Business Overview 4. DX Regional Collaboration Project Signpost's DX and Regional Collaboration Project started in March 2022 with the establishment of the DX and Regional Collaboration Division. It aims to provide products and services that contribute to regional collaboration by collaborating with local financial institutions nationwide, utilizing its own DX technology and open innovation. In August 2022, it began working with Oita Made Co., Ltd., which was established with the investment of multiple companies in Oita Prefecture, including Oita Bank, to sell original products made in Oita Prefecture to both domestic and overseas markets and to match local companies and Signpost's products and services in order to promote the revitalization of Oita Prefecture's economy. In addition, in April 2024, it started offering DX support services for medium-sized and small businesses. As the first effort, it supports the creation of DX declaration by (The) Fourth Hokuriku Bank, Ltd. (Niigata City, Niigata Prefecture) to deploy DX declaration support services to the market. Furthermore, it will realize new solutions by commercializing its own technology and open innovation and promote regional collaboration through innovation.

1. Market Trends

Many of the solutions offered by J-DEP Advance <5885> are AI-oriented. Advanced companies and organizations specializing in building AI models are accelerating their investments in large-scale proof-of-concept experiments and operational deployments of their proprietary AI models. Furthermore, even companies and organizations that have limited AI usage are expected to accelerate the creation of simple models and the integration of generated AI applications, further increasing the demand for AI systems.

The core technology that determines the performance of AI systems is the GPU, and the overwhelming market share of 80-90% worldwide is dominated by the US-based NVIDIA. NVIDIA publicly announces its product and technology roadmap, with plans to introduce new products annually until 2027, including Blackwell (2024), Blackwell Ultra (2025), Rubin (2026), and Rubin Ultra (2027). The continuous evolution of technology and application development is expected to revitalize the AI market.

2. Customer Composition

The company's customers are predominantly universities and research institutions, accounting for approximately 50%. This is partly due to the fact that transactions with universities and research institutions have been the main focus since the company's origins as an electronic component trading company. In recent years, with the era of AI being utilized in various scenarios, the ratio of business companies has increased. The company's customers span diverse industries such as the automobile industry, other manufacturing industries, AI-related startups, the healthcare industry utilizing AI for drug discovery, the information & communication industry, the media & entertainment industry, etc.

3. The company's strengths

The company has established a high competitive advantage through the certification of strong technical expertise by four global processor manufacturers and the strategic planning and product procurement capabilities arising from collaboration with global IT vendors. Its strengths and features include 1) proposing optimal solutions by combining the latest technology with unique gimmicks, 2) offering a variety of solution delivery methods, 3) ensuring customer continuity through Service & Support, 4) responding to projects with small-scale deployment in mind, and 5) achieving unique positioning to differentiate from other companies.

The company has obtained 11 types of certifications from 4 global processor manufacturers (NVIDIA, intel corporation , Advanced Micro Devices, AMD XILINX), and its high technological capabilities are highly recognized. By the way, the company is the only one in Japan certified by these four companies. In particular, the company has been building a good relationship with NVIDIA since 2007 and is the number one partner in the country (certification license number, AI server DGX sales performance, number of awards received). Examples of certifications include "NVIDIA AI Solution Provider Preferred" for small to medium-sized AI systems, and "DGX Cloud Solution Provider Preferred" for large-scale cloud AI, contributing to the company's seamless response capabilities.

Many companies in the same industry are entering the growing AI market. Approximately 80 companies are NVIDIA's domestic partners alone. There are also entries from peripheral industries such as software vendors, SaaS, SIer, and CIer (cloud integrator). Among them, the company has established its unique positioning as a provider that can offer flexible tailor-made solutions with strong knowledge of cutting-edge hardware and its integration.

(Written by FISCO Guest Analyst, Hideo Kakuta)