March 10, 2022

Company Name: Nihon Dempa Kogyo Co., Ltd.
Representative: Hiromi Katoh, Representative Director and President(Securities Code 6779 Tokyo Stock Exchange, 1st Section)
Contact:
Yuzuru Takeuchi, Senior Corporate Officer and General Manager of
Administration Division(Phone: +81-3-5453-6711)

Notice Concerning Formulation of
New Medium-Term Management Plan (MTMP)(FY2022-FY2024)
Nihon Dempa Kogyo Co., Ltd. (the “Company” or “we”) hereby announces that wedeveloped a medium-term management plan for the fiscal year 2022 ending March 2023
through the fiscal year 2024 ending March 2025 (the “New Medium-Term Management
Plan”, or the “New MTMP”).
1. Background to the formulation of the New Medium-Term Management Plan
Under the Medium-Term Management Plan (FY2020-FY2022) for the fiscal year
2020 ended March 2021 through the fiscal year 2022 ending March 2023 (the“previous Medium-Term Management Plan”, or the “previous MTMP”), the NDKgroup companies(the “Group”) have endeavored to build a strong management
structure by reducing fixed costs, strengthening profitability, pushing forward thestructural reform such as voluntary retirement of the Company’s employees, partial
transfer of the SAW filter business, and personnel rationalization of the consolidated
subsidiaries.
Consequently, the series of structural reforms, which the Group has been working
on since the fiscal year 2018 ended March 2019, are about to be completed. In addition,
the business environment surrounding the Company has changed drastically,
compared with the time when the previous Medium-Term Management Plan wasdeveloped; the business performance has recovered at a faster pace than anticipated,
mainly in the automotive and mobile communications applications.

As a result, the business goals set in the previous MTMP are expected to be achieved
one year ahead of schedule. We expect a significant increase in demand for highprecision, high-reliability crystal devices, which is one of our strengths, with aprospect of full-scale demand for the next-generation communication standard “5G”
and an increase of ADAS (Advanced Driver Assistance System) devices loaded ineach car.
Under such circumstances, the Company aims to shift from structural reform to a
growth phase. To further improve corporate value, we have moved up the period of
the previous MTMP by one year and prepared the New MTMP. Please refer to the“New Medium-Term Management Plan (FY2022 ～ FY2024), Long-Term
Management Strategy -Vision 2030-” for detail.
2. Overview of the New Medium-Term Management Plan
1) Measures that are of Primary Importancea. Solidify the structure for the automotive electronics and 5G-related businesses
We will expand sales in automotive electronics and 5G-related (mobile
communications and industrial equipment) applications and maintain andstrengthen the high-profitability structure.
･ Automotive electronics: supply high-quality, high-reliability products andmaintain high market share.
･ Mobile communications: strengthen compact, high-frequency products for 5G
smartphones (utilizing photolithography technologies).
･ Industrial equipment: strengthen compact OCXO (oven-controlled crystal
oscillators) for 5G base stations.
b. Aggressive investment strategy toward the realization of growth strategy
Investments for production increases based on supply and demand conditionsin the automotive and mobile communications applications; investments for thedevelopment of cutting-edge products (i.e., photolithography technologies,
compact and high-frequency region, etc.); infrastructure renewal and systemfoundation construction
c. Financial strategy toward higher capital efficiency and healthier financial structure･ Introduce ROIC index to practice the management with capital efficiency inmind･ Improve the efficiency invested capital by optimizing inventory and making
adequate decisions and investments.
･ Build a more robust financial structure by redeeming all of Class A shares byJune 2022 (*) and steadily compressing loans and borrowings.

(*) It is the Group’s objective as of today and not a confirmed matter. The ClassA shares will be redeemed on the premise that sufficient funding can beachieved through a public offering. In case it turns out to be impracticable tofinance in the time and conditions the Group desires due to changes in themarket environment and other factors, the redemption date of Class A shares
may be postponed to July 2022 or later.
2) Business Goals
Net Sales:
Operating income ratio (IFRS):ROIC (IFRS):
Equity ratio:
D/E ratio:
Dividend per share:¥58 billion
11%
10%
40%
0.8
¥10/semi-annual(in FY2024)(in FY2024)(in FY2024)(End of FY2024)(End of FY2024)(after full redemptionof Class A shares)[Prerequisite] Full redemption of Class A shares
3. ESG (Environmental, Social, and Governance) Strategy
The Company will promote the initiatives to achieve carbon neutrality by 2050.
4. Long-Term Management Strategy -Vision 2030Looking ahead to 2030, the Company will make the years up to 2030 the period ofa giant leap toward sustainable growth as a reborn NDK, clarifying the direction weshould proceed in the medium-to-long term and the new businesses to address. In
concrete terms, we will aim to enter new markets and build new business models
toward upgrading of communication standards (from 5G to 6G) and further expansion
and development of IoT society.

End

New Medium-Term Management Plan (FY2022–FY2024)
Long-Term Management Strategy—Vision 2030
日本電波工業株式会社
Nihon
Dempa Kogyo Co., Ltd.
March 2022
2022年3月

Copyright © 2022 Nihon Dempa Kogyo All Rights ReservedNew Medium-Term Management Plan and Long-Term
Management Strategy: Table of Contents
I.

Review of the Previous Medium-Term Management Plan (FY2020–FY2022)
and Overall Picture of the New PlanII.

New Medium-Term Management Plan (FY2022–FY2024)(1) Overview(2) Business Strategy

III. ESG Strategy
IV. Long-Term Management Strategy (Vision 2030)

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved-1-

I. Review of the Previous Medium-Term Management Plan and Overall Picture of the New Plan

Review of the Previous Medium-Term Management Plan:
Net Sales and Operating Income◼ Business performance has improved significantly and we expect to achieve the management targets ofthe previous Medium-Term Management Plan one year ahead of schedule
Net Sales (end of March for each fiscal year)

Operating Income (IFRS) (end of March for each fiscal year)*1(¥ billion)(¥ billion)¥+1.9 billion¥+2.5 billion

4.9
44.5

44.0
42.5

2.8
42.0

39.5 39.2

Previous MediumTerm Management
Plan
FY22 target

3.0

0.4

Previous MediumTerm Management
Plan
FY22 target

-8.3
-9.6
FY17 FY18 FY19 FY20 FY21 FY22
Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved

FY17 FY18 FY19 FY20 FY21 FY22
*1：FY21 profit include approx. ¥1.1 billion in grant from Suzhou government
and approx. ¥500 million in cost of structural reform-2-

I. Review of the Previous Medium-Term Management Plan and Overall Picture of the New Plan

Review of the Previous Medium-Term Management Plan: Management Targets◼ In addition to earnings, we expect to achieve financial targets ahead of schedule
FY2019Results

FY2020Results

FY2021
Forecast

FY2022Previous MediumTerm Management
Plan Targets

Evaluation¥39.5
billion¥39.2
billion¥44.5
billion¥42.0
billionAchieve aheadof schedule(IFRS)¥-8.3
billion¥2.8
billion¥4.9
billion¥3.0
billionAchieve aheadof schedule

Operatingincome ratio-21.0%

7.3%

11.0%

7%

Achieve aheadof schedule¥20.3
billion¥17.6
billion

(51%)

(45%)

9.8%

21.5%

Net sales
Operatingincome(IFRS)

Fixed costs(% of net sales)

Equity ratio

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved

Approx.

¥18.7
billion(approx. 42%)

29.3%*1¥18.0
billion(43%)

Over 20%

Achieve fixed cost ratio
despite fixed cost
increases accompanying
Sales increase

Achieve aheadof schedule*1: Calculated based on BS results at the end of the 3rd quarter and net income forecast for the 4th quarter.

-3-

I. Review of the Previous Medium-Term Management Plan and Overall Picture of the New Plan

Review of the Previous Medium-Term Management Plan
: Achievements and Challenges◼ Structural reforms over the past three years and steady efforts by our manufacturing, sales, andengineering departments contributed to improved performance◼

Streamlining of fixed costs through structural reforms✓◼

Firmly established profitability-oriented sales activities✓

Achieve- ◼
ments◼

Challenges

Substantial improvement in earnings for automotive electronics and mobile communications

Achieved yield improvement through production and engineering collaboration✓

In particular, significant results were achieved in products equipped with photolithography blanks, a business expected to
grow in the future

Strengthened collaboration with other companies; broke away from focus only on in-house efforts✓◼

Drastic reduction of fixed costs through structural reforms

Realized external alliances such as creating JVs in the SAW business and adopting OEM for building a flexible production
systemHave not been able to expand sales of
OCXOs*1 for base stations✓

Have not been able to compensate for the impact
of changes in the external environment such as the
US-China trade issue

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved

In order to expand sales of products in the
5G market (which has high potential), we
will take measures such as strengthening
FAE functions.*2*1: Oven Controlled Crystal Oscillator*2: FAE is an abbreviation for Field Application Engineer, a position that supports sales by utilizing
specialized technical expertise.

-4-

I. Review of the Previous Medium-Term Management Plan and Overall Picture of the New Plan

Positioning and Aims of the New Medium-Term Management Plan and Long-Term
Management Strategy◼
◼

The New Medium-Term Management Plan clarifies our shift from structural reforms to a growth phase
Long-Term Management Strategy—Vision 2030 looks ahead to the year 2030 and clarifies the direction we should proceed in
the medium to long term. The long-term strategies will start during the New Medium-Term Management Plan period
Period of the new Medium-Term Management Plan (FY2022–FY2024)
Achieve a balance between solidifying existing businesses andbuilding a foundation for future growth

Investment

Strengthen and solidify
existing businesses
Further expand cash
generation

Investment in
expansion of production

Investment

Automotive
electronics

5G (Mobile
communications /Organizational fortification& human resource
development investment

Cash generation
New product development& new business investment

Industrial
equipment)

Long-Term Management Strategy—Vision 2030
(Elaborate concrete strategies)

Clarify the direction against the change of businessenvironment from 5G to 6G and further developmentof IoT society◼

DeepenAutomotive
electronics

Mobile andterminal devices◼

Pursue

6G and next-generation
infrastructure equipment

Space

Implement carbon-neutral measures able to comply
with future global standards

Repayment

Financial soundness

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved-5-New Medium-Term Management Plan and Long-Term
Management Strategy: Table of Contents
I.

Review of the Previous Medium-Term Management Plan
and Overall Picture of the New PlanII.

New Medium-Term Management Plan (FY2022–FY2024)(1) Overview(2) Business Strategy

III. ESG Strategy
IV. Long-Term Management Strategy (Vision 2030)

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved-6-II. New Medium-Term Management Plan (FY2022–FY2024) (1) Overview

Management Targets during the New Medium-Term Management Plan
FY24
Net sales

Operatingincomeratio¥ 58.0 billion◼

Sales will rise mainly in automotive electronics and mobile communications
markets

FY24◼

11 % (IFRS)◼

Boost profitability by increasing the sales of high-frequency and compact products,
as 5G gets into full swing
The plan reflects the assumed price rise of materials such as IC

FY24
ROIC

Financial &capitalstrategies

10 % (IFRS)
Quickly achieve financial
and capital soundness forsustainable growth

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved◼

Introduce as a new indicator as we implement management with an awareness ofcapital efficiency◼

In addition to generating profits, we aim to achieve this target by optimizing
inventories and improving the efficiency of invested capital through appropriate
investment decisions and execution◼

Strengthen financial base and secure funds for growth through a capital increase
from a public offering of common shares
Aim to fully redeem Class A shares by the end of June 2022*1
Normalize transactions with financial institutions in March 2022 and steadily
reduce debt◼
◼

*1:It is the Group’s objective as of today and not a confirmed matter. The redemption of Class A shares will be carried out on thepremise that sufficient funding can be achieved through a public offering. In case it turns out to be impracticable to financein the time and on the terms and conditions the Group desires due to changes in the market environment and other factors,
the redemption date may be postponed to July 2022 or later.
-7-

II. New Medium-Term Management Plan (FY2022–FY2024) (1) Overview

Investment Strategy
Most recent three years(FY19–FY21)

Prioritize improvementof financial structure;
Restrain investment

New Medium-Term Management Plan
(FY22–FY24)

Growth investment phase

Short
term

Three-year total¥6.0 billion¥11.5 billion

Investment inproduction
increases¥2.1 billion¥5.4 billion◼ Capacity expansion to meet increasing demand forautomotive electronics and mobile communications

Medium to long term

Research anddevelopment
investment¥0.5 billion¥2.1 billion◼ Accelerate investment in photolithography technology◼ Development of advanced products in the compact
and high frequency product fields

Infrastructure
investment¥3.0 billion¥3.0 billion◼ Investment in renewal of facilities for long-termsustainable growth

Systems
investment, etc.

¥0.4 billion¥1.0 billion◼ Build systems and data infrastructure for DX
promotion

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved-8-II. New Medium-Term Management Plan (FY2022–FY2024) (1) Overview

Financial Strategy◼

Expandcapital◼

◼

Aim to fully redeem Class A sharesby the end of June 2022*1
Capital increase through public offering of newshares during the period of the New MediumTerm Management Plan
Steady build-up through increased profits

Equity ratio
End of FY20
Approx.

End of FY24

20 %

40 %
After redemption of all Class A shares

D/E ratio (Interest-bearing debt ÷ shareholders' equity)
Reduceborrowingbalance(improve D/E ratio)◼

Reduce the balance of borrowings
to an appropriate level

End of FY20

End of FY24

2.6

0.8
After redemption of all Class A shares◼

Increase thedividend◼

Dividend increase planned
after fully redeeming Class A shares
After the capital increase through public offering,
we plan to transfer the funds to surplus¥
in order to maintain stable dividends

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved

Dividend per share
End of FY21

5/semi-annual

After redemption of all Class A shares¥

10/semi-annual*1:It is the Group’s objective as of today and not a confirmed matter. The redemption of Class A shares will be carried out on thepremise that sufficient funding can be achieved through a public offering. In case it turns out to be impracticable to financein the time and on the terms and conditions the Group desires due to changes in the market environment and other factors,
the redemption date may be postponed to July 2022 or later.
-9-

II. New Medium-Term Management Plan (FY2022–FY2024) (1) Overview

Overview and Purpose of the Shelf Registration for New Share Issuance*1

Overview
Shelf registration for the issuance of new shares by
public offering and the disposition of treasury shares
◼
◼

◼
◼

Class of Securities to be offered:
Shares of common stock of NDKScheduled Issue (Disposal) Period:
For the period from the scheduled effective date of the
shelf registration to the date that is 1 year after suchscheduled effective date.
(From March 18, 2022 to March 17, 2023)
Scheduled issue (Disposal) Amount: Up to ¥5 billion
Offering method: To be determined

Purpose of the Shelf Registration
To establish a system for flexible capital procurement inlight of the following points◼

◼

Securing the necessary funds for achieving thefuture growth strategies set forth in the new
Medium-Term Management Plan
Further strengthening our financial base after theredemption of Class A shares

In conjunction with the shelf registration, it was also resolved to transfer the entire amount of the increase in capital stockand legal capital surplus from the expected increase in capital to other capital surplus on the same day as the payment
date of share issues, in order to ensure flexibility and mobility in capital policies, etc. after the redemption of Class A
shares.*1*1: For details, please refer to the March 10, 2022 press release "Shelf Registration Statement regarding Issuance of New Sharesand Disposal of Treasury Stock and Reduction of Amounts of Capital Stock and Legal Capital Surplus Concurrently with Issuanceof New Shares."
Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved- 10 -

New Medium-Term Management Plan and Long-Term
Management Strategy: Table of Contents
I.

Review of the Previous Medium-Term Management Plan
and Overall Picture of the New PlanII.

New Medium-Term Management Plan (FY2022–FY2024)(1) Overview(2) Business Strategy

III. ESG Strategy
IV. Long-Term Management Strategy (Vision 2030)

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved- 11 -

II. New Medium-Term Management Plan (FY2022–FY2024) (2) Business Strategy

Business Overview and Strategy◼

We plan for revenue to increase, mainly for automotive electronics and mobile communications applications
FY24 net sales of ¥58 billion
Medium-term sales target

Environmental awarenessDirection of growth(¥ billion)

CAGR*1
9.2%
44.5

58.0
Other

4.6

Industrial
equipment

8.9
3.5

12.7

Mobilecommunications/IoT

10.1

29.8

5G-related

10.9

Automotive
electronics• Recovery in the number of•completed vehicles & increase in thenumber of vehicles with advanced
driver assistance systems (ADAS)

Mobilecommunications/
IoT• Smartphone shipments leveling • Leveraging the advantages ofminiaturization and high-frequency
off, but the percentage of 5Gtechnology (photolithography blanks)
compatible smartphones is
to capture 5G demand
increasing

Industrial
equipment• Expansion of 5G
communication network andlarge increase in small basestations (RU)

Other*2• Consumer: expansion in camera
market for professionals•• Medical equipment,
synthesizers/sensors: gradually•
increasing

Automotive
electronics

FY21

FY24

• For 5G base stations (RU), aiming to
expand sales by introducing compact
OCXO
•

22.0

Maintaining a high market share by
supplying high-quality, highly reliable
products

Consumer (cameras): offset the decline
in mass market consumer sales withgrowth in professional sales
Medical equipment: expand sales to new
customers
Synthesizers/sensors: continue contractdevelopment and secure new orders

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved *1: Compound annual growth rate; *2: "Other" includes consumer, medical devices (hearing aids, ultrasonic equipment, etc.), and synthesizers/sensors - 12 -II. New Medium-Term Management Plan (FY2022–FY2024) (2) Business Strategy

Business Overview and Strategy: Priority Focus Fields◼ Focus on automotive electronics and 5G-related areas

5G

Automotive
electronics◼
◼

Supplying products for automotive applications since theearly 1970s
Holding 50% or higher market share*1 for many years*1: NDK estimates based on data from research companies
Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved◼
◼

Began development of photolithography blanks around 2008
Began mass production of high-precision products required for 5G
products ahead of competitors- 13 -

II. New Medium-Term Management Plan (FY2022–FY2024) (2) Business Strategy

Automotive Electronics Market (NDK’s Strength)
NDK’s uncompromising approach to high quality required toautomotive product
NDK receives steady trust from tier 1 customers◼

10 years or more
maintaining 50%+
market share

NDK's comprehensive support capabilities
Others: 10%

Planning

Development

Ability to propose high quality products that anticipate needs
Design technology to meet required specifications

Company D: 3%
Company C: 7%

Prototypes

Verification capability to prevent defects before they occur

Massproduction

Ability to supply high quality and highly reliable productsCompany B: 10%

Global market
share

Company A: 15%

Shipping

Full-fledged support in the unlikely event of a defective product

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved

Source: NDK estimates based on data from research companies(Market share as of CY20 forecast)- 14 -

II. New Medium-Term Management Plan (FY2022–FY2024) (2) Business Strategy

Automotive Electronics (Market Environment (1))◼ Market potential for crystal products is expected to increase due to an increase in the number of completed
vehicles and the number of crystal units installed
Crystal Product Potential for Automotive Electronics Applications(million units)

6,000
5,000

10% CAGR*

Increase in
number ofcompletedvehicles

4,000

Increase in
number of
crystal devices
installed

3,000

...

2,000
1,000
0

Market size is expected to increase significantly
during the new Medium-Term Management Plan
FY21 FY22 FY23 FY24 FY25

FY30

Source: NDK estimates from FY21 are based on forecast data from research companies*Abbreviation for compound annual growth rate
Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved- 15 -

II. New Medium-Term Management Plan (FY2022–FY2024) (2) Business Strategy

Automotive Electronics (Market Environment (2))◼
◼

The growth of ADAS installed into automotives will raise the crystal device demands
The trend of standardization and mandatory of ADAS installation is expected to accelerate according to the developmentof automated driving technologies

Forecast of global sales volume of completed vehicles◼

The number of completed vehicles is
expected to recover to the 94 million unit
level in CY24

100 (million units)

Estimated number of crystal devices installed◼

The number of crystal devices installed isincreasing significantly as ADAS are becoming
more common◼

No impact on the number of crystal devices
installed is expected accompanying the shift to
EVs

95

90

(Units: pc/vehicle)

80

0Conversion to EVs

ADAS increase85

CY19 CY20 CY21 CY22 CY23 CY24 CY25

34.2

35.7

37.0

39.0

40.8

42.3

44.0

CY19

CY20

CY21

CY22

CY23

CY24

CY25

Source: NDK estimates from CY21 are based on forecast data from research companies
Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved- 16 -

II. New Medium-Term Management Plan (FY2022–FY2024) (2) Business Strategy

Our Business Domain in 5G◼ 5G has two main markets: the devices market and the network market, and NDK can approach both markets◼ The 5G market is expected to have high growth potential and a wide range of business opportunities exist

Devices(Mobilecommunication)

Although the required crystal products
are different,

we can approach both markets
with NDK's technicalcapabilities

Network(Base stations)

There is a wide range of business opportunities
in the 5G market
Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved- 17 -

II. New Medium-Term Management Plan (FY2022–FY2024) (2) Business Strategy

Mobile Communications Market(NDK‘s Strength: Photolithography Processing Technology (1))◼

With the advent of the 5G era, the need for compact, high-frequency crystal devices will increase, and the advantages ofphotolithographic processing technology will become even more pronounced

5G domain

smallerSuperiority in
Photolithographic
processing

The Arrival of the 5G Era
Size

Changing needs for crystal products
Pre
5G domain
Superiority inmachining processing

largerlower
Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved

Frequency

higher- 18 -

II. New Medium-Term Management Plan (FY2022–FY2024) (2) Business Strategy

Mobile Communications Market(NDK’s Strength: Photolithography Processing Technology (2))◼

The technological know-how we have accumulated over many years has become the cornerstone of our integrated production of highquality, high-performance photolithography blanks, giving us a competitive edge in 5G applications
Raw crystal growth

Initiatives and Results to Date◼

◼ Success in growing large,
high-purity raw crystals
High quality
Large raw crystals

We have been accumulating production know-how
through repeated trial and error since around 2008

Photolithographic
processing◼

Realization of high quality and high performance(compact size and high frequency) photolithography
blanks with high productivity◼

Successfully developed products for 5G ahead of othercompanies✓

Acquired first certification of crystal unit (76.8 MHz)
with a built-in thermistor from Qualcomm(mass production began in June 2020)

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved

76.8 MHz
crystal units with built-in
thermistor◼ Mass production using 4-inch wafers
started ahead of competitors- 19 -

II. New Medium-Term Management Plan (FY2022–FY2024) (2) Business Strategy

Mobile Communications (Market Environment)◼
◼

Shift towards 76.8MHz band will move forward along with the growth in demand for 5G-compatible smartphones
NDK will expand sales of ultra-compact crystal units(include 76.8MHz products) with photolithography blanks for 5G-compatible
smartphones and wareable devices

Potential number of smartphones

Crystal devices potential for smartphone applications

5G smartphone market: 18% CAGR
５G smartphone ratio

21%

40%

49%

55%

62%

◼

Requirement for higher frequency in crystal units due to the
spread of 5G-compatible smartphones◼

Shift toward 76.8MHz band is moving forward
Forecast by Frequency Band

Total numbers of smartphones

1,500(Units: millions of phones)

32 MHzor below

43%

39%

1,000
up to
76.8 MHz

500

76.8
MHz

0

CY20

CY21

CY22

CY23

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved

CY24

53%

5%
CY21

40% 80%

90%

21%
CY24

Source: NDK estimates from CY21 are based on forecast data from research companies- 20 -

II. New Medium-Term Management Plan (FY2022–FY2024) (2) Business Strategy

Industrial Equipment: Base Stations (NDK’s Strengths)◼

NDK is the sole Japanese mass producer of OCXO for 5G base station【5G Network system 】 *1
Base station at 5G network system,
which connects devices to networks,
is composed of CU, DU, thatprocess data, and RU, that
sends/receives radio waves
between devices

NDK provides high-stable OCXOs
using our own high-purity andhigh-quality raw crystal◼ OCXO (25×22mm)*1

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved

CU : Abbreviation for Central Unit
DU : Abbreviation for Distributed Unit
RU : Abbreviation for Radio Unit

- 21 -

II. New Medium-Term Management Plan (FY2022–FY2024) (2) Business Strategy

Industrial Equipment: Base Stations (Market Environment)◼
◼

5G base stations are expected to need a large number of small wireless base stations called radio units (RU)
NDK will aim to expand sales of compact OCXO
Base Station Market Potential

Forecast of RU Demand by Region

RU market: 38% CAGR
8,000

8,000

(Units: thousand stations)
Outside
China(Units: thousand stations)

CU

4,000

DU

6,000

China
0

CY21

CY22

CY23

CY24

CY25

4,000

RU

◼ World's smallest (7×5 mm)compact OCXO

2,000

0

Aim to provide compact OCXO thatmaintain stable performance even inharsh environments
CY21

CY22

CY23

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved

CY24
Source: NDK estimates from CY21 are based on forecast data from research companies- 22 -

New Medium-Term Management Plan and Long-Term
Management Strategy: Table of Contents
I.

Review of the Previous Medium-Term Management Plan
and Overall Picture of the New PlanII.

New Medium-Term Management Plan (FY2022–FY2024)(1) Overview(2) Business Strategy

III. ESG Strategy
IV. Long-Term Management Strategy (Vision 2030)

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved- 23 -

III. ESG Strategy

Overall Picture of ESG Strategies
Accelerating Efforts to Achieve Carbon Neutrality by 2050
Scope 1 and 2

Reduce electricity usage◼ Greening of energy through procurement of electricity
from renewable energy sourcesE
Environment◼ Improvement in power consumption efficiency
through energy saving strategies

Scope 3

Greener power◼ Visualizing GHG emissions throughout the supply chain◼ Visualizing the risks and opportunities of climate change and the responses to them

Scope 1: Direct emissions of greenhouse gases by the business itself; Scope 2: Indirect emissions from the use of electricity,heat, and steam; Scope 3: Indirect emissions other than those in Scope 1 & 2As a social institution, we will further strengthen our internal infrastructureand governance in order to achieve both social responsibility and sustainable growth.

Society◼ Strengthen and maintain occupational health and safety initiatives that enable
employees to work with vitality◼ Continuously strengthen supply chain CSR with consideration
for social responsibilities such as environmental conservation and human rights

S/G◼ Review human resource strategies in anticipation of social trends

Social/Governance◼ Increase the ratio of female managers and promote female executives

Governance◼ Examine the nature of the Board of Directors and individual directors
who contribute to the enhancement of corporate value◼ Strengthen our risk management system◼ Strengthen our responses to sustainability issues
Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved- 24 -

III. ESG Strategy

NDK Concept for environment

Calculation of product life cycle
CO₂ emissions using theenvironmental LCA method

Eco-friendly products with low
voltage operation & longer
battery life

Miniaturization of products &improvement of power-savingsfor hardware

Eco-friendly products that reduce
environmental impacts

Establishment of management
standards for environmental
substance lists

Product development leveraging
state-of-the-art technology

Selection/use of parts and materials
that do not containany banned substances

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Miniaturization & weight reductionof products and materials- 25 -

New Medium-Term Management Plan and Long-Term
Management Strategy: Table of Contents
I.

Review of the Previous Medium-Term Management Plan
and Overall Picture of the New PlanII.

New Medium-Term Management Plan (FY2022–FY2024)(1) Overview(2) Business Strategy

III. ESG Strategy
IV. Long-Term Management Strategy (Vision 2030)

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IV. Long-Term Management Strategy (Vision 2030)

Positioning of Vision 2030◼

Looking ahead to 2030, NDK will clarify the medium-to-long-term direction in the Long-Term Management Strategy-Vision 2030Make a concrete strategy
Period of the new Medium-Term Management Plan (FY2022–FY2024)
Achieve a balance between solidifying existing businesses andbuilding a foundation for future growth

Strengthen and solidify
existing businesses
Further expand cash
generation

Investment

Investment inproduction
expansion
Investment

Automotive
electronics

5G (Mobile
communications /Organizational fortification& human resource
development investment

Cash generation
New product development& new business investment

Industrial
equipment)

Long-Term Management Strategy—Vision 2030
Enter new markets and build new business models

Clarify the direction against the change of businessenvironment from 5G to 6G and further development of
IoT society◼

DeepenAutomotive
electronics

Mobile andterminal devices◼

Pursue

6G and next-generation
infrastructure equipment

Space

Implement carbon-neutral measures able to comply
with future global standards

Repayment

Financial soundness

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IV. Long-Term Management Strategy (Vision 2030)

NDK’s Core Competences and Business Development
An established position in the industry
through accumulated technologies from
integrated production

Endeavor toward a new business modelBusiness
Development
NX1008AA
1x0.8 mm crystal unit

NX3225GB
Crystal unit
for automobiles

NH9050SA
7x5 mm OCXO

Overwhelming trustin the automotive
electronics market

Leading the industry
with compact andadvanced products

The value NDK
provides

NDK’s
Core
Competences

High frequency
supportPhotolithography technology

Product
miniaturization

High qualityHighreliability

Simulation technology

High-quality quartz-growing
technology

Component handlingtechnology

Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved

NT2520SE
TCXO for automobiles

Diverse,wide-ranging
products

Equipment design technology

Inspection technology

Quality management

Stable production technology

6.5 GHz frequency
synthesizer

QCM
Outgas sensor

Modules/systems
business development

GHz band +low noise

Microwave/millimeter wave
high-frequency circuit technology

Frequency
control

Digital signal processing technology

Wireless system design

Combining and integrating technology- 28 -

IV. Long-Term Management Strategy (Vision 2030)

Business Opportunities and Technology Deployment toward Vision 2030
Upgrading of communication standards(from 5G to 6G)

Further expansion and evolution of the
IoT society(Dramatic increase/expansion of wireless communication
demand & applications)

Create countless business opportunities
Areas to deepen

Areas to pursue
Mobile communications
and terminal devices

Automotive electronics◼ Full-scale spread of automated driving
and V2X*1◼ Further progress in the computerizationof cars◼ Widespread use of high-frequency

communications for 6G◼ From industrial equipment to everyday
objects: Everything will be linked to IoT

6G and next-generation
infrastructure equipment

Space◼ Evolution of equipment accompanying◼ Increasing demand as commercialization

spreads

significant changes in network
configuration

Acquisition of core competences necessary to realize businessin the modules/systems business & in new areas of pursuit
Highfrequency
supportProduct
MiniaturizationHigh
reliability

Small lotsupportUltra-highprecisionFrequency
controlTechnologies at the root of the value NDK provides*1: Vehicle to everything(V2X) is a wireless communication technology between vehicle and, things, other vehicles, pedestrian, infrastructure, network, etc
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IV. Long-Term Management Strategy (Vision 2030)

Initiatives for the Post-5G Era
Post-5G: Enhancing 5G's ultra-low latency, multiple simultaneous connections,and other features to address "Beyond-5G" expected to start in 2030
Expected to be used in a variety of applications, including automated driving,
smart manufacturing, and industrial IoT

NDK participates in a project*² commissionedby the Ministry of Economy, Trade and Industry and NEDO*¹
Research and development are currently underway (in collaboration with the National Institute ofInformation and Communications Technology, the University of Tokyo, Tohoku University, and Hiroshima University)on "time synchronization technology," which will become increasingly important in the post-5G era.

•

We have developed a digitally-controlled crystal oscillator and are planning to develop adevice in FY22 for time-synchronized wireless communication jointly with the National
Institute of Information and Communications Technology (NICT).

•

Plans call for more progress with experiments and verification of wireless connectivity using
the device, with the aim of commercializing it in 2026.

*1: New Energy and Industrial Technology Development Organization*2: Ministry of Economy, Trade and Industry (METI) and NEDO's "Research and Development Project forEnhancement of the Bases for Post-5G Information and Communication Systems" (commissioned project)
Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved- 30 -

Final Comments◼

NDK will launch the New Medium-Term Management Plan one year ahead of schedule. Aiming for continuous growthby solidifying current business and taking medium- to- long-term initiatives.

Current
location

Globalfinancialcrisis2010

Slump in businessperformance

COVID-19

2015

2020

Automotive electronics growth& 5G in full swing
2024

2022

A giant leap
toward sustainablegrowth2030

Initiatives for Vision 2030
New Medium-Term Management Plan
• Strengthen current businesses
and improve profitability

Vision 2030
• Expand into new markets• Create new business models• Achieve financial soundness
Foundation for FY18 and beyond• Production transfer• SAW joint venture• Structural reform• Issued Class A shares

Previous MediumTerm Management
Plan• Steady progress toward alean "muscular" company

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(Reference) Special IR Page on NDK Crystal Devices

https://www.ndk.com/en/ad/2021/index.html
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Thank you everyone for your time

For IR inquiries:
Corporate Planning Group,
Nihon Dempa Kogyo Co., Ltd.
Mail: irmaster@ndk.com

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Copyright © 2022 Nihon Dempa Kogyo All Rights Reserved- 34 -