Harmonic Drive Systems Inc.

Business Details

Domestic subsidiaries, including Harmonic Drive Systems Inc., and local subsidiaries in Asia (excluding China) handle production and sales. The segment develops, manufactures, and sells reduction gears centered on the Harmonic Drive® (strain wave gearing) and Mechatronics products (actuators / controllers) combining motors and sensors. It supplies a wide range of applications including industrial robots, semiconductor manufacturing equipment, automotive, and general industrial machinery, and also serves as the Group's manufacturing base, providing internal supply to other segments.

Recent Overview

Segment profit rose 66% year on year on higher sales to industrial robots and semiconductor equipment plus improved utilization rates

Japan Segment sales (external customers) for FY2026 (ending March 2026) were ¥26,627 million (up 22.5% year on year), driven by increased orders for industrial robots and semiconductor manufacturing equipment. Manufacturing cost ratio improved due to higher factory utilization rates, and segment profit (ordinary income) was ¥3,694 million (up 66.1% year on year). Meanwhile, automotive-related sales declined due to customer production adjustments. HAD (precision planetary reducers) recorded an impairment loss of ¥394 million. Orders were also secured in connection with the transition to mass production for AI robots, and the order backlog increased 42.4% year on year.

Key Products

Growth Drivers

• Expansion of orders for industrial robots (order acquisition driven by continued automation investment and the transition to mass production of AI robots)
• Expansion of demand for semiconductor manufacturing equipment (increased capital investment in advanced semiconductor equipment related to generative AI and data centers)
• Improved manufacturing cost ratio and profitability from higher factory utilization rates
• Steady global trend in automation and labor-saving investment (expectations for expanding demand for collaborative robots and humanoid robots)
• Improved profitability from product price revisions and effects of company-wide cost innovation projects
• Focus on "AI robots," "aerospace and defense," and "e-mobility" under the new medium-term management plan (FY2026-FY2030)

Risks

• Continued decline in automotive-related sales (risk of customer production adjustments)
• Profitability at HAD (precision planetary reducers) remains low, with a risk of additional impairment losses if future business plans are not achieved
• Risk of cost ratio deterioration due to fluctuations in domestic factory utilization rates
• Risk of capital investment restraint due to US tariff policy and geopolitical risks
• Risk of profit pressure from continued increases in material and labor costs
• Risk that the pace of social implementation of the AI robot market falls short of expectations (currently in an early formative stage)
• Risk of order cancellations (¥435 million in order cancellations occurred in the fiscal year under review, mainly in the Japan Segment)