IBIDEN CO.,LTD.

In the Electronics Business, technological innovation and rapid shifts in product needs in the server and PC markets, and in the Ceramics Business, changes in demand for internal combustion engine products due to accelerating EV and hybrid vehicle adoption, may affect business performance. Accurately forecasting customer needs is not easy, and timely development and supply of new products cannot always be guaranteed. As countermeasures, the Group is strengthening the collection of technical information and technology development, building flexible resource allocation and production systems, and expanding the development and sales of EV-compatible products.

The Group provides many products requiring high reliability and exercises great care, such as establishing automated verification systems for quality data, but this does not guarantee the elimination of defects in all products or complete prevention of serious quality problems in the future. If defects or quality deficiencies leading to large-scale product liability claims occur, the Group may bear liability for damages not covered by product liability insurance. In addition, a decline in sales due to loss of credibility may affect business and financial results.

The Group has sales, production, and procurement bases deployed around the world, and sudden changes in laws and regulations arising from political and social tensions in specific regions may cause abrupt disruptions to procurement, shipping, and operations. The Group seeks to mitigate impacts through alternative shipping and production using its global production network, diversifying material procurement, and considering the adoption of alternative materials; however, if unforeseeable political or economic events occur, business and financial results may be affected.

The Group depends on a limited number of suppliers for some key raw materials, components, and energy, and a sudden surge in demand causing supply shortages, delays, or stoppages may affect production activities. If prices surge due to changes in the supply-demand balance of raw materials, this may hinder product delivery to customers and quality assurance, as well as raise manufacturing costs, thereby affecting business and financial results. As countermeasures, the Group is continuing to improve usage efficiency and negotiate with suppliers for long-term stable and low-cost supply.

Information systems supporting manufacturing, R&D, and management information may temporarily suspend operations due to external cyberattacks or infrastructure failures. In addition, technical, sales, personal, and management information may be leaked externally due to unforeseeable circumstances or human acts and improperly obtained or used by third parties, and the resulting substantial costs or loss of customer trust may affect business and financial results. As countermeasures, the Group is building system backup and early recovery systems, establishing internal regulations, and providing employee training.

The Group, which has numerous business sites in Japan and overseas, may be affected in its business and financial results by the suspension of operations at its own plants or disruption of the supply chain in the event of a large-scale natural disaster such as an earthquake or flood. To minimize impact, the Group is formulating business continuity and recovery plans and diversifying procurement across multiple sites within the supply chain.

Stricter climate change-related regulations pose a risk of raising energy procurement costs, and unforeseeable events arising from political factors such as the introduction of emissions trading systems or changes in laws and regulations, as well as sudden changes in market conditions, may affect business and financial results. As countermeasures, the Group is improving energy efficiency by enhancing high-efficiency power generation equipment and utilizing its own renewable energy, while also working to create new businesses anticipating decarbonization.

If the securing and development of human resources cannot proceed as planned due to Japan's declining labor population from low birthrates and an aging society, business strategy and performance may be affected by business stagnation resulting from a shortage of engineers. The Group regards human resources as the lifeline of sustainable growth, and is working to secure talent by promoting operational efficiency and automation using AI and DX, supporting the success of diverse talent, and enhancing employee engagement and branding.

The Group, which has a high ratio of overseas sales and operates businesses around the world, is significantly affected by exchange rate fluctuations in foreign currency-denominated transactions and in the yen conversion of revenues, expenses, assets, and liabilities denominated in local currencies at subsidiaries. If the yen appreciates sharply and over a long period against major currencies such as the US dollar and euro, this may significantly affect business performance and financial condition; although hedging measures are in place, fluctuation risk cannot be completely eliminated.

The Group plans large-scale capital investments to develop production systems in Japan and overseas for both the Electronics and Ceramics Businesses, but if the initially expected order volume cannot be secured due to competitor trends or changes in demand for final products, this may significantly affect business performance and financial condition. In addition, if profitability declines for business-use fixed assets due to a decline in fair value or a failure to achieve expected cash flows, impairment losses may need to be recorded, significantly affecting business performance and financial condition. There is also a risk that deferred tax assets may need to be written down if actual taxable income diverges from forecasts or if tax system changes occur.