Maxell, Ltd.

If personal consumption and private capital investment decline due to economic downturns in Japan, Europe, the U.S., China, emerging markets, and other regions, there is a risk of decreased demand for products and services and intensified price competition. The Energy, Functional Materials, and Optics & Systems businesses are affected by corporate investment trends, while the Value Co-Creation Business is affected by personal consumption trends. The Group closely monitors economic and market trends and seeks to minimize the impact through cost reduction and fixed cost reduction, but there is no guarantee that sales and profitability can be maintained.

If natural disasters such as earthquakes or floods, epidemics, wars, terrorism, or similar events occur, production and sales activities may be disrupted, and facility damage may affect business performance. In particular, the Group has numerous manufacturing sites and cooperating factories in China, and unpredictable changes in political factors (such as regulatory trends), economic factors, or social conditions in that country could seriously impact the entire supply chain. The Group is considering optimizing the allocation of manufacturing sites, but its current dependence on China remains high.

As overseas sales account for a high proportion of total sales and import/export transactions are conducted mainly in U.S. dollars, fluctuations in foreign exchange rates may affect yen-denominated business results and financial position. The Group implements measures such as balancing foreign currency-denominated transactions and hedging through forward exchange contracts, but there is no guarantee that the impact of sudden exchange rate fluctuations can be completely avoided.

Many of the Group's products use petrochemical products as raw materials, and some products use rare substances, so significant fluctuations in crude oil prices or international market conditions may affect business performance. The Group takes measures such as periodically reviewing procurement routes and developing products using materials that can be stably supplied, but the risk of significant raw material price fluctuations cannot be completely eliminated.

For some products, commoditization and manufacturing in low-cost regions have progressed, intensifying price competition, requiring the Group to maintain competitiveness in price, technology, quality, and brand strength across the board. The Group continues to respond through cost reduction, fixed cost reduction, and changes in production locations, but for businesses and products where it is judged difficult to maintain competitiveness and profitability over the medium to long term, the policy is to withdraw or discontinue them. There is no guarantee that competitiveness can be maintained across all products and services, raising concerns about the impact on business performance.

Amid rapid technological innovation in the automotive field such as ADAS, CASE, and MaaS, the Group promotes R&D based on its proprietary "analog core technology," but if the development of advanced technologies or their application to products and services does not proceed as planned, this may significantly affect business performance. There is no guarantee that R&D will always succeed, and failure to keep pace with competitors' technological innovations could lead to a decline in competitiveness.

The Group manages quality in accordance with quality management systems such as ISO9001 and ISO/TS16949, but if unexpected quality defects or recalls occur, this may result in recovery costs, compensation expenses, or a decline in sales volume. Furthermore, a loss of brand credibility could jeopardize the continuity of the company, and serious quality problems could have a severe impact on business performance.

The Group implements security measures such as firewall installation, virus protection, and backups, but in July 2025, an actual incident occurred in which a server of an overseas consolidated subsidiary was subjected to unauthorized access by a third party. If personal information, technology, or trade secrets are leaked, this could undermine trust in the Group and affect business results; accordingly, the Group continues to implement recurrence prevention measures across the entire group, including strengthening restrictions on unauthorized access, reviewing information management systems, and expanding employee training.

The Group holds numerous patents in fields such as secondary batteries, optical components, functional materials, and RFID systems, but there is no guarantee that pending patent applications will be registered in a timely manner, and there is a risk of being subject to injunctions or claims for damages for allegedly infringing unknown third-party patents. This could result in significant costs and management resources being spent on litigation, and if continued use of third-party licenses adopted for some products becomes difficult, this could constrain business development.

Taxable income has been reduced by tax loss carryforwards from prior years, but if these loss carryforwards expire at the end of the carryforward period due to changes in business performance or tax reforms, the tax burden may increase. In addition, unpredictable events such as changes in transfer pricing taxation systems and other regulations and tax systems in various countries could affect business results. The Group has published its "Global Tax Policy" and has adopted a policy of appropriate tax payment in each country.