SAKAE ELECTRONICS CORPORATION

The Group has a large volume of transactions related to semiconductor manufacturing equipment, and supply-demand trends in the semiconductor industry are the primary factor behind fluctuations in operating results. If market conditions for semiconductor electronic components deteriorate, this could directly affect net sales and profit. As a countermeasure, the Group has adopted a policy of shifting management resources toward developing new markets and new customers and expanding the range of new products handled.

The Group has a high degree of dependence on transactions with major domestic semiconductor manufacturing equipment makers, resulting in a structure in which fluctuations in demand from specific customers directly affect the Group's operating results. If demand for semiconductors or related equipment declines, there is a risk that this could lead to a sharp drop in sales. As a risk mitigation measure, the Group is promoting the development of latent demand among existing customers as well as the cultivation of new customers.