The semiconductor industry, which is the main target market for the Semiconductor Lithography System handled by the Precision Equipment Business, is characterized as an industry with drastic changes in the business cycle, although this inclination has been waning in recent years, due to the diversification of end products. As a result, an over-supply of semiconductor devices in the market poses the risk of a decrease in the demand for steppers, due to a cutback in capital investment by semiconductor manufacturers and an accompanying increase in inventories. However, it is difficult to predict the timing or the duration of such a situation or the degree of fluctuation. As an additional characteristic of customer behavior in the same industry, orders are subject to postponement or cancellation even after they have been placed, resulting in a structure that is prone to increases in inventory during periods of slow demand. Particularly with regard to advanced equipment, since there are many cases in which a product enters mass production after receiving a high rating during its introduction phase, if new customers cannot be obtained as planned, there may be a negative impact later on medium and long term sales. The demand for FPD Lithography System, which is dependent on the climate of the LCD panel market, may experience a rapid decline, should LCD panel prices drop as a result of an over-supply.
In the market for digital cameras, which are the leading products in the Imaging Products Business, there is a possibility of the market undergoing changes such as the decline in demand for digital cameras due to such factors as fluctuation of the economy of the respective regions and the emergence of strong competition such as new digital equipment.
In the Instruments Business, the microscope market is becoming saturated, leading to the possibility of a change in competition structure, as a result of an industry restructuring or the like. Further, the Industrial Instruments Business is susceptible to the effect of the economic and facility trends of various industries, including semiconductors, power generation, electronic components, automobiles and machine tools.
Such changes in the business environment are likely to have a considerable impact on the business performance and the financial position of the Nikon Group.