MICRONICS JAPAN CO.,LTD. Q2 FY2025 earnings call

Overall Company Financial Results

• Q2 2025 (Apr-Jun 2025) total revenue hit 18.996 billion yen, a new all-time quarterly high, up 34.5% quarter-over-quarter and 32.1% year-over-year. Operating profit was 4.711 billion yen, up 64.9% quarter-over-quarter and 44.7% year-over-year, with an operating margin of 24.8%, maintaining above 20% for 7 consecutive quarters since Q4 2023.
• First half 2025 (Jan-Jun 2025) cumulative revenue was 33.12 billion yen (up 26.6% year-over-year), cumulative operating profit was 7.569 billion yen (up 28.3% year-over-year), with all profit lines growing 27%-30% year-over-year.

Probe Card Business Operational Updates

• HBM demand continues to expand rapidly, and the company maintains strong pricing and demand momentum for next-generation HBM probe cards. The new Aomori Plant new building has started operations as scheduled, and development of next-generation probe card technology for HBM is progressing on track.
• For non-memory probe cards, the company is focusing on developing new automotive customers with its new vertical probe card products MEMS-V and MEMS-SP, which have received strong market evaluation despite the current challenging automotive market conditions.

TE Business Operational Updates

• Commercial negotiations for the company's new Excelyze engineering prober and Testalio all-in-one tester are ongoing. Excelyze fills the company's gap in 200mm manual probers, enabling support for all wafer development projects, while Testalio offers 4 models covering portable to full-spec configurations to support a wide range of device testing needs.
• The company is expanding sales of test sockets by strengthening customer support at its overseas hubs centered in Asia.

1. Probe Card Business: Q2 2025 (Apr-Jun 2025) total revenue was 175.96 billion yen, accounting for 92.6% of total company Q2 revenue. Within this segment, memory probe cards made up 92% of segment revenue, reaching 161.88 billion yen (up 4.8 billion yen quarter-over-quarter, with DRAM-focused revenue hitting an all-time high driven by forward shipment shifts and strong HBM demand); non-memory probe cards accounted for 8% of segment revenue at 1.4 billion yen, flat quarter-over-quarter. Segment profit hit 54.55 billion yen with a 31% profit margin, improved quarter-over-quarter on strong DRAM sales. Q2 2025 orders were 10.955 billion yen, down 8 billion yen quarter-over-quarter. Order backlog remained high at 26.384 billion yen.
2. TE Business: Q2 2025 total revenue was 1.4 billion yen, flat quarter-over-quarter, with solid performance from semiconductor test sockets offset by softness in other product lines. The segment recorded a 172 million yen loss in Q2 2025, and management expects full year 2025 revenue of 1.8 billion yen, down 15% year-over-year.

• Full year 2025 total revenue guidance is maintained at 68.9 billion yen (up 23.8% year-over-year), with probe card business revenue guidance of 67.1 billion yen (up 25.4% year-over-year). Full year operating profit guidance is 13.8 billion yen (up 12 billion yen year-over-year), net profit attributable to parent shareholders is 9.2 billion yen (up 388 million yen year-over-year), and dividend per share guidance is 72 yen, a 2 yen increase.
• Q3 2025 guidance has been revised downward: revenue is cut by 1 billion yen to 50 billion yen, operating profit is cut by 13 billion yen to 11.1 billion yen, and net profit attributable to parent shareholders is cut by 17 billion yen to 6.8 billion yen. The downward revision reflects production delays caused by equipment malfunction at an existing memory probe card factory, with impacts incorporated into both Q3 and Q4 2025 forecasts.
• The full year 2025 capital expenditure plan is 17.8 billion yen, of which 7.8 billion yen has been spent in the first half. Full year R&D expenditure plan is 7 billion yen, with 3.1 billion yen spent in the first half. The company is accelerating capital expenditure to match strong HBM demand, and total investment for the mid-term plan may exceed original targets.
• The company maintained its 2026 (FV26) mid-term target of 80 billion yen in revenue, 20 billion yen in operating profit, 25% operating margin, and 23% ROE, despite revising the projected probe card market CAGR from 20% to 14% through 2026.
• Management expects that after the order adjustment in Q2 2025, orders will return to normal levels matching production capacity in Q3 2025, and targets to reach close to 20 billion yen in probe card revenue in Q4 2025.

• Equipment malfunction at an existing memory probe card factory has caused product shipment delays, leading to downward revisions to Q3 2025 profit guidance and near-term production capacity constraints.
• Probe cards currently face extended lead times (roughly double standard lead times), leading to frequent order and shipment schedule adjustments from customers, creating operational complexity and temporary order volatility.
• Global economic risks include renewed trade friction from US tariff policy, uneven monetary policy across major economies, and soft demand for automotive and industrial semiconductors that weighs on non-memory probe card demand.
• Strong market demand has stretched industry-wide production capacity, leading to extended lead times across all major probe card manufacturers, which could create customer dissatisfaction and potential share shifts if capacity cannot be expanded quickly enough.

Q: Why did probe card orders drop so sharply quarter-over-quarter in Q2, and will orders recover to 15-20 billion yen in coming quarters? Is the drop just from customer ordering timing changes, or is it related to the equipment malfunction or competitive share loss? / A: The sharp drop is primarily a temporary shift driven by customer ordering behavior. Industry-wide lead times for probe cards are double standard levels, so customers have adjusted their ordering to prioritize only highest-urgency products in Q2, delaying lower-priority orders. All major probe card makers face high order backlogs and long lead times, so this is an industry-wide dynamic rather than a company-specific or competitive issue. Management expects orders to return to normal capacity-aligned levels in Q3, and targets close to 20 billion yen in probe card revenue in Q4 2025, which represents the company's current full production capacity.

Q: After lowering the probe card market CAGR projection from 20% to 14%, how do you see next-generation demand and the sustainability of growth for your business, especially for HBM? / A: HBM demand remains very strong, and orders for HBM4 generation probe cards have already started coming in from all major customers. While there is some quarterly order volatility, customer demand appetite remains strong. Long-term, AI growth and HBM generation transitions will continue to drive probe card demand expansion, and industry-wide capacity constraints confirm that underlying market demand is very strong. The company does not see a major risk of existing product generation extending lifecycle significantly derailing growth, and the demand slowdown actually gives the company time to expand capacity and move lead times back toward standard levels.

Q: What is the expected quarterly production capacity after accounting for the equipment malfunction, and what is the path for capacity ramp from the new Aomori plant? / A: Current full year guidance is based on full production utilization, so the published revenue forecast directly reflects the company's available production capacity. The company expects Q4 2025 probe card revenue to reach 17-18 billion yen, which is the current available production capacity after incorporating the equipment malfunction impacts. Capacity will continue to ramp as the new Aomori plant comes fully online to meet growing HBM demand.