ENOMOTO Co.,Ltd

The Group manufactures and sells Lead Frames for Power Semiconductors, Lead Frames for Opto Devices (for LEDs), and Connector Components on a global basis, and the electronic components industry is prone to being affected more severely than expected during economic downturns. A global or regional economic downturn could adversely affect business results and financial condition. The Group seeks to mitigate the risk of a sharp decline in orders by maintaining technological capabilities and equipment that can address a wide range of fields, from highly specialized products to highly versatile products.

The Group has production sites in China and the Philippines, and unexpected changes in laws or tax systems, political or economic events, or social disruption caused by terrorism or war could seriously affect business operations. In particular, geopolitical risk could also disrupt logistics arrangements. The Group is building a framework for technical exchange and mutual support among domestic and overseas sites, and is promoting prompt backup responses in the event of an emergency.

The electronic components industry faces intense competition in both price and technology, and if the Group fails to respond promptly to rapid technological innovation or to introduce new products tailored to customer needs, it could lose order opportunities or experience a sharp decline in selling prices. The Group secures orders for products requiring advanced technology and makes active capital investments, aiming to maintain state-of-the-art processing technology through the sharing of information and technology with universities and business partners.

The Group procures steel, copper, gold, silver, nickel, and other materials as principal raw materials from external sources, and if prices surge or supply shortages occur, product profit margins could deteriorate or opportunity losses could arise. The cemented carbide used in mold components contains rare metals such as tungsten, and close attention must also be paid to procurement disruptions caused by geopolitical risk. The Group has established a framework for information sharing at the management level with raw material manufacturers and processing subcontractors, as well as an alternative supply system using multiple procurement sources.

Although the Group has established a quality control system based on ISO9001 and IATF16949, if unexpected quality defects or defects in final products occur, this could result in substantial costs and a loss of social credibility, affecting operating results. The Group aims to improve quality control capabilities and quality assurance standards across the Group through the development and introduction of state-of-the-art automatic inspection equipment and personnel exchange between domestic and overseas sites.

As the Group operates business globally, fluctuations in foreign exchange rates and rising interest rates could affect business results and financial condition. The Group seeks to minimize this risk through long-term, fixed-rate financing and foreign exchange hedging of major foreign-currency-denominated assets and liabilities, but it may not be possible to completely avoid the risk depending on market conditions.

If information assets are leaked or a cyber attack occurs, substantial costs such as loss of credibility, expenses for preventing recurrence, and damages could arise, affecting business results and financial condition. The Group strives to avoid the risk of information leakage by establishing an "Information Security Basic Policy," building firewalls, and conducting regular company-wide employee education and training.

Depending on deterioration in future business profitability, market conditions, land prices, or economic trends, the Group may be required to recognize losses due to the application of impairment accounting for fixed assets related to existing businesses, which could affect business results and financial condition. The Group seeks to mitigate this risk by promoting the sale or repurposing of idle fixed assets.

If the Group is unable to secure sufficient appropriate human resources, constraints on business execution could arise, resulting in opportunity losses and adverse effects on business results. In addition to recruiting excellent human resources through partnerships with universities and various schools, the Group seeks to improve employee retention through active efforts in work-style reform and childcare support, including obtaining certifications such as "Platinum Kurumin Plus" and "Certified Health and Productivity Management Organization 2026 (Large Enterprise Category)."

If natural disasters such as earthquakes or typhoons, fires, or serious epidemic outbreaks occur, facilities and the workforce at business sites could be damaged, causing operational disruption and delays in production and shipment, as well as substantial costs for equipment repair, potentially having a significant impact on the business, results of operations, and financial condition. The Group seeks to minimize the impact on business results through the early realization of an alternative production system by standardizing technology and knowledge across sites, and by deploying a uniform, head-office-led epidemic prevention policy across all sites.