FANUC CORPORATION
Q&A Summary of the Telephone Conference
on Financial Results for the Third Quarter ended December 31, 2021
(January 26, 2022)
Q: Please provide an update on the supply shortage situation, with focus onsemiconductors. In Q2, there was a downward revision of your forecast due to thesituation of the shortage of semiconductors being more critical than expected. On
the other hand, sales and profits increased in Q3 compared to Q2, and there waseven an upward revision of the yearly forecast. Sales is expected to decrease slightlyin Q4.
What has changed in the external environment and FANUC’s approach?

A: The downward revision in Q2 was due to the decrease in production and sales resulting
from the shortage of components, mainly semiconductors. Procurement gradually
improved in Q3, but the overall situation continued to be harsh. Under suchcircumstances, changing designs and acquiring parts sold at large in the market, enabled
us to persevere and continue production, so that the production volume was higher thanin Q2. We are bracing ourselves to face another half year or so of difficulties in procuringparts, especially semiconductors, and expect that production and sales for Q4 will remain
at the same level as Q3. FANUC is continuing to do its utmost to acquire parts, in orderto manufacture even at least one more unit to deliver to our customers.

Q: ROBOTs are being manufactured both in FANUC Headquarters and Tsukuba. What
are your plans for enhancing production capacity in these sites, as well as in theMibu area?
A: The monthly production capacity of ROBOTs is 11,000 units, and it seems that
manufacturing at full capacity is on the horizon. By using free space within the company
and improving efficiency, prospects are clear for increasing the monthly production
volume to approximately 14,000 units. Also, the evaluation of achieving a production
capacity of 16,500 units per month, without new constructions, is ongoing.
Still, as the robot market is expected to expand dramatically, such enhancements areseen as being limited, and will cover demands only for the next few years. Building a new
ROBOT factory in Tsukuba is contemplated as the next step. If demands increase evenfurther, there is a possibility to consider using Mibu as an option for additional production.

Q: In your Annual Report, in addition to conventional directions of making huge
capital investments in ROBOTs to maximize the automation rate, there is a new1

trend in which investments are suppressed and production is dispersed to ensure
continuous stable supply. Such a case is written in your Annual Report. What kindof business is FANUC targeting?
A: Even at present, major manufacturers are installing a considerable amount of equipment
and facilities to fully automate production, and this direction will continue into the future,and is quite important. On the other hand, more and more manufacturers of large
varieties in small volumes, and companies belonging to what we call “general industries”
are expected to introduce automation one step at a time, prioritizing cost efficiency,
without investing heavily. FANUC shall develop products to meet such needs as well.

Q: What is the environment for demands, especially in China?
A: Although page 8 in the material mentions the decrease of FA sales in China, this is dueto the increase in backlog, as our production is unable to keep up with demands, andcustomers are adjusting orders. Demands for FA products continue to be extremely high,and we can sell as much as we can supply, if only the situation will permit.
The increase in ROBOTs is derived from the active conversion to automation, which isleading to a mammoth growth in demands from a wide range of areas. The mostprominent are those related to EVs and IT.
The outlook for ROBOMACHINE is rather obscure, but in Q4, demands are expected tosome extent.

Q: Bookings for ROBOTs amounted to 90.9 billion yen and is probably the highest
recorded. Is this due only to the increase in overall demands, or is anythingchanging, such as the expansion in the ways robots are used?
A: As pointed out, ROBOTs recorded the highest quarterly bookings in our history, in Q3.
Though partially inflated by pent-up demands due to COVID-19, the pandemic has also
triggered a change, and has given momentum to the transition to automation. Robot inquiries
have soared throughout the industry. Especially, EV related inquiries stand out, and various
manufacturers in the Americas and China are trying to increase production capacity all atonce. The impression is that demands for robotization is increasing significantly in EV-relatedareas, such as batteries and car bodies. In China, the IT industry has formed clusters, and is
focusing on automation, resulting in a sharp spike in the number of inquiries.

Q: Is there a difference between difficulties in parts procurement for ROBOTs andthose for FA?
A: Bottlenecks in the procurement of electric/electronic parts, particularly semiconductors,2

is not a problem that is unique to us. Manufacturers around the world are more or lessfacing a similar situation. At the same time, various machine components are hard toobtain, though not to the extent of difficulties in procuring electric/electronic parts suchas semiconductors, and there is also a global shortage associated with plastics. With theincrease in orders for ROBOTs, we are in the midst of pouring efforts into increasing
production. Parts procurement for ROBOTs is indeed onerous, though not as much asparts for FA products.

Q: Will the present high level of ROBOT bookings rise in the future? Will sales
increase as well?
A: As a trend, orders for ROBOTs are anticipated to surge even more. The lead time isgetting longer because of problems in parts procurement and other factors, but it is a factthat the procurement status is improving gradually. From this, sales will increase witheach quarter from the viewpoint of moving average.

Q: As for FA bookings, does increase seem to be unlikely in light of future demands?
A: Regarding FA bookings, it is written that there is “a decrease in China, South Korea, andTaiwan,” but this a consequence of large backlogs, bringing about order adjustments.
The reality is that demands in China are astonishingly high, and if we were able to supply
more, we would win more orders. Enhancement of production capacity is considered tobe an urgent matter. The Mibu factories which produce CNCs, motors and amplifiers, willreach the limit in capacities in their facilities in the next few years. Furthermore, theincrease in the production capacity of ROBOTs will require more controllers, motors andamplifiers to manufacture ROBOTs. Therefore this extra amount has to be taken into
account as well. Measures are being considered, and when plans are finalized, they will
be disclosed.

Q: Concerning the growth of the FA business, will the rise in the rate of NC usage in
China, the switch from hydraulic control to electric control that is highlighted in
the reference material, and the movement towards energy saving have an effect?
A: As to whether the change from hydraulic control to electric control is explicitly reflectedin our orders, our reply is that we are not at that stage yet. However, the shift towards
using numerically controlled machine tools, and replacing hydraulic control with electric
control in machines, will definitely be propelled. In that respect, there is much room for
FANUC to make a contribution. In addition to our approach to achieve carbon neutrality
in our manufacturing activities, FANUC will devote more efforts into making our products
more energy efficient than before.
3

(Note: Any reference in this material about the future may be affected by uncertain factors, such as
supply and demand trends, industry competition, and economic climate. Therefore, actual
outcomes may differ.)4