Source of uncertainty for earnings growth due to the semiconductor shortage

「No new business or other risks arose during the six months ended 30 June. There were also no material changes to the business and other risks described in the securities report for the previous fiscal year.」

「During the current interim consolidated accounting period, companies in Japan and overseas continued to have strong appetite for capital investment, and demand continued to exceed supply.」

「During the consolidated fiscal year under review, manufacturers in Japan and overseas continued to have strong capital investment intentions, and excess demand remained.」

「Meanwhile, component shortages continue, and excess demand remains.」

「However, although the semiconductor shortage is gradually easing, it still cannot be considered sufficient, and the situation in which supply cannot keep pace with demand for capital investment continues.」

「Capital investment appetite among companies in Japan and overseas remains solid, and energy-saving investment is also increasing due to higher raw material prices. However, semiconductor supply remains insufficient except in some areas, and supply continues to fall short of capital investment demand.」

「In the Intelligent FA Systems business, performance remained solid, supported by strong sales of production management systems, various inspection equipment, including shipment inspection equipment, and monitoring equipment for electricity, water and other utilities, driven by continued growth in capital investment using IoT. Demand for various automation systems, including robots, is also expanding, and the “One Stop Shopping” initiative is performing well. The impact of shortages of certain raw materials, which had been a concern, is also gradually moving toward resolution, although the process remains ongoing.」

「In addition to the resumption of capital investment that had been restrained over the past 3 years, the semiconductor shortage has gradually eased and overseas travel restrictions have been relaxed, but excess demand remains.」

「During the cumulative second quarter of the current consolidated fiscal year, manufacturers' appetite for capital investment remained strong. However, shortages of semiconductors and resin continued to have a significant impact across many industries, and rising raw material prices and transportation costs also contributed to an ongoing situation in which demand exceeded supply.」

「As prolonged semiconductor supply shortages have significantly delayed the recovery in supply, the situation in which supply cannot keep pace with capital investment demand continues.」

「During the current consolidated fiscal year, there were strong signs of a recovery in capital investment by large companies. However, the prolonged shortage of semiconductor supplies continued to prevent supply from keeping pace with demand for capital investment.」

「Although capital investment appetite in the manufacturing industry was strong during the cumulative third-quarter consolidated period as economic sentiment recovered, semiconductor and resin shortages continuing from last year, together with soaring raw material prices and transportation costs, had a significant impact toward the end of the fiscal year.」

「Although a recovery in capital investment appetite in the manufacturing industry was seen during the cumulative second-quarter consolidated period, semiconductor and resin shortages that have continued since last year have been prolonged. In addition, some customers have been significantly affected by soaring raw material prices and transportation costs, and excess demand continues.」

「Capital investment appetite among major companies has been rising since the second half of the previous consolidated fiscal year. However, this has been significantly undermined by resin shortages and semiconductor supply shortages that have continued since the beginning of the year. With no clear indication of when supply will recover, the situation in which supply cannot keep pace with capital investment demand continues.」

「In addition, resin shortages caused by a cold wave that struck North America and semiconductor supply shortages have undermined this recovery, resulting in a situation where supply cannot keep pace with capital investment demand.」

「Although semiconductor shortages are a source of uncertainty, we expect the Group’s performance, under its business model dependent on capital investment and R&D investment, to enter a growth phase with some time lag.」