Mitsui High-tec,Inc

Demand trends in the semiconductor, home appliance, and automotive industries and customer inventory adjustments directly impact business performance. If a sudden change in the environment occurs, there is a possibility of losing order opportunities and declining competitiveness due to surplus or shortage of production capacity. The Group addresses this by closely monitoring global economic conditions and the semiconductor and automotive market conditions, and expanding or adjusting production capacity based on medium- to long-term market forecasts.

Due to imbalances in supply and demand and instability in the international situation, prices of non-ferrous metals and precious metals such as nickel, copper, gold, silver, and palladium, as well as steel materials and crude oil, may fluctuate, and if these price changes cannot be sufficiently passed on to product prices, business performance may deteriorate. In addition, if legal violations such as child labor or forced labor occur at suppliers, there is a risk that the Group's reputation may decline and stable procurement may be hindered. The Group seeks to mitigate this impact by strengthening relationships with key suppliers, diversifying procurement sources, and establishing CSR procurement guidelines.

Fierce global price competition is unfolding in the semiconductor, home appliance, and automotive industries, and if competitors supply products at low prices using cheap labor, raw materials, and parts, the Group's business performance may suffer. While the Group works to address this through cost reduction and technological development, if declines in sales prices exceeding these efforts continue, it may adversely affect business performance and business development.

As overseas sales account for approximately 50% of total sales, fluctuations in exchange rates may affect business performance and financial condition. While the Group seeks to mitigate risk from sudden exchange rate fluctuations through forward exchange contracts, sharp fluctuations may still adversely affect business performance and business development.

As the Group operates production and sales bases globally, sudden policy changes, economic fluctuations, changes in import/export regulations, rising labor costs, terrorism, war, infectious disease outbreaks, and other social disruptions in various countries may adversely affect business performance and business development. While the Group seeks to diversify country risk by dispersing its bases, it may be difficult to respond to unexpected sudden changes.

The Group may bear substantial liability for damages resulting from losses caused by defects in supplied products, and large-scale recalls or product liability issues could result in significant costs and have a serious impact on corporate reputation. The Group addresses this by operating a quality management system (QMS) compliant with international certification standards such as ISO/IATF, and by building a quality assurance system that "builds in quality" at each process both domestically and internationally.

If confidential information or personal information is leaked externally due to computer viruses, unauthorized access, human error, or other causes, this may result in a loss of social trust and adversely affect business performance and business development. The Group conducts regular risk response assessments under the officer in charge of the information systems, and works to strengthen IT governance and security and develop personnel. A system has been established to promptly disclose information through deliberation by the Information Disclosure Committee and reporting to the Board of Directors in the event of a significant incident.

Regulations related to greenhouse gas emissions and other measures to curb climate change are becoming stricter, and if the Group is unable to adequately respond to these laws and regulations, it may result in a loss of social trust and adversely affect business performance and business development. The Group has established a governance structure centered on oversight by the Board of Directors and the Sustainability Promotion Committee, and is working on disclosure of risks and opportunities based on scenario analysis in line with the TCFD recommendations.

If the Group is unable to recruit and develop the necessary human resources, or if excellent personnel do not stay with the Group, this may adversely affect business performance and business development. Based on the concept that "human resources are capital," the Group invests in recruitment and development and provides growth opportunities, and seeks to improve employee engagement and retain excellent personnel through fair evaluation based on standards, appropriate feedback, and improved treatment.

If demand declines due to changes in competitors' technological capabilities, pricing trends, or changes in the market environment for final products, and the expected sales scale cannot be achieved, recovery of capital investment may become difficult, adversely affecting business performance and business development. The Group strives to mitigate this risk through coordination with customers on specifications and securing production capacity, examination of investment efficiency, and cautious execution of investments that take into account fluctuations in required capacity.