TOMEN DEVICES CORPORATION

The company depends on Samsung Group (Samsung Japan Corporation 31.5%, Shanghai Samsung Semiconductor Co., Ltd. 51.0%, etc.) for 82.7% of its purchases (FY2026, ending March 2026). Changes in the group's management strategy or geopolitical risks at its bases directly affect business results. As a countermeasure, the company is working to develop a second core pillar of products and business models, but alternative procurement sources are currently limited.

The top 10 customers by sales (including affiliated companies) account for approximately 71% of total net sales, creating a risk that changes in major customers' management strategies or deterioration in their business performance could directly spill over into the Group's results. Due to the high concentration of customers, the impact of reduced demand from specific customers or changes in transaction terms is significant.

The Group is expanding its business in overseas markets, primarily China, where obstacles such as exchange rate fluctuations, geopolitical risk, credit risk, country risk, and differing business customs in each country have become apparent. As countermeasures, the company has strengthened security trade control, conducts monthly reviews of credit limits, and has established a reporting framework through the Board of Directors and the Risk and Compliance Committee.

Transaction prices for semiconductors and electronic components, the Group's main products, can fluctuate significantly due to supply-demand balance, potentially having a major impact on business results. To prevent inventory buildup, the company continuously monitors customer demand trends and supplier supply conditions, and mitigates price fluctuation risk through thorough inventory management.

Working capital needs have increased along with the expansion of transaction volume, and short-term borrowings increased significantly from ¥14,054 million (12.3% of total assets) in FY2025 (ended March 2025) to ¥118,569 million (34.4% of total assets) in FY2026 (ended March 2026). Rising interest rates or changes in settlement terms could affect business results, and managing the effective interest burden—combining interest expense of ¥2,066 million and loss on sale of receivables of ¥517 million (FY2026)—has become a challenge.

The company conducts foreign currency-denominated (US dollar) transactions, and rapid fluctuations in exchange rates could affect business results. For domestic transactions, forward exchange contracts are used, while for overseas transactions, both purchases and sales are basically unified in US dollars to mitigate the impact of exchange rate fluctuations.

If the Group's operations are wholly or partially suspended due to a large-scale earthquake, flood, or other natural disaster, or if the production or logistics functions of suppliers or customers decline over an extended period, business results could be affected. As a countermeasure, the company conducts BCP drills targeting all officers and employees, working to maintain and enhance its business continuity framework.

In overseas operations centered on China, geopolitical risk and the risk of legal violations related to security trade control have become apparent. The company strives to avoid violation risk through audits of its control framework and thorough legal compliance, but changes in international circumstances could constrain business activities.