The market for digital cameras, the leading products of the Imaging Products Business, continues to shrink and see intensified competition overall. In addition, as the global 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. In response to this, the Group has implemented business structure reforms, such as optimizing production and sales bases and thoroughly reducing cost, as well as various reforms to SCM, logistics, and others, to convert to a structure that can generate a certain level of profit.
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 in the business 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 and the improvement of production efficiency.
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 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 materializaiton 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.