High Dependence on the FPD, Semiconductor and Electronic Component Markets

「In the business environment surrounding the Group, investment in leading-edge logic and next-generation memory drove the semiconductor market against a backdrop of the rapid adoption of generative AI. Plans to build and expand semiconductor plants worldwide are progressing in response to geopolitical risks. In the electronics industry, capital investment in power devices is being adjusted in the short term due to slowing EV demand and other factors, but technological innovation and capacity expansion investment in various electronic devices aimed at the digitalisation of society continue to advance. In the flat-panel display (FPD) industry, capital investment to increase panel size is becoming more active as OLED adoption expands in IT products such as tablets and PCs.」

「Under its new medium- to long-term management plan, the Value-Up Plan, the Company has adopted a policy of concentrating its business portfolio on the semiconductor and electronics fields. However, the semiconductor market is characterised by rapid technological innovation and is susceptible to geopolitical risks and economic fluctuations.」

「In the business environment surrounding the Group, the semiconductor industry is expected to see medium- to long-term growth in semiconductor demand driven by the increasing adoption of generative AI and other factors. Plans to build and expand semiconductor plants worldwide are progressing to strengthen supply chains and address geopolitical risks. In the electronics industry, capital investment in power devices is being adjusted in the short term due to slowing EV demand and other factors, but technological innovation and capacity expansion investment in various electronic devices aimed at a smarter and more digital society, as well as investment in domestic production in China, are continuing. In the flat-panel display (FPD) industry, as IT panels for tablets, PCs and other products shift from LCD to OLED, investment in OLED using large substrates is beginning in earnest. In addition, the industrial battery industry is expected to see mass-production investment aimed at making EV batteries smaller with higher capacity and improving safety.」

「In the business environment surrounding the Group, the semiconductor industry is seeing short-term moderation in semiconductor manufacturers' capital investment as demand for smartphones, PCs and other products slows. However, medium- to long-term growth in semiconductor demand is expected, partly driven by expectations for generative AI, while plans to build and expand semiconductor plants worldwide are progressing in response to geopolitical risks.」

「In the business environment surrounding the Group, the semiconductor industry is seeing short-term moderation in semiconductor manufacturers' capital investment as demand for smartphones, PCs and other products slows. However, medium- to long-term growth in semiconductor demand is expected, partly driven by expectations for generative AI, while plans to build and expand semiconductor plants worldwide are progressing in response to geopolitical risks. In the electronics field, investment in power devices driven by the shift to green energy and EVs, technological innovation and capacity expansion for various electronic devices aimed at a smarter and more digital society and the realisation of the metaverse, and investment in domestic production in China continue to expand. In the flat-panel display (FPD) industry, IT panels for tablets and PCs are at a transition point from LCD to OLED, and investment in OLED using large substrates is expected going forward. In addition, mass-production investment aimed at making EV batteries smaller with higher capacity and improving safety is beginning in earnest.」

「In the business environment surrounding the Group, the semiconductor industry is seeing short-term moderation in semiconductor manufacturers' capital investment as demand for smartphones, PCs and other products slows. However, medium- to long-term growth in semiconductor demand is expected, partly driven by expectations for generative AI, while plans to build and expand semiconductor plants worldwide are progressing in response to geopolitical risks.」

「For fixed assets in the Group's FPD business, which belongs to the Vacuum Equipment segment, the rapid change in the market environment meant that the originally anticipated earnings could no longer be expected. After identifying indications of impairment and considering whether to recognise an impairment loss using undiscounted future cash flows, the carrying amount of fixed assets in the asset group before the impairment loss, ¥3,564 million, was reduced to value in use, and the reduction of ¥2,275 million was recorded as an impairment loss under extraordinary losses.」

「In the business environment surrounding the Group, the semiconductor industry continues to see short-term moves to postpone capital investment in semiconductor manufacturing equipment as demand for smartphones, PCs and other products slows. Over the medium to long term, plans to build new semiconductor plants and expand existing plants are progressing worldwide to meet growing semiconductor demand and address geopolitical risks, and medium- to long-term growth is expected.」

「In the business environment surrounding the Group, the semiconductor industry saw moves to review capital investment plans for semiconductor manufacturing equipment as demand for smartphones, PCs and other products slowed.」

「In the business environment surrounding the Group, the semiconductor industry saw a cautious approach to new capital investment in semiconductor manufacturing equipment as demand for smartphones, PCs and other products slowed, while investment in power devices driven by the shift to green energy and EVs, various electronic devices aimed at realising a smart society, and domestic production in China remained active in the electronics field. In the flat-panel display (FPD) industry, investment in OLED panels using large substrates is expected to increase going forward in response to the shift from LCD to OLED in smartphones, tablets and other products, although the industry is being affected by a decline following the active investment in LCDs for IT panels such as tablets, PCs and automotive displays in the previous fiscal year.」

「For operating assets, because the rapidly changing market environment in China for the mask blanks business for flat-panel displays (FPDs), which belongs to the Vacuum Applications segment, meant that the originally anticipated earnings could no longer be expected, and for idle assets, because production facilities were consolidated through the integration and elimination of production lines, among other measures, the carrying amounts were reduced to their recoverable amounts, and the reductions were recorded as an impairment loss of ¥3,090 million under extraordinary losses.」

「During the cumulative consolidated period for the third quarter, no new business or other risks arose. There were also no significant changes to the business and other risks described in the securities report for the previous fiscal year.」

「Our diverse products are used across a wide range of fields. In particular, by establishing a stable earnings base in semiconductors and electronic components, we are strengthening our ability to respond to market fluctuations.」

「In the electronics industry surrounding the Group, investment has become more active not only to realise a smart society as 5G spreads, but also to support remote work and stay-at-home demand during the pandemic. Recently, foundries and logic manufacturers have increased leading-edge investment, and there have been moves to resume memory investment. In China, investment aimed at domestic production in the electronics field has become more active. In the flat-panel display (FPD) industry, the market was in a temporary adjustment phase as major LCD panel investment projects subsided amid the shift from LCD to OLED, but there were also efforts to develop mass production of OLED panels using large substrates and moves to invest in LCD panels to meet stay-at-home demand.」

「In the electronics industry surrounding the Group, investment has become more active not only to realise a smart society as 5G spreads, but also to support remote work and stay-at-home demand during the pandemic. In China, investment to promote domestic production in the electronics field has become more active. In the flat-panel display (FPD) industry, as the market shifts from LCD to OLED, efforts are under way to develop mass production of OLED panels using large substrates, while the industry is in a temporary adjustment phase as major projects for LCD panel investment have subsided.」

「In the electronics industry surrounding the Group, expectations for more active investment to realise a smart society have increased with the spread of 5G, while a wait-and-see stance toward new investment has also emerged due to the effects of COVID-19 and US-China trade friction. Against this backdrop, investment in China to promote domestic production in the electronics field has recently become more active.」

「In the electronics industry surrounding the Group, capital investment by foundries and logic manufacturers in leading-edge processes remained firm. New capital investment by memory manufacturers was in an adjustment phase, but there were moves to resume investment amid rising demand for servers for data centres and other factors.」

「In the electronics industry surrounding the Group, capital investment by semiconductor memory manufacturers was in an adjustment phase, partly reflecting the backlash from the strong investment seen in 2018, but there were moves to resume investment amid rising demand for servers for data centres and other factors. Over the medium to long term, investment is expected to become more active as the full-scale commercialisation of 5G progresses worldwide and society becomes smarter. In the flat-panel display (FPD) industry, major projects for investment in large LCD panels have subsided, while investment in OLED panels for smartphones is also in a temporary adjustment phase.」

「In the electronics market surrounding the Group, capital investment by semiconductor memory manufacturers is currently in an adjustment phase due to slowing demand for servers for data centres and smartphones, although there are also moves to resume investment, and investment is expected to become more active over the medium to long term as society becomes smarter. In the flat-panel display (FPD) industry, major projects for investment in large LCD panels have subsided, while investment in OLED panels for smartphones is also in a temporary adjustment phase.」

「In the electronics market surrounding the Group, capital investment by semiconductor memory manufacturers is currently in an adjustment phase due to slowing demand for servers for data centres and smartphones, but investment is expected to become more active over the medium to long term as society becomes smarter. In the flat-panel display (FPD) industry, capital investment in large LCD panels is continuing, although major projects have subsided, while investment in OLED panels for smartphones is also continuing, with some moves to postpone investment.」

「In the electronics market surrounding the Group, capital investment by semiconductor memory manufacturers had continued in response to expanding memory demand driven by increased demand for servers for data centres and other factors, but recently there have been moves to postpone new capital investment due to slowing demand and other factors.」

「In the electronics market surrounding the Group, capital investment by semiconductor memory manufacturers continued in response to expanding memory demand driven by increased demand for servers for data centres and other factors, but recently there have been moves to postpone new capital investment due to slowing demand and other factors.」

「In the electronics market surrounding the Group, capital investment by semiconductor memory manufacturers continued in response to expanding memory demand driven by increased demand for servers for data centres and other factors, but recently there have been moves to postpone new capital investment due to slowing demand and other factors.」

「There were no newly arising business or other risks during the cumulative consolidated period for the first quarter. Nor were there any material changes to the business or other risks described in the securities report for the previous fiscal year.」

「Sales in these fields now account for more than 50% of consolidated net sales and have become the core fields of our Group. Conversely, a substantial contraction in capital investment by FPD, semiconductor and electronic components manufacturers, which are our business partners, or a deterioration in the financial condition of our customers could adversely affect the Group's operating results and financial position.」

「During the cumulative consolidated period for the third quarter, no new business or other risks arose. There were also no significant changes to the business and other risks described in the securities report for the previous fiscal year.」

「During the cumulative consolidated period for the second quarter, no new business or other risks arose. There were also no significant changes to the business and other risks described in the securities report for the previous fiscal year.」

「There were no newly arising business or other risks during the cumulative consolidated period for the first quarter. Nor were there any material changes to the business or other risks described in the securities report for the previous fiscal year.」

「Sales in these fields now account for more than 50% of consolidated net sales and have become the core fields of our Group. Conversely, a substantial contraction in capital investment by FPD, semiconductor and electronic components manufacturers, which are our business partners, or a deterioration in the financial condition of our customers could adversely affect the Group's operating results and financial position.」

「Sales in these fields now account for more than 50% of consolidated net sales and have become the core fields of our Group. Conversely, a substantial contraction in capital investment by FPD, semiconductor and electronic components manufacturers, which are our business partners, or a deterioration in the financial condition of our customers could adversely affect the Group's operating results and financial position.」