SHIZUKI ELECTRIC COMPANY INC.

In relation to major shareholders, Mitsubishi Electric Corporation holding 17.5% and Murata Manufacturing Co., Ltd. holding 13.5% of total issued shares, the degree of transaction dependence on the Mitsubishi Electric group stood at 11.1% in the current fiscal year. Transaction terms are determined through individual negotiations based on market prices, and the Company strives to diversify its business partners in order to avoid concentration of sales risk on a specific corporate group.

As the majority of customers are manufacturers, fluctuations in customers' capital expenditure and production plans may have a significant impact on the business performance of the Group. The Group seeks to reduce this risk by grasping market trends and collecting and accumulating customer information to provide products that satisfy customers in a timely manner.

If a product defect occurs in the manufacture of various products, liability for damages to customers may arise, which could adversely affect business performance and financial condition. Although the Company has established a quality control system to address this, it is difficult to completely eliminate the risk of defects occurring.

The Group's transactions directly or indirectly include import and export transactions with various countries, and fluctuations in foreign exchange rates as well as the establishment or revision of tariff rates due to economic policies of various countries may affect business performance and financial condition. Changes in domestic and overseas economic conditions are recognized as the main factors giving rise to this risk.

The Group conducts local production and sales in the United States (Nebraska), China (Shanghai), and Thailand (Bangkok), and is inherently exposed to risks such as unexpected changes in laws and tax systems, unfavorable political and economic factors, and terrorism, war, or social unrest. Should such events occur, they could significantly impede the conduct of overseas business operations.

The occurrence of natural disasters or pandemics caused by infectious diseases may disrupt production activities. Although the Company has established crisis management rules such as building maintenance, storage of materials, and remote work arrangements, the risk remains that events exceeding expectations cannot be fully addressed.

If business partners are affected by natural disasters or other extraordinary disasters, securing raw materials and maintaining production systems may become difficult, which could significantly affect business performance. The Group seeks to reduce this risk by strengthening relationships with business partners, conducting periodic audits, and continuously identifying new business partners.

A surge in the prices of raw materials used in key products and energy such as electricity required for manufacturing may significantly affect business performance and financial condition. The Company implements productivity improvement and cost reduction activities based on the integrated management system "∫IΣS," and addresses cost increases that cannot be absorbed by optimizing selling prices.

If corporate confidential information such as customer information, sales information, and technical information is leaked outside the Company due to server attacks, computer virus infection, or employee negligence or misconduct, it could have a significant impact on business activities, performance, and financial condition. The Company is strengthening and maintaining its information security systems while thoroughly implementing personnel-related measures based on its Compliance Charter.

As the Company develops Film Capacitors for xEV, industrial capacitors, and power/environmental energy-saving businesses as priority areas, price competition with domestic and overseas competitors may significantly affect business performance and financial condition. The Company addresses this by strengthening the development of high value-added, competitive products through manufacturing and improvement activities based on the integrated "∫IΣS" approach combining development, manufacturing, and sales.