■Japan Airtech's Business Environment ＜6291＞

1. Market trends

The electronics industry sector is currently in a recovery phase after 2023 production adjustments in the semiconductor device market, and semiconductor-related capital investment has maintained a high level. Driven by the government's semiconductor/digital industry strategy and large-scale subsidy budgeting, movements aimed at increasing domestic semiconductor manufacturing capacity have been active. In response to this, in 2024/2, the first plant of Taiwan Semiconductor Manufacturing (TSMC), a major **** foundry company, opened in Kumamoto Prefecture, and subsequent construction of the second plant was also announced. The Japanese government plans to contribute a total subsidy of over 1 trillion 200 billion yen to TSMC. The electric vehicle (EV) market is anticipated to expand, and large-scale capital investments for power semiconductors are also being planned in Kyushu, mainly by various manufacturers. Also, they are planning to build a factory in Hokkaido to produce cutting-edge semiconductors of 2 nanometers or less. We believe that domestic investment in semiconductors, electronics, and materials is expected to increase continuously in various fields such as DX, EVs, and renewable energy in the future.

In the biological field, normalization of socio-economic activities has progressed in line with the transition of the novel coronavirus infection to the 5 types of novel coronavirus infections, and capital investment in pharmaceuticals, regenerative medicine, medical care, food, and infectious disease research has been steady, and steady orders for equipment such as clean rooms, safety cabinets, and clean booths are expected. Regarding infectious diseases, special demand from the COVID-19 pandemic has subsided, but awareness of indoor air environments is growing, and demand for research and development departments and welfare/nursing facilities is expected to continue to grow.

2. Parts procurement and raw material prices

Prices of steel sheets, stainless steel, aluminum, etc. used as raw materials have continued to rise since 2021 due to rising fuel prices due to the prolonged conflict in Ukraine and rising global prices, and they remain high even now. The company raised prices for standard products in 2022/6/11, and a wide range of items in 2023/4. In 2024/1, standard product price increases and sales price setting reviews for special products were carried out for the 5th time since 2021.

Also, there continues to be a shortage of parts, mainly power semiconductors, and the shortage of supply of many electrical components and prolonged delivery times have not been resolved. Therefore, in order to avoid loss of order acceptance opportunities due to parts shortages, the company is increasing the inventory of parts used as standard. We are developing places to purchase important parts, and are proceeding with efforts to switch to two company purchases.

(Author: FISCO Analyst Tomokazu Murase)