Japan Aviation Electronics Industry, Limited

The Group operates production and sales bases overseas, and changes in economic trends, political and social conditions, and interest rate and foreign exchange fluctuations in various countries around the world may affect procurement costs and the supply chain. In particular, since foreign exchange fluctuations directly affect earnings, the Group hedges through forward foreign exchange contracts and strives to build a stable production system by diversifying production across multiple sites.

Declines in product prices for connectors and other products and rapid technological innovation may result in a decline in market share and deterioration in profit margins. In particular, in the mobile device market, where product life cycles are short, intense competition for share involving competitors over next-generation products could have a material impact on business performance. As countermeasures, the Group is promoting the introduction of new products, concentration of resources in high-value-added areas, and portfolio optimization.

Increases in procurement costs due to fluctuations in market prices of key raw materials, as well as procurement difficulties arising from sudden demand changes or logistics disruptions, may affect business performance. In addition, since the manufacturing process consumes a large amount of electricity, surges in electricity prices could also put pressure on earnings. The Group addresses these risks by developing procurement sources including overseas suppliers, ensuring stable procurement through dual sourcing, and promoting energy conservation.

The Group holds a large amount of confidential information and personal information belonging to business partners, and if such information is lost, altered, or leaked due to cyberattacks, virus infections, or similar incidents, it could result in loss of social credibility and claims for damages, potentially having a material impact on business activities and performance. The Group has established an Information Security Management Office and is working to manage risk through strengthening policies and guidelines, developing a monitoring system, enhancing security personnel, and building systems.

The Group has set forth "Innovation in Quality and Manufacturing" as a basic management policy, but if quality or safety defects occur in its products, this could affect business performance. The Group is working to reduce the risk of defects occurring by strengthening and expanding its evaluation testing system and maintaining and improving a high level of quality control.

Accidents or fires at production sites could halt production lines, and sudden fluctuations in required volume could affect production capacity. There is also a risk that delays in developing new technologies or manufacturing methods could reduce competitiveness and affect business performance. The Group strives to maintain stable production by continuously introducing the latest technologies and building a distributed supply system across multiple production sites.

If product quality and performance fail to meet market demands, if the development of new technologies is delayed, or if the results of R&D are not accepted by the market, market competitiveness may decline, potentially worsening market share and profitability. The Group addresses this through global marketing to grasp customer needs, expansion of technology development resources, and strengthening its capability to develop core technologies for next-generation products.

The Group is subject to a wide range of laws and regulations both in Japan and overseas, including antitrust law, product liability, anti-bribery, data protection, and import/export regulations. If violations or compliance issues, including human rights issues, occur, this could affect business activities and performance through claims for damages or loss of credibility. The Group works to reduce the likelihood of violations and misconduct by establishing the Japan Aviation Electronics Group Charter of Corporate Behavior and Code of Conduct, setting a "Compliance Day," and establishing an internal whistleblowing system.

Due to the declining birthrate and aging population, a shrinking labor force, and increasing labor market fluidity, competition to secure excellent talent is intensifying year by year, and if the Group is unable to secure sufficient human resources, this could affect business activities. The Group addresses this by creating a workplace environment where diverse talent can thrive, expanding its personnel systems, developing human resources, and improving the internal work environment.

If the Group is slow to respond to environmental issues such as global warming countermeasures and the transition to a recycling-oriented society, this could have a material impact on business activities and performance. The Group positions environmental issues as an important sustainability item and is engaged in various environmental management activities, including reducing greenhouse gas emissions.