The market for digital cameras, the leading products of the Imaging Products Business, is seeing intensified competition stemming from the market shift to mirrorless cameras. In addition, as the spread of COVID-19 has resulted in tighter regulations in various countries, consumer behavior has been restrained or diminished due to stay-at-home orders, suspension of business at retail stores, cancellation of events, and other measures, and procurement of components has been delayed. However, recently, consumer spending is gradually picking up. In response to this, the Group continues to implement business structure reforms, such as optimizing production and sales bases, thoroughly reducing cost and increasing development efficiency, as well as reforms to supply chain and logistics, to strengthen the earnings structure of the business.
The demand for FPD lithography systems handled by the Precision Equipment Business is expected to be stable in the display market. However, if there is over-supply as a reaction to large-scale capital investment or curbing of consumption, demand for lithography systems may also experience a decline. In response to this, the Group is working to secure a certain level of profit under such a business environment through new lithography systems and service business, in addition to reducing total costs.
Although the semiconductor market, the target market for semiconductor lithography systems, is expected to grow significantly over the medium- to long-term, demand for immersion lithography systems may drop depending on the degree of the shift in the cutting-edge process development to EUVL. In addition, the Group’s profit may be affected by such factors as changes in capital investment plans by its major customers. In response to this, the Group will vigorously work on business development other than with its existing customers and expand its service business, in accordance with the business strategy that prioritizes profitability.
Looking at the Precision Equipment Business as a whole, tighter regulations enforced by various countries in response to the spread of COVID-19 may potentially damage trust from customers due to delay or suspension of shipments, and cause an investment freeze due to decline in demand, as well as a decline in sales. In response, the Group will further strengthen communication with customers, as well as promoting local support for installation and service personnel.
In overseas business development, changes in political systems and economic environments, the effect of trade wars and conflicts between countries, social turmoil due to riots, terrorism, wars, disasters, and various infectious diseases, and other issues may cause major obstacles or losses to our business activities. It is difficult to make concrete predictions regarding the possibility and timing of the materialization of these risks, as it depends on social conditions and other factors. In response to this, the Group examines and implements countermeasures by collecting information and analyzing the impact on business.