AGC Inc. ($5201)

AGC Inc. semiconductor-related business briefing. My name is Nakagawa from the Corporate Communications and Investor Relations division. I'll serve you as a moderator today. I'd like to introduce you today's speakers. Mr. Hideyuki Kurata, Representative Director, Executive Vice President, Mr. Nobuyuki Suzuki, Executive Vice President, President of Electronic Company. Mr. Tatsuo Momii, Senior Executive Officer, President of Chemicals company. First, Mr. Kurata will present AGC Group's technology development strategy and semiconductor-related businesses. He will be followed by Mr. Suzuki, who will discuss the electronic semiconductor business, and then Mr. Momii will present the Performance Chemical Semiconductor business. After the presentations, we will move on to the question-and-answer session. We expect to conclude approximately 05:45, and we appreciate cooperation. Mr. Kurata, the floor is yours.

My name is Kurata, CTO today. I'd like to explore our semiconductor-related business. We are engaged in a wide range of businesses as a material manufacturer. And recently, in particular, we have been seeing a significant increase in interest in our semiconductor-related products. I'd like to introduce how our company was founded and how a technology development has evolved explaining why you have such a broad portfolio of semiconductor-related products. Before handing over to the Head of the Electronic Chemicals company for more detailed explanation. Mitsubishi founding family member and the second Son of Yanosuke Iwasaki a founder, Toshiya Iwasaki, took on challenge on domesticating the production of flat glass in Japan despite the difficulties and succeeded, Our spirit the Never way out, but confront difficulties corporate culture today. In addition, the founding aspiration of contributing to society through materials has been continuously passed down through the generations. This is directly reflected in our corporate philosophy look beyond looking ahead and supporting people's lives around the world through our unique materials and solutions. Our industrial domains and product applications continue to grow and evolve even today. Since our founding in 1907 by continuously providing products needed in each era, our business has diversified from architectural glass to automotive glass and further into electronics, chemicals and life sciences. We have consistently supplied products that meet the needs of the times, including glass for LCD displays, a wide range of functional chemical products and materials and components for semiconductors. It can be said that AGC has opened up new market through its unique capability to combine materials and solutions. Over a long history, we have built up composite technologies based on both inorganic and organic materials technologies as well as design and processing technologies that enable higher functionality. In addition, our manufacturing capabilities, including stable production and design technologies for specialized products have become major differentiation factors, including Black Box technologies. The ability to integrate and combine these strong core technologies is one of the AGC's greater strength and provides the foundation that enables us to offer a wide range of products in the semiconductor field. Since 2015, with a clear vision of what we aspire to be in 2030, we have clearly defined our core businesses and strategic businesses and have pursued growth through Ambidextrous Management approach that balance us both. Through these medium- to long-term initiatives, we are advancing both the contribution to a sustainable society and a commitment to continuous growth and evolution. We defined the 5 businesses that we have actually operated, which is Architectural, Automotive, Display, Essential Chemicals and Ceramics. As our core businesses, and these businesses provide a strong and stable long-term earnings foundation. We have designated 4 areas: Mobilities, Electronics, Life Science, Performance Chemicals. As a strategic businesses, we have taken on both challenges and drive the expansion of both revenue and profit. Through this strategy, we aim to transform our business portfolio into its optimal form and become a company that continuously creates a value. The semiconductor-related businesses we are introducing today fall within the areas of Electronics and Performance Chemicals and are truly key drivers of our growth. By clearly identifying our sources of growth, we believe we can continue to accelerate the expansion of our growth areas in the years ahead. Looking at the performance trend of our strategic business, revenue has grown to approximately 2.4x the 2017 level. In particular, focusing Electronics and Performance Chemicals, which include semiconductor businesses, we have achieved growth at CAGR of 8.9%. Although the growth in operating profit has been limited due to underperformance of Life Science, earnings from Electronics and Performance Chemicals have expanded in line with revenue growth. Going forward, we will continue to polish on our strategic businesses as key growth drivers and further accelerate the expansion. By promoting Ambidextrous Management, our priorities for R&D investment have been clearly defined using a matrix of market customers and organization capabilities and technologies, we construct our R&D investment portfolio by combining existing and new initiatives. A comparison of 3-year aggregate shares investment in strategic businesses that exceeds 70%, demonstrating a strategy to accelerate the growth of strategic areas. That is how we have changed the allocation so that we will be able to grow strategic areas. Regarding current and future technologies, we are striving to increase the probability of success by defining key technology fields and focus areas. We are paying particular attention to fields that will be next growth drivers. And among next-generation electronics, semiconductor-related materials is being a key focus area. As you know, in the semiconductor industry, while following Moore's Law, the history of process node miniaturization has involved changes in lithography light source from i-line to Krf to Arf and Arf immersion and now to EUV. AGC began producing synthetic quartz, a lens material for lithography equipment in 1985. And in step with the evolution of semiconductors, we have provided core products that are essential to semiconductor manufacturing. And the core products are shown on this slide. Technology will continue to evolve in the future. And AGC will continuously work on the development of new products that will make us indispensable to the semiconductor industry in the future as well. We will contribute to the semiconductor industry without missing the right timing to enter the market. This slide shows a product lineup divided into the front-end process for semiconductor with manufacturing and the back-end packaging process. We further categorize it into semiconductor process products and semiconductor manufacturing equipment products. Regarding our main products, I believe the heads of the relevant companies will explain them in detail later. So I will meet them here. Going forward, we will also focus on packaging materials, which is a growth area. From front-end to back-end processes and from process products through equipment products, we will offer proposals to our customers based on the breadth and depth of AGC's technology.

Next is Mr. Suzuki, President of the Electronics company to talk about AGC's semiconductor-related businesses. Mr. Suzuki, please start your presentation.

So this is Suzuki, President of the Electronics Company, and I will explain AGC's semiconductor-related businesses. I will explain the key features of AGC's technology and development across the entire electronics sector. Our company is capitalized by our ability to supply products that combine outstanding technologies in materials, processing, design and evaluation .A unique aspect of our material is that we possess both inorganic and organic materials. In terms of processing, we possess a wide range of technologies, including not only simple glass cutting, but also polishing, high-precision coating, patterning as well as laser and molding. Furthermore, we do not nearly paint [indiscernible] products, but we also require expertise in composition design, optical design and advanced simulation technology as well as high-performance inspection, evaluation and analysis skills. By combining these capabilities, we can provide unique solutions and have consistently broad cutting-edge and composite materials to the market. The same applies to our semiconductor products. For example, CMP slurries, we use organic and inorganic materials to supply cutting-edge high-quality products. Further synthesis of high-precision abrasive particle synthesis, dispersion processing technology, composition design, polishing and evaluation using the same equipment as our customers. In the field of CPO, which is expected to expand in the future, we believe we can offer unique products by combining polymers and inorganic materials with processes such as photolithography, etching and laser processing and integrating them with optical design and optical property evaluation. As explained earlier, using them sustainable growth strategy in the semiconductor field based on the technologies we described on this previous page will be explained. We have long focused on our business development or materials for advanced semiconductors. As shown in the graph on the left, advanced semiconductors will continue to drive that business going forward. In particular, we hold a high market share in fields with high technical differentiation and expected long-term growth. Representative examples of existing products include blanks, CMP slurries and components of semiconductor equipment. Going forward, we will also focus on the back-end packaging processes, which is expected to see significant growth driven by AI and high-performance service. Furthermore, the CCL technology acquired through a M&A will become even more important. We have prepared a separate slide regarding the back-end process. For existing products, we will continue to increase the proportion of products for advanced semiconductors by leveraging the partnerships we have cultivated with leading companies and strengthening the development of next-generation products. I knew needs and requirements will continue to emerge in the back-end process. So development of the new product is essential. In the back-end process, we aim to establish a status as a provider of cutting-edge packaging solutions by offering new products and solutions to leading companies through our unique composite materials that combine organic and inorganic technologies. Additionally, since coordination with other materials and the equipment is crucial in the back-end process, we aim to accelerate more through opening [indiscernible] Such as participation in JOINT3. In both front and back-end processes, we possess unique chemical products. And by conducting joint marketing, we aim to provide our customers with a broader range of solutions. Next, please. This slide explains the global presence to strengthen our relationship with leading companies, we are enhancing local marketing efforts. Outside of Japan, U.S., Thailand, South Korea, China, Europe and Singapore. These are the areas that we have semiconductor-related marketing offices. In Taiwan, China and United States, we operate these offices jointly with our chemical business, creating synergies. While development in centers in Japan, we also have development centers in Taiwan and in the U.S. In Japan into [indiscernible] Yokohama Technical Center, we conducted development at each manufacturing site, creating a system that enables the effective product development, including basic research and prototyping. In Taiwan and other areas, we conduct in local marketing, so strengthening our partnerships with leading companies. Next, we will introduce our representative products. First is Lens Materials for lithography equipment. Although this has not received much attention in the past, AGC holds a high market share in products for semiconductor equipment. And while EUV is attracting attention in semiconductors for AI and data centers, demand is also increasing for Arf, another advanced lithography technology as well as Krf and i-line. AGC differentiates itself from competitors through the superior properties and quality of its synthetic quartz lens materials and holds a top market share for Arf lithography tools. Demand for synthetic quartz from customers is very strong, and we will continue to expand sales for Krf and i-line applications in addition to Arf. For semiconductor equipment silicon carbide, which offers excellent heat resistance is also one of our products with a high market share. Next, I'd like to discuss EUV mask blanks. Since joining the consortium in 2003, AGC has continuously advanced its research and devolvement effort in this field. We are recognized by our customers as the only mask blank manufacturer capable of providing end-to-end production. As you know, the use of AUV [indiscernible] is expected to continue expanding, particularly for AI and high-performance server applications. While there are concerns last year that market might slow down, but increasing demand, including the memory devices, along with the comments from ASML, I support our view of the market will continue to grow steadily. With higher utilization rate and improved lithography tools throughput, we expect the number of masks used for lithography to increase which could further strengthen demand and we are monitoring this trend closely. We achieved the sales of JPY 40 billion in 2024. Also sales were temporarily declined last year. They have recovered this year, and we expect continued growth going forward. While leading manufacturers are currently in mass production are 2-nanometer node for logic devices and DRAM degeneration for DRAM, AGC is already developing next and future generation ologies in preparation for further scaling. Shipment volumes for [indiscernible] mass production are increasing, and we are also supporting products for PSM application in volume production. Evaluation for high NA EUV applications are progressing steadily. Our manufacturing site are located at AGC Electronics Motomiya and Koriyama plants. We have continued to invest in line with the growing customer demand and intend to maintain an active investment strategy going forward. Next page, please. Next, I'd like to CMP slurries, which are used in polishing processes for semiconductor manufacturing. Since mass production started in 2003, AGC has expanded its business by focusing specifically on Ceria slurries. We have maintained a leading position in Ceria slurry market for many years. Because slurries are used during semiconductor manufacturing, demand increases semiconductor production capability expense and the number of layers are using Ceria slurry growth. Our slurries are used in high-quality demand applications such as SDI layers because substitution is difficult, we expect demand to continue growing alongside semiconductor market expansion. One of AGC's key advantage is our fully integrated production system spanning from raw material, with abrasive powder through the finished slurry product. This enable us to respond directly to customer requirement and provide high-quality slurries and provide ceria solutions. End-to-end production also provide advantages in many quality consistently both quality and consistent supply stability. As a new application area, we see promising opportunities in advanced packaging for 3D integration in back end. While silica slurry is currently the primary solution in this field, demand for Ceria slurries begin to emerge. In addition, our chemicals business is developing cleaning agents used after slurry polishing processes by leveraging ACG's combined technologies, thanks we aim to provide customers with comprehensive and integrated solutions. Next page, please. This slide introduces CCL, a copper clad laminates. CCL consists of glass cloth impregnated with resin laminated between copper foils in both sites. The copper layers are patterned to form electrical circuit. CCL's used in the very range of applications, the market is making particularly strong growth in AI-related applications. On the resin side, ACG has developed low dielectric loss resins based on its chemical technologies along with the coating technologies and electrical performance evaluation capabilities built around these materials. So we are reducing dielectric loss depends on both the material use for glass cloth and lowering the dialectic loss of the resin impregnated into the both glass cloth. I think I need to speak up. So reducing dielectric loss depends on the both the material used for glass cloth and lowering the dielectric loss of the resin impregnated in the glass cloth. Cloth is the material that offers the lowest dielectric loss for glass cloth, but it is difficult to manufacture and also has a certain performance trade-off. By using AGC's low dielectric loss resin, higher performance can be achieved with the same glass cloth or the required performance can be maintained when using one lower-grade glass cloth. Given the current tight supply-demand balance for glass cloth, our resin technology can also contribute to the improved supply stability across the industry. We have already begun supplying prototypes for next-generation 2 to 4 giga bps applications. And if these products are adapted, we expect the sales growth beginning next year. One of our new product in this field is our RCC resin coated copper. RCC eliminates the glass cloth in CCL. As a result, it can be made thinner and smoother and making multilayer structure, easier to manufacture. As communication speeds continue to increase and have surface smoothness is expected to become a major advantage because it uses signal degradation and improve signal integrity. Next page please. Finally, I'd like to explain AGC's initiative in the semiconductor packaging field. This is a cross-section view of advanced semiconductor package, memory and logic chips are connected to the substrate through an interposer. At the bottom is a PCB, which provides a connection to the overall circuit system to support higher speed data transmission, photonics electronics convergence technologies are employed, enabling the integration of both electric and optical signals. AGC is a deploying glass interposer for connecting semiconductor chips to substrate. For the substrate layer, we are developing glass core and buildup films. In particular, we are placing significant emphasis on the Glass core technology because it is expected to play a critical role in larger packaging format, chiplet architecture. And lower power consumption, making a potentially large future market. For PCB applications, we are already supplying copper clad laminations in mass production or also developing RCC as a process material, we are currently mass producing and supplying glass carriers. In the field of photonic electronic convergence, which supports both electric and optical transmission, we are developing both MLAs, micro lens arrays and optical control and polymer and glass wave guides for signal transmission. The product I have discussed so far handled within the electronics business in addition Chemicals business is developing low dielectric underlying other fields low fluoropolymer resins and silica fillers for various packages. We are supplying release films for process materials. As you can see, AGC has a broad portfolio and product covering multiple years within the packaged structure. Furthermore, by leveraging expertise across individual layers, we aim to process optimized solutions that take advantage -- adjacent layers. This concludes my presentation AGC's Electronic Technologies semiconductor business strategy and key products. This concludes Electric's element of today's presentation. Thank you very much for your attention.

Thank you very much Suzuki-san. I'm sorry that the audio volume was a little bit low. If you still have problems, please let us know. so Momii-san, please.

Yes. I'm Momii, Chemicals President, and I'd like to talk about semiconductor-related performance of chemicals. So this [indiscernible] department is using fluorochemicals [indiscernible], we are providing the multiple the high functional materials. I'd like to talk about semiconductor-related business growth strategy and 5 chemical main products. So this is about Performance Chemicals and fluorochemicals. We are using the brine electronics and using the bases and fluorine and the the natural gases are using that as a material to have a solid business foundation for the fluorochemicals has a heat and also chemical resistance and very good electrical and optical characteristics. And this the material can not be replaced by other materials. On the right-hand chart, for the semiconductor equipment, we have the release film, particular raw materials, heat transfer food packaging materials. So the very wide range of the processes, we provide the product. We have full strength. First is the fluorochemical synthesis technology. Second, supply chain. Using the strong and competitive supply chain, starting from the brine electrolysis and extend through in the in-house production. Number 3 is resource procurement and recycling. Number 4 is group synergies within AGC Group. This is a strategy for our strategy field. We have 2 directions. One, is the extending area where fluoropolymers and fluoroelastomers are used. The heat and also chemical resistant, which is differential technologies and also we have Performance Chemicals mother plant, Chiba plant extended the capabilities to meet customers' demand. The second strength is future business expansion areas, which is semiconductor process products. We have built and established the customer relationship, and we expand into semiconductor process materials and accelerate deployment into high-speed communication material market. for AI and semiconductor and for AI and data center, miniaturization and high-speed communications we plan to meet customers the emerging demand by our product. So the -- our 2025 performance chemical sales was JPY 171.9 billion and the 24% of Electronics applications, and that is almost -- the majority is our semiconductor business. And I'd like to talk about details of product and also the product we are currently developing. The first one is fluoropolymer fluoroelastomer component for semiconductor manufacturing equipment, which is called AFLAS FFKM. So for FFKM the higher performance of fluoroelastomer with a fully fluorinated structure, in which all hydrogen atoms are replaced by Flourine, which is used as a sealing materials in the semiconductor manufacturing equipment and which is very essential for sealing. What we pay attention to is a stable replacement demand, particularly for the etching processes, the harsh plasma environment requires a placement once every quarter. So demand is stable in line with the semiconductor manufacturing. For the supply chain, we produce FFKM and O-ring manufacturers make sealing materials and supply to semiconductor equipment. So this is a supply chain structure. Our FFKM strength is the industry-leading heat and plasma resistance. The plasma of the environment is very harsh, but our product can be used with stability. And in terms of the environmental concerns, the normally that the emergence and also the [ Fluorescent ] polymers not used we have free the emulsion and fluorosolvent free. We are a leading company to do that. And we have 2 pillars for the future development. First, we will meet the semiconductor miniaturization advances so that we improved heat and plasma resistance. And second one, is the -- we recover discarded Florine and recycling is at the circular floors part, achieving industry-leading recycling level so that we will become even more sustainable and as a differentiation. So we have a product to support different temperature. So less than 200 and also over 300 the temperature target in the future. Next is about ETFE-based release film. AFLAS is my next topic. This product is used in semiconductor back-end molding process, which is on the right-hand side. This is the consumables. IC Tip is sealed with the resin. This is placed between to mold and resin. This is very important to have a release of the mold. At AGC, we have #1 share in the world. So demand increases in relation with the semiconductor manufacturing. So also used in HBM, which is a next-generation semiconductor memory. In terms of the supply chain, Equipment manufacturers are molding the resin -- the manufacturers are recommending our resin. So you see, ETFE-based release film, the Aflex, it has its proprietary resin design and modern technology. And as you can see on the right, ETF resin. It has a film strength and also excellent mode of following capability and also release capability. These 3 are shown, and we have that factor standard in the industry. And in addition, AGC is the #1 supplier of ETFE resin film from the resin to the film. So we are the only company that can follow from that resin to the actual development and production. And the molding process is very difficult. So it's very difficult to change to competitors' products. So we can sustain high maintenance level. So HBM we are going to see endurance and also new protection. So that is going to mean that the new lineup of these is films will be offered going forward. Next, I want to talk about the Pellicle raw material CYTOP. So Pellicle, as you can see on the right-hand side of the slide, in the photomask service is protected using this pellicle so photomask, we have foreign matters. And it protects it from having these being reflected. So it is very important from the quality control point of view. So format is it is not attached to the wafer. So we will be able to avoid any defects. So AGC has this site up and it is offered for this Pellicle material. So when it comes to the market going forward, because of the expansion of the semiconductor production sites and photomask demand increases we believe that this is going to bring a very strong growth going forward. The strength of this CYTOP is Arf and Krf Pellicle raw material, there are virtually no substitute for them. So we have established a very strong position. The differentiation factors. One is that because it is capable for film coating as it is a solution-based. Number two, it is amorphous structure, and it provides high transparency, and it delivers the different properties simultaneously, such as electrical insulation, water and oil repellency, UV transmitters and chemical resistance. And in the later chart on the right, these are Pellicle. What is very important is the UV durability and UV transmittance in both CYTOP compared to competitor products that shows a superiority. So it cannot be replaced. And that is why we have a strong position in the market. Number four, this is under development. This is Thermal medium from semiconductor. It is called AMOLEA AF-164. So during the semiconductor manufacturing, of course, when it comes to precise temperature control is needed for semiconductor manufacturing processes like deposition, etching and ion implantation and of course, the temperature control is going to be very important for the yield, et cetera. So precise temperature control is needed. And of course, this is a JPY 30 billion market. And for AI servers its leading, and it is showing a growth rate of more than 10%. AGC is working on the mid temperature range. The existing competitors is focusing high temperature range and low temperature range. So mid temperature range is a core market that we are targeting. And that is a position that we have established. So AF-164 has 3 strengths. Number one, it has 164 degrees. So it can be used in many different temperature ranges. For customers, they are not -- they did not have to use any multiple temperature devices. Therefore, the total cost can be reduced and also the equipment operation and procurement burdens are low. And it's a small environment impact with low GWP is another strength. So when we look at the robust environmental control going forward, I think this is going to be a big advantage. And AF-164, we are using and producing this domestically in Japan from upstream raw materials. So it has low geopolitical risk. As you can see on the right, the temperature range can be used in environmental consideration and geopolitical risk. All these 3 access are covered very highly with AF-164. So we'd like to utilize the relationship we have with our partners so that we'll be able to penetrate into the market further. And this is our last product, this is under development. This is Post-CMP Cleaner and CMP, as Suzuki from Electrics company mentioned, this is for polishing. And in the processes, this is very important for removing microparticles in the -- and of course, there are some micro particles and chemical residues remaining on the wafer surface. And it's very important to have this removed. And I'd like you to focus within AGC, we have a synergy to be able to provide this product. So Electrica company provide the CMP and the chemical company provides this solution. So this is a total solution that we can offer as a company. So CMP process is expanding, and we believe that we will see strong growth in the demand for solutions going forward. So the strength of this per CMP cleaner is that we are focusing on the entire process, leveraging its know-how accumulated technology specialized in ceria-based CMP slurry. And CMP post process, it shows a very high performance for removing these particles. So we were able to design this because we have a very good know-how of this CMP slurry, which makes this possible. Taiwan in one area, we have created a technical center, we are able to grab the needs of the customer, and we are able to provide a proposition of the products and we'll be able to develop these new products. So the we would like to target demand for leading etching nodes and advanced packaging going forward. And we like to see stable growth centered on high-value eco-friendly products going forward. So that was from the Performance Chemicals semiconductor-related business explanation. Thank you very much for your attention.

Thank you very much Mr. Kurata, Mr. Suzuki and Mr. Momii. Now, we'd like to ask Mr. Kurata to give us a summary.

So in summary, AGC aims to double revenues in the semiconductor-related businesses by 2030 compared to 2025. And we plan to achieve this through continued growth of existing high market share products and the launch of new products, including packaging materials. There are 3 key drivers of this growth. Number one, strong demand for existing products, the EUV mask blanks, lens materials lithography and CMP slurries and release films. Among others, we ensure a strong market position and stable earnings through these products. Number two, expansion of the product portfolio. By focusing on materials for back-end packaging processes, we will broaden our revenue structure, which is currently centered on front-end processes and strengthen our ability to propose solutions spanning the entire supply chain from upstream downstream. Number three, group-wide technology and supply chain. AGC's ability to provide integrated solutions from materials to components and processes through the synergy between Electronics and Performance chemicals is a key differentiator. So based on these factors, we aim to achieve sustainable revenue growth by steadily executing investment plans in growth areas, leveraging our portfolio of products and technologies with clear competitive advantages. With that, we'd like to end our presentation. Thank you very much for your attention.

I'm sorry, that was a very important slide at the very end. Now we will start the Q&A session.

[Operator Instructions] Now we'd like to start the Q&A.

My name is Matsuda, Mizuho Security. Can you hear me?

Yes, we can hear you.

I have 2 simple questions. The first question, this is a very elementary question. I just want to make a confirmation. So Page 37, the last slide I'm looking at that. And particularly this in pink, electronics, the semiconductor product in electronics, it's approximately JPY 100 billion. So I think a pink is about the JPY 70 billion to JPY 80 billion. So lens from to CCL, you talked about 4 products for each. Would you please give us the breakdown out of JPY 70 billion to JPY 80 billion? It doesn't have to be exact. I just want to have an image. That's my first question. And also this pink still. How about the profitabilities? So for the Electric company, there's a display and also electric materials component. So out of components, I think the semiconductor is there. How about the breakdown or the ratio of each product? And for the semiconductor-related business well electronics, what would be the -- could you please give us a certain image about the profit -- profitabilities?

Thank you very much for your question. Okay. So most Electronics discussions. So Suzuki-san, please.

Yes. Thank you for your question. First of all, the first question Currently, actually, I'm not able to talk about details like a detailed breakdown. However, the largest sales is blanks. Next, second is CMP slurry and CCL business is following the blanks. And then after that is semiconductor lithography lens. So that is the order in terms of the size. So second question about the profit. We are developing a lot of product, but for the semiconductor related business and also electronics. We don't give the specific breakdown, but the electric components out of that opt in the semiconductor for both sales and profit, it's 50-50. However, in the future, we would like to grow semiconductor-related businesses. So in terms of business size, we think that the semiconductor-related business side will grow in the future.

Next is on CCL. Of course, from material to the very. I just want to ask you about the sensors that you have for these materials. When it comes to resin, you have talked about the PTFE. And also, you have hydrocarbon that you're working on at the moment. So PTFE and hydrocarbons, including all these 2, what the areas that you want to target in the data centers. What are the CCL? Have they been adopted already or are you still working on the sample work? So what is your future direction in these areas?

So this was a question on CCL. So I'd like to ask Suzuki-san to answer this question.

So I'd like to explain about CCL as you mentioned, we have a strong characteristics with the resins. When it comes to chemical development we are leading, therefore, with resin, we are using 2 companies to develop. And this is a unique position when it comes to CCL makers. And of course, we are working on new products with dielectric properties. And in AI, for example, routers and switch. These are the areas that we are offering and being adopted. So 224 gigabps the resin's dielectric property is going to be very important. So using this new resin, we are trying to increase our sales, and we are probably not providing samples. And from next year going forward, we believe it will be replaced by 224. So we believe that from next fiscal year, we will be making the contribution to the company's performance. So there will be some dielectric properties that are going to be the focus going forward. So that will be our focus going forward. Thank you very much.

Kono-san from from Nomura Securities.

I'm Kono from Nomura Securities. So by 2030, you would like to double the sales. So you have to increase the sales by JPY 100 billion in 5 years. What products are the driver for sales increase in terms of the contribution or maybe size that what product can increase the sales by how much?

So the -- we have a product for both Electric and Performance Chemicals. We'd like to ask the Suzuki-san and Momii to answer your question.

Yes, from electronics, yes, please from electronics. So we think that in total, yes, this also be doubled, but for the electronics, this actually a back-end new product is not really included in this target. So actually, we expect the existing product to grow. For back end, we do not know for sure what product we will have for the back end. So we don't want to mislead you. However, having said that, as I touched upon earlier, blanks growth and CCL, we think these drivers and as a polishing and lithography. These really dependent on equipment number of units, and they are increased. These products will grow for sure. So for the synthesized quartz and also the -- yes, the lithography that's the second group to drive the sales. And Momii-san,would you please talk about the Performance Chemicals?

Yes. Would you please show us the Page 25 of the slide? Yes. For Performance Chemicals, as I explained today, this the equipment -- semiconductor manufacturing, the materials focusing -- centering on the resin, there's the semiconductor process the materials. For the Performance Chemicals, yes, we'd like to double the sales. Also, but for the semiconductor manufacturing equipment products, we would like to make organic growth in this area. And for the semiconductor process products, we are developing the cleaner and also the the heat resistant product. We would like to the strengthen the Performance Chemicals business in this time called the process products. Thank you very much. Did we answer your question?

I'd like to ask another question, if I may. Looking at Page 22. The packaging-related solution, which is going to be a focus going forward. On Page 22, there are many products as shown here. In the next 5 years, which are the products that you expect the sales to grow? And when do you think those products will start to show sales contribution?

Thank you very much. I'd like to ask Suzuki-san to this question first, and Momii-san to add some comments.

Yes, when it comes to semiconductor packaging, we are a number of products involved here. The market, which is expected to grow is a glass core. The reason is used here at the moment, however with a larger packaging because of large size packaging, if it's a resin, there will be some slides or it may be some heat-related issue. So glass is a focus right now to replace it. So glass core if we are able to produce good products and provide us an industry, then there will be replacements or for high functionality, we believe glass will be used more. So if it's going to get larger, I think it is going to be glass core. I think glass core is going to grow further. And when you capture CCL, these now provided as products. that AI service that I mentioned earlier, the 224 gigabps, this is what is needed. And if CCL can enter that area, naturally, because this is already available, we believe that the growth will be quite large. And also, this is another area in which we are going to see this combination -- and we believe that this is an area that we will be able to see a great enhancement. So glass core and also in CCL and also when it comes to optical materials on the electric convergence, this is another area that we can expect the growth coming from going forward. Thank you very much. Momii-san, would you like to add some comments?

In Performance Chemicals, on this slide, this the resin is what we are looking at. And this is though the electric resin raw material. The adoption is going with the differences of manufacturers. And we believe with AI server market being grown, we will see supply to increase. And we believe that this lower resin raw material combined with fluoropolymer resin is going to be very important going forward, especially for high-speed communications. And of course, the silica filler dielectric, this is something that we are preparing for mass production going forward, and this is going to be serving the needs for AI servers going forward. Thank you very much. Anything else? Thank you very much.

Now next question, please. Nishiyama-san from Citigroup Securities.

My name is Nishiyama, Citigroup Security. So Page 21, please. I have a question about CCL. So one lower grade glass is being used. So is that the low decade second generation is used but fast generation is possible but maybe the second generation can replace the other or the higher grade glass. And also [indiscernible] wave. You have the integrated the [ PTE ], but this is ELL-Series. Is this PTFE or hydrocarbon? Would you please talk about that?

Yes. So this is for CCL. So Suzuki-san would you please take discussion?

Yes. The first question is about glass cloth and resin relationship. Right now, especially what we're targeting at 224 area. So in that sense, the existing resin, quartz is necessary to achieve the high performance required performance. But right now, 112 is using is NER, this type of product can be used in combination. So the past existing resin needed quartz, but existing cloth can be used to reach the required performance. That's what we are aiming for. And for ELL -- sorry about that. I mean we can answer questions in a later date after this briefing. Is that okay? Yes, I need to check my document. So can we answer questions later?

Okay. Can I ask you another question?

For the second question, we will answer your second question through IR division.

Can I ask you a different question?

Of course, go ahead.

As for EUV blanks, so CPU demand is going to get bigger. So from a major customers demand, is it getting better from the beginning of the year in 2024? The sales was over JPY 40 billion, I believe. So do you think you'll be able to capture that kind of level when you capture sales? And are you looking for mass production from customers out of a new major customer in this area. So this is that we must like.

Suzuki-san, please.

As for EUV mask blanks, I'd like to explain. I cannot give you details about the different customer situation. However, comparing this year from last year for each of the customers, the EUV, the blanks usage is increasing, and it is stabilizing. And last year, one specific customers demand lowered, but the usage by this customer is recovering this year. When it comes to the outlook, the current market situation and supply situation, we can expect a stable demand going forward. And when it comes to customers, for EUV mask blanks customers, there aren't many. However, for each of the customers, the usage of our product is increasing. So compared to 2024, looking at the customer portfolio, we believe that stable growth can be expected. That is a change that we're seeing in the trend. Therefore, last year was the bottom. And this year, we are seeing recovery. And after 2024 and the demand in 2024, how can I say this, in that term, we believe that we will exceeded this year. And next year, we will exceed the number further. Thank you very much.

We'd like to take the next question. Maeda-san, SMBC Nikko Securities.

My name is Maeda from SMBC Nikko. I have 2 questions. The first question is about Page 25 about Performance Chemicals, semiconductor-related but it could be electronics application. For each product, would you please give us the sales breakdown? I'd like to understand the ratio against the sales. About the contribution to the profit, which product has the largest particularly significant contribution?

Okay, that is Performance Chemicals, the contribution to sales and profit. Momii-san, is going to explain.

Thank you very much for your question. To answer to your question about the detail, the sales volume, sales numbers about the breakdown, I'm not able to disclose that information. But in terms of contribution, for sales and the profit, which are productive drivers. So the areas that will grow. For example, for the semiconductor manufacturing equipment product are currently still already that this product for that application has the good the OP margin. So actually, also, we'd like to launch the products for semiconductor process products which is currently is doing well.

I have another question. The GP architecture for AI materials may be used in the back plane. I think that is something that we are hearing. So do you see this as a business opportunity going forward? And of course, when it comes to Fluorites, the control risk regulation risk is there anything that we need to be concerned about in this area?

First for the PFAS control, as you mentioned, the PFAS regulation currently, the direct impact on our business and product, we believe, is limited. However, as you know, in Europe, this discussion is ongoing. Therefore, in the Performance Chemicals business, we do believe this is a significant risk that we need to recognize. But we believe that 5G and 6G, the communication related usage and also the semiconductor-related products that we talked about, these are essential for making in semiconductors. So we would like to continue to supply the products then we need to reduce the environmental building from production processes. And of course, we need to sophisticate how we control -- and of course, we need to look at replacement and alternative technologies as well. And of course, we are looking at dielectric properties. So we believe that this is another perspective that we can work on when it comes to fluorine products. But this is something that we are working on in development as well.

So in your development processes, what is your positioning of your company in their development field?

Well, in that sense, our company from that dielectric property, we do have that material that we can offer, but we believe that the demand is going to be higher going forward. And it is not as if we are leading or we are delayed. So I don't think we are able to do that kind of assessment yet. Thank you very much.

Next question. Yes. Chiba-san from BofA Securities.

I'm Chiba, BofA Securities. Can you hear me?

Yes, we can hear you.

Just have 2 questions. Page 22, please. So out of this glass core and glass interposer. These are my questions. So TV, TGV Glass core is actually sample...

Chiba-san, I'm sorry, we are not able to hear you well. Could you please repeat? Would you please speak into the microphone?

Can you hear me better?

Yes, please.

On Page 22. glass core, there's a TGV the substrate sample shipment has started. So at AGC, there's a rumor that it's going to be behind maybe later 2030. So when do you think you have the production? So if you have any outlook for the glass core TGV.

So the TGV substrate when you start the production, what is our plan of forecast? Suzuki-san, please.

For -- this is the TGV glass core, rather substrate, I think when we can start the production shipment, there's a technical models not only with us, but for the industry. The full target -- our original target of 2028, but I have a personal feeling. I think it will be sometime around 2029. That is the start-up production. So our customers are not going to they start using in the large scale, but they'll start using gradually from 2029, then when glass core supply becomes a good in size, then I think we'll see the ramp up of the production in sales. So to answer to your question, the timing is about 2029.

Understood very well. May I ask one more question please? So this is also on Page 22, but dielectric products. And I don't think this is included in the double revenue by 2030. But when do you think it will come to make the contribution?

Thank you very much. Suzuki-san, would you like to answer the question?

Yes. Thank you very much. Maybe Mr. Maeda will be able to answer this question. So Mr. Maeda, would you like to answer this question.

My name is Maeda from electronics company. About the optical materials for photonic and electronic convergence. So NVIDIA Switch has been launched, and that is where we have started adoption. And we make proposals now. And as Suzuki-san mentioned earlier. Our Microlens array this is optical. This is using parallel gate so that it can be used for grading. And that is a kind of product in which we are getting a lot of inquiries about. And also going to the future, there will be [indiscernible] going forward, and that is something that we can work on. And as was mentioned earlier, of course, the copper power-related products, we have lots of inquiries, and we are providing samples at the moment. So as for the scale of revenue going forward, we are not able to give specific values. It will depend on how much we'll be able to expand the value chain. Therefore, we can give you a new thing specific, but it would be a multibillion dollar level of our business scale that we would like to target as we continue with the development. Thank you very much. So it will be a few billions of yens of market. So we'd like to take a part of that market. So this market is going to grow. And in FY '28 to FY '29, we hope that it can be started and that is the kind of inquiries that we are receiving. So we hope that for tonic electronic convergence will start to grow after 2030.

And my follow-up question is, you said that adoption has already started. In other words you mean that new products of your company has been adopted already. What did you mean by adoption by customers?

Well, our current situation is that development and also trials is now being done. So when it comes to mass production, that has not started yet.

So I'd like to move to the next question. Hirakawa-san of Daiwa Securities.

Yes. I'm Hirakawa of Daiwa Securities. I have 1 question. So I have a question about the entire flow actually. So you talked about AI so like dielectric glass like CCL is getting attraction. But when we have a glass score, what do you think about will happen to CCL? Do you think that will be replaced by the glass core? And you have the fluororesin. And what will be the chemistry or affinity with the glass core? So I have a -- what the glass core is going to impact CCL or the fluororesin and what will be the timeline that these product is going to grow? And again, if you have any math these new products is going to replace the old products. That's my question.

Thank you about the package material. So first, I think Suzuki-san can answer your question. And then Momii-san, can respond to the question about fluorochemicals.

Yes. About packaging, glass core and CCL PCV relationship glass core was that would be penetrated in the future. The PCV, meaning CCL's demand will not be replaced. It's not going to be converged. The glass core is for the resin for the substrate is going to be glass core. So PCV will stay. Therefore, cannibalization that doesn't happen to us. And then for the future, maybe the photonic-electronic convergence and also substrate could be integrated. But that will be a positive business opportunity. So again, it's not a cannibalization. So about the fluorine for each layer. We -- they don't offer how to make everything high functional, but if any of the product is going to be integrated into the new product to close the cannibalization, we don't think that will happen.

In Performance Chemicals, when it comes to is dielectric, it is not used independently. So it will be used in combination with other materials. And as Suzuki-san mentioned, there would not be any cannibalization with glass core. So it will be case by case, it will be in combination with different materials that customers are considering its use. So in that manner, I think they will be used as products going forward. So today in the market, Florence are focus of the market. And therefore, here, glass core and also there will be some good compatibility with the copper. Therefore, we believe that Florence would continue to grow. Is that the possibility that you're seeing? That is our understanding as well. Thank you very much.

It is time. So with that, we'd like to end the Q&A. [Operator Instructions] With that, we'd like to end the explanation session of semiconductor-related business. Thank you very much for your participation. [Statements in English on this transcript were spoken by an interpreter present on the live call.]