to 66 in 2012. Then, for the fiscal year ending March 2014, we expect increases in Nikon’s sales of 5th- and 6th-generation systems for small to medium-sized high-definition panels, as well as systems in the 7th generation and beyond for large-screen televisions.

In addition, we expect investment to accelerate in the first half of 2014, to cope with an anticipated shortfall in production capacity for large-screen television panels in the second half of calendar 2014.

Nikon's LCD scanners employ a unique multi-lens system comprising an array of high-precision lenses for exposure of a broad area, providing optimal performance to efficiently manufacture large, high-definition panels. This system can be flexibly adapted to different plate sizes, and is incorporated in systems for small to medium-sized high definition panels, demonstrating its exceptional performance.

Much interest has been generated lately in creating high-value-added, next-generation, high-definition televisions with 4K2K or 8K4K displays. We expect that, were a market for these products to be established, it would be to Nikon's advantage, considering our technical strengths in the field. Thus, we are seeking to increase our current 80% market share.

Q4:What are the future direction and priority issues for the Precision Equipment Company?

A4:

We foresee continued growth in the market for IC and LCD panels, as the user base expands to reflect falling prices. With sharp shifts between boom and bust characterizing this market, the Precision Equipment Company is responding to falling prices and market fluctuations by lowering its break-even point, and devising a business structure able to generate earnings even as the market contracts. We thus must take steps to prioritize cost reductions and shorten production lead time, while also bearing in mind the importance of enhancing our product innovativeness.

The fiscal year ending March 2014 will be when, amid a harsh operating environment, we sow the seeds to establish our revised business structure. We plan to return to manufacturing basics, enhance product and price competitiveness, and strengthen our business structure so that, in time, our efforts might bear fruit.