MINEBEA MITSUMI Inc.

Natural disasters such as typhoons, earthquakes, floods, and volcanic eruptions, as well as the outbreak of infectious diseases, may cause damage to or reduced operating rates at the Group's production and sales sites and those of business partners. In the event of a large-scale disaster, disruption to fund procurement due to turmoil in financial markets is also anticipated. As countermeasures, the Group is expanding its BCP, identifying risks through hazard maps and risk surveys, enhancing disaster drills and emergency stockpiles, extending the maturity of fund procurement, and strengthening cooperation with financial institutions.

The Group has 133 production and R&D sites and 103 sales sites across 28 countries and regions worldwide, some of which are located in areas with inherent risk of social disruption such as unexpected changes in laws and regulations, large-scale labor disputes, terrorism, and war. Should these risks materialize, they could have a material impact on production and sales activities. As countermeasures, the Group is developing crisis management manuals at overseas sites, coordinating with relevant authorities, and maintaining and building a diversified production site network.

The Group has high ratios of overseas sales and overseas production, and sharp fluctuations in foreign exchange rates may affect operating results and financial position. Given the business structure's high dependence on specific currencies, the impact of foreign exchange risk is far-reaching. As a countermeasure, the Group works to reduce risk by utilizing hedging instruments such as forward foreign exchange contracts based on established rules.

Competition is intense in the Group's principal markets, centered on PCs, information and communications equipment, home appliances, automobiles, and aircraft parts, and a sharp contraction in demand or price competition from low-priced products may affect operating results and financial position. There is also a risk of profit pressure from fluctuations in raw material prices and tariffs stemming from geopolitical factors. As countermeasures, under the management strategy of "Strengthening Core Businesses," "Diversification through Niche (Eight Spears)," and "Creating Synergies through Integration," the Group focuses on avoiding concentration risk among sales destinations, strengthening receivables management, and creating high-value-added, one-and-only products.

Geopolitical emergencies such as conflicts, tariff policies, and import/export restrictions, pandemics, and disasters, bankruptcies, or strikes affecting partners or outsourced transportation and storage providers may disrupt the supply of raw materials and logistics, causing a material impact on production and sales activities. As countermeasures, the Group strives to secure a stable supply chain by combining diversification and consolidation of partners and outsourced transportation and storage providers, diversifying countries of origin, and expanding options for transport modes and routes.

There is a risk of intellectual property infringement lawsuits being filed by third parties, as well as a risk of reduced sales and brand damage due to the circulation of counterfeit versions of the Company's products. As countermeasures, the Group investigates and avoids/eliminates conflicts with other companies' intellectual property rights during development and design, monitors counterfeit products through customs registration of the Company's trademarks, actively acquires intellectual property rights for newly developed products, and conducts appropriate management and operation through the Patent and other committees.

The Group is subject to a wide variety of laws and regulations across regions worldwide, and there is a possibility of future legal violations, as well as increased difficulty in compliance and higher costs due to changes in laws, regulations, or regulatory interpretation. As countermeasures, the Group has established the "MinebeaMitsumi Group Code of Conduct" and "Officer and Employee Code of Conduct," and the Compliance Committee, Internal Audit Department, and Internal Control Promotion Department work together to enhance the effectiveness of the Group's overall legal compliance system.

The Group's products are used in high-precision applications, including fields related to human life such as automobiles, aircraft, and medical devices, and should product defects lead to serious accidents in the market, production stoppages at customers, recalls, or similar events, the resulting substantial costs and loss of social trust could significantly affect business performance and financial condition. As countermeasures, the Group thoroughly applies lessons learned from quality issues, conducts investigations and confirmations at the design stage, strengthens supply chain management systems, and shares information through company-wide meeting bodies and on-site audits.

Cyberattacks such as computer viruses, malware, and unauthorized access, or leakage of important or personal information due to negligence, could result in substantial response costs and loss of social trust. As countermeasures, the Group has established a Security Promotion Office headed by the CISO, verifies its systems through the Information Security Committee, has introduced a 24/7/365 threat detection system, implements antivirus and anti-malware measures, and conducts regular security training and comprehension testing.

While M&A and alliances are positioned as the most important initiatives, changes in market conditions and other factors could cause profitability at acquired companies or alliance businesses to decline more than expected, or their financial condition to deteriorate, which may affect operating results and financial position. In alliances, there is also a risk that the initially anticipated synergy effects may not be achieved due to strategic misalignment with the partner. As a countermeasure, the Group places emphasis on integrating personnel and organizations and creating synergies through mutual utilization of knowledge.