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Operational Risks

Risk factors that may affect the HDS Group's performance and financial conditions are shown.

  1. Plant and Equipment Investment Trends

    Because the majority of HDS products are sold as components for industrial machinery such as industrial robots, semiconductor manufacturing equipment, and flat-panel display manufacturing equipment, plant and equipment investment trends have an influence on the operating performance of the HDS Group. In particular, for semiconductor and flat-panel display manufacturing equipment industries, while there is large growth from improved conditions in the semiconductor device and panel markets and from manufacturing technology innovations, an unexpected market contraction resulting from supply-demand adjustments or other developments could adversely affect the operating performance of the HDS Group.

  2. Research and Development Results

    The HDS Group develops and puts on the market distinctive, high-value-added products by intensively allocating resources to the research and development division as a technology and technical skills organization in the motion control field. A delay in the market release or market penetration of the resulting new products despite the continuous allocation of resources to research and development could adversely affect the operating performance of the HDS Group.

  3. Product Quality

    The HDS Group has received ISO9001 certification and otherwise strives to strengthen its quality assurance system to boost customer satisfaction and gain market advantages. Nevertheless, the emergence of unexpected product defects or other quality issues could adversely affect the operating performance of the HDS Group.

  4. Fluctuations in Foreign Exchange Rates

    The HDS Group has two consolidated subsidiaries in the US, one consolidated subsidiary in China, in Korea and one equity method affiliate in Germany, and we are actively advancing internationalization in our businesses. Consequently, foreign exchange rate fluctuations sometimes have a negative effect on the business activities of the HDS Group. Foreign exchange rate fluctuations also affect the yen-equivalent value of the Group's assets and liabilities and revenues and expenses from transactions denominated in foreign currencies, and may have a negative effect on the HDS Group's operating results and financial conditions.

  5. Retirement Benefits Obligations

    Harmonic Drive Systems Inc. and some HDS consolidated subsidiaries have defined benefit pension plans or lump-sum retirement benefit plans. Revisions of the assumptions for calculating retirement benefits obligations and retirement benefits expenses, changes in the investment environment for pension assets, and other financial developments could adversely affect the Group's operating performance and financial conditions.

  6. Other Risks

    Changes in the economic and political environment and the occurrence of terrorism, wars, natural disasters, infectious diseases and other unpredictable events that cannot be avoided by the HDS Group alone could adversely affect the Group's operating performance and financial conditions.

Reference ― Plant and Equipment Investment Trends