The main risk factors that may affect the performance and financial condition of our group are as follows:

We have developed proprietary technologies in the vacuum equipment field, particularly for manufacturing processes in semiconductors, electronic components, and FPDs, and have expanded our market share. However, if significant reductions in customers’ capital investment or deterioration in their financial conditions arise due to market fluctuations in the semiconductor, electronic device, or FPD sectors, our operating results and financial position may be adversely affected.

Furthermore, under our new mid- to long-term management plan, the “Value-Up Plan,” we aim to further concentrate our business portfolio in the semiconductor and electronics fields. The semiconductor market, however, is characterized by rapid technological innovation and vulnerability to geopolitical risks and economic cycles. Sudden changes in semiconductor demand or shifts in competitive conditions may affect our operating results and financial position.

While focusing on the semiconductor and electronics fields, we continue to expand our vacuum-related businesses more broadly. To respond to rapid market changes in the semiconductor field, we are strengthening our R&D investment to enhance technological competitiveness, expanding and differentiating our product lineup, and promoting the diversification of our earnings base through new businesses that leverage synergies across operations, thereby improving resilience to market volatility.

We have continued to introduce new products incorporating cutting-edge technologies through ongoing and proactive R&D investments. However, if significant development delays occur and new products cannot be launched as planned, our operating results and financial position may be affected.

For essential development activities that support our growth, we accelerate progress by prioritizing and focusing investments, while regularly monitoring development status to prevent major delays.

We have a high ratio of overseas sales and provide products to customers worldwide. However, we face numerous established competitors operating globally, as well as increasing numbers of new entrants, resulting in intensified competition not only in product performance but also in pricing. Such competitive pressures may affect our operating results and financial position.

We strive to maintain competitiveness and respond to the market environment by accurately identifying customer needs and delivering products that reflect those needs in a timely manner.

Securing talent is one of the most critical requirements for maintaining growth in the global business environment. If we fail to continuously secure personnel essential for business growth, our competitiveness may decline, potentially affecting our operating results and financial position.

We regard employees as “human capital” and are committed to creating an environment where diverse talent can continuously take on challenges. We promote recruitment and development initiatives and maintain a working environment that supports employee engagement and well-being, enabling individuals to perform at their full potential.

If component supply tightness leads to soaring component prices or delays in procurement, or if supply chain disruptions caused by large-scale disasters or other factors result in production stoppages or delays, our operating results and financial position may be affected.

We work to secure necessary components through close cooperation with suppliers and early procurement initiatives.

We conduct business globally and are therefore subject to various laws and regulations in each country and region, including export/import controls, competition laws, anti-corruption and anti-bribery regulations, labor laws, environmental laws, and transfer pricing rules. We endeavor to comply with all applicable regulations. However, if any non-compliance is identified, we could face reputational damage, fines, penalties, civil liabilities, or restrictions on business activities.

In addition, if new regulations emerge or existing ones are strengthened—such as national security-related controls—our response or shortcomings in compliance could result in additional costs or operational restrictions.

To mitigate these risks, we promote awareness of legal compliance by establishing the Code of Ethical Conduct across domestic and overseas subsidiaries and encourage early detection and remediation of violations through internal and external whistleblowing systems. Compliance and risk management committees established in each Group company also report on potential legal risks and ensure timely responses. Important matters related to legal and regulatory compliance are reported to the Management Council and cascaded across the Group under the leadership of executive management.

We have established a quality assurance system, including ISO 9001 certification, and have continued to provide high-level products and services. However, due to the highly developmental nature of advanced products, unforeseen defects may occur. Such events may result in additional costs, claims for damages, or loss of customer trust, potentially affecting our operating results and financial position.

Under the new mid- to long-term management plan, we continue to strengthen our manufacturing capabilities by reinforcing upstream processes that determine cost, reliability, and specifications. We incorporate value engineering and horizontal deployment of corrective actions into our quality improvement framework and ensure thorough implementation of recurrence prevention measures.

We raise funds through borrowings from financial institutions. However, unfavorable market conditions or a decline in our creditworthiness could make financing difficult. Some loan agreements contain financial covenants; although we currently meet these requirements, any breach could impair our ability to raise funds. Delays or difficulties in obtaining financing as planned may affect our operating results and financial position.

We work to level repayment schedules across fiscal years, thereby reducing refinancing risk and the burden of repayment. In view of ongoing economic uncertainty, we maintain ample liquidity and have secured additional financing capacity through commitment lines, keeping financing risk at a very low level. We will continue to maintain the ability to secure necessary funds in a timely manner in response to rapid changes in the business environment.

We retain important business information, as well as personal and confidential information obtained in the course of business. If such information is inadvertently leaked, we may face loss of customers, reputational damage, or claims for damages. Furthermore, unauthorized use by third parties due to theft or loss, cyberattacks, or other unforeseen events may result in the destruction, alteration, or leakage of important data, or system shutdowns, which could affect our operating results and financial position.

We conduct regular risk assessments and monitoring of information systems and networks and maintain appropriate information management systems under relevant internal regulations. We also provide continuous employee education to ensure proper information handling.

Although we have a high ratio of overseas sales, transactions are principally conducted in Japanese yen. However, such yen-denominated transactions may place us at a price disadvantage compared to overseas competitors when the yen strengthens. We also conduct some foreign currency-denominated transactions, which may expose us to foreign exchange risk from sudden currency fluctuations. These factors may affect our operating results and financial position.

We mitigate such risks by using forward exchange contracts and other hedging measures.

We hold numerous patents related to vacuum equipment and related technologies and actively seek to acquire new intellectual property rights. However, if we become the subject of unexpected patent infringement claims by third parties, our operating results and financial position may be affected.

To mitigate such risks, we conduct regular patent searches related to our products and technologies.

If safety-related issues arise in connection with our products, resulting in customer damages, liability claims, reduced sales, or loss of trust, our operating results and financial position may be affected. Furthermore, unforeseen events may result in occupational accidents affecting employees or facilities, disrupting product supply or service delivery.

We uphold “Safety First” as a fundamental principle of management and seek to ensure the safety of all products and services used by customers, while creating a vibrant workplace where employees can work safely and energetically. This is pursued through the implementation of a safety management system centered on risk assessments.

We strive to comply with environmental laws and regulations in Japan and overseas, including those related to climate change, water pollution, air quality, noise, soil contamination, waste management, and hazardous chemicals. However, if unforeseen events or challenges make it difficult to comply with future environmental regulations, we may incur increased environmental costs, face operational disruptions, or suffer reputational damage, affecting our operating results and financial position.

We recognize climate change as a key management issue and support the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Based on scenario analysis, we assess risks and opportunities and take action accordingly. We have set targets to reduce greenhouse gas emissions by 50% by 2030 (vs. FY2023 levels) and achieve net-zero emissions by 2050, with regular monitoring and progress management.

We will continue to promote environmental initiatives—including compliance measures, reduction of environmental impact under our environmental philosophy and policy, and efforts to achieve our GHG reduction targets—and appropriately disclose related information.

As a globally operating enterprise with a broad business portfolio, we may be affected by macroeconomic fluctuations, natural disasters, war, terrorism, infectious diseases, or other force majeure events occurring in various countries and regions.