Deterioration in global market conditions and supply-demand adjustments across the supply chain

「In addition to issues relating to market conditions and supply and demand, the continued surge in metal benchmark prices made further cost reductions necessary.」

「中国製半導体へのシフトが急速に進展」

「Sales of white goods products declined 14.2% year on year as customer inventory adjustments continued amid a prolonged adjustment in residential sales in China. In the industrial and consumer markets, sales increased only 0.7% year on year due to inventory adjustments in the supply chain amid stagnant IT-related capital investment, including investment in data centers.」

「Net income attributable to owners of the parent increased by ¥1,493 million, or 50.6%, year on year to ¥4,448 million, due in part to the impact of production adjustments for white goods products, primarily at Sanken Core, resulting from deteriorating market conditions. However, the result was below the earnings forecast announced at the beginning of the fiscal year.」

「The operating environment during the cumulative first quarter under review remained uncertain, as delays in China's economic reopening became increasingly apparent amid sluggish consumption and private-sector capital investment, while persistent inflation and monetary tightening continued in Europe and the US.」

「In particular, an impact on production and consumption activity from a slowdown in the U.S. economy is anticipated, and the outlook remains uncertain.」

「Although the rapid depreciation of the yen had eased, uncertainty over the outlook continued to increase due to the impact of China's zero-COVID policy and the renewed spread of infections after its relaxation, accelerating global inflation and the prolonged invasion of Ukraine by Russia.」

「The operating environment during the cumulative second quarter under review became increasingly uncertain, with accelerating global inflation, stagnation in the Chinese economy associated with its zero-COVID policy, the prolonged invasion of Ukraine by Russia, and the rapid depreciation of the yen.」

「During the first-quarter cumulative period, the operating environment remained subject to rising global inflation and the continuing semiconductor shortage」

「The operating environment during the cumulative third quarter under review (April-December 2021) saw consumption recover as the severe conditions caused by COVID-19 eased, economic activity progress in various countries, and demand growth in the semiconductor market continue.」

「During the first-quarter cumulative period, the operating environment saw a continued recovery in China and increases in personal consumption and capital investment in the United States, among other factors. As a result, the global semiconductor market remained buoyant, and steady signs of economic recovery from COVID-19 emerged.」

「Although the global economy was affected by the spread of COVID-19 during the first half, signs of an economic recovery emerged in the second half, with production and consumption activity recovering quickly in China and the global semiconductor market becoming buoyant.」

「Although the global economic stagnation caused by the spread of COVID-19 infections affected the first half, business sentiment began to recover in the second half as economic activity resumed in developed countries in Europe and the US, led by China, where production and consumption activity recovered at an early stage.」

「Although production adjustments were unavoidable in the second quarter, shipments increased as production of white goods by Chinese and South Korean manufacturers and automobile production in the United States and China, mainly by Japanese automakers, showed signs of recovery, together with a temporary increase in demand for office automation products such as printers.」

「For the group, demand forecasts for semiconductor devices have continued to decline since April this year, and the impact on factory operations has begun to emerge.」

「Strongly affected by the decline in global automotive unit sales, consolidated sales declined by ¥13,432 million, or 7.7%, from the previous consolidated fiscal year to ¥160,217 million.」

「Due to sluggish growth in the global automotive market, sales of automotive products, the main products of the group and its U.S. subsidiary Allegro MicroSystems, Inc., declined, while sales of products for industrial equipment also fell sharply.」

「Although sales of products for inverter air conditioners with high energy efficiency, which leverage the group's technological strengths, continued to grow, particularly in the Chinese market, inventory adjustments progressed gradually throughout the supply chain as global automotive market conditions deteriorated. Sales fell sharply not only for automotive products, the main products of the group and its U.S. subsidiary Allegro MicroSystems, Inc., but also for products for industrial equipment.」

「As deteriorating global market conditions led to supply and demand adjustments across the supply chain, consolidated sales declined by ¥4,872 million, or 11.4%, year on year to ¥37,807 million.」