Future Outlook

24
Copyright © 2018 Harmonic Drive Systems Inc.

Orders by Region

25
Copyright © 2018 Harmonic Drive Systems Inc.

Consolidated Orders, by region
External environment

 In the preceding fiscal year, adjustment process in Asia due to “investment overheating” and “advanceorders” centering on robots
 Adopting a wait-and-see approach for some investment due to US–China trade friction and revisions
to China’s state subsidy system

Internal environment

 Strong performance in Europe and North America
 Competitive advantage unchanged
 Expect upturn in orders from Q4 (firm in advanced-country economies, strong progress in plans forinvesting in automation)(Millions of yen)

Harmonic Drive AG becomes subsidiary

25,000FY03/19

20,00015,00014,43914,022

15,715

15,645
9,526

10,000
11,544

5,000

5,820

5,412

6,543

0

1,301
435

1,133
402

1,035
495

Q1 2016

Q2 2016

Q3 2016

1,867

2,247

3,681

4,695

4,088

Q4 2017

Q1 2018

Q2 2018

1,707

2,076

1,894

2,006

1,269
941

3,834

4,264

4,442

Q4 2016

Q1 2017

Q2 2017

Q3 2017

North AmericaAsiaEurope

6,449

26

Copyright © 2018 Harmonic Drive Systems Inc.

Trends in Main Fields ofApplication

27
Copyright © 2018 Harmonic Drive Systems Inc.

1. Industrial robots
 Growth leveling off in 2018 due to US–China trade friction and revisions to China’s state subsidy system A wait-and-see attitude on some investment in Asia
 “Bringing jobs back home” campaigns in the US and other countries, as well as favorable demand forinvestment in automation in advanced and newly industrialized countries(backdrop of rising personnel expenses, worker shortages, and a growing quality focus)

Worldwide outlook for number of industrial robots sold*forecast

Copyright © 2018 HarmonicDrive Systems Inc.

28

Copyright © 2018 Harmonic Drive Systems Inc.

2. Collaborative robots (co-bots)
 Expanding adoption in the manufacturing and service industries Robust demand, centered on Europe

Expected size of the market for co-bots(by amount and units)Sales(billions of yen)

30.9

48.8

80.0

204.0

2017-2020 (forecast)

6

Aprox.4.3x
CAGR: 62.4%

5
Ten thousands of units

126.5

0.9
4
1.5
3

0.6

2
100.1
0.2
0.3
0.1
2016

1.0

0.4
0.6

1.9

0.2
0.4
0.4
0.22017(Actual)

2018
2019
2020
(Estimate) (Forecast) (Forecast)

JapanAsia

1.1

0.7
0.3

0.8

0.5

EuropeUS

Source: Techman Robot Inc.

Source: “Reality and Future Outlook of Worldwide Robot
Related Market 2018; Vol.1 FA Robot Market
Edition,” Fuji Keizai Group

29Copyright © 2018 Harmonic Drive Systems Inc.

3. Semiconductor manufacturing equipment,LED and OLED manufacturing equipment
Semiconductor manufacturing equipment
 At present, adjustments underway to invest in higher
semiconductor multilayer and miniaturization technologies
 Growing demand for AI, VR, and CASE (automobile-related) Driven by 5G-related investment (3G [voice] ➔ 4G [data] ➔ 5G[video]) Explosion in data volume driving increases in server demand
and accelerating the shift toward cloud computing
 Shift from hard disk drives to solid-state drives

LED and OLED manufacturing equipment Demand for small- and medium-sized panels falling as smartphone growth levels off
 Demand emerging for OLEDs used in large TVs and onboard automotive electronics

Copyright © 2018 Harmonic Drive Systems Inc.

30

New Applications

31
Copyright © 2018 Harmonic Drive Systems Inc.

1. Medical applications
 Robotics technology is playing an active role in medical practice Use of power assistance is expanding in physical therapy clinics and for easing
the burden of carrying heavy objects
 Health insurance applicability to surgery assistance robots is growing

Market forecast for surgical robots

Surgical robots

Power assist suits(US M$)

10Forecast

86
45mm diameter HarmonicDrive®

202015201620172018~2020

Source: IFR "World Robotics 2017 Industrial Statistics"

32Copyright © 2018 Harmonic Drive Systems Inc.

2.-(1) Helping to bring a revolutionary type ofnew engine into practical use
 Nissan Motor Co., Ltd.

Used in actuator for variable compression ratio (VCR) engine
One Harmonic Drive® used in each engine
Significantly improved fuel performance Compression ratio continuously changes according
to driving conditions
 Significantly improved thermal efficiency
 Has been something of a dream among internal
engine technologies, under development for morethan 20 years

Source: Nissan Motor Co., Ltd.

 Expected to drive next-generation technologies
State-of-the-art technology contributing to thefusion of internal combustion engines and electricvehicles
33

Copyright © 2018 Harmonic Drive Systems Inc.

2.-(2) Helping to bring a revolutionary type ofnew engine into practical use
 Major technological breakthroughin internal combustion engines
Optimal compression ratio for travel obtained bychanging the top dead center position of thepiston

Multi-linkmechanism
Note: Developed by NissanMotor

 We are developing andcommercializing specialized speed
reducer for VCR engines
Newly developed Harmonic Drive® Dual type

Harmonic Drive®
area

Technology once considered a dream achieved through multi-linkmechanism and new Harmonic Drive®

34Copyright © 2018 Harmonic Drive Systems Inc.

2.-(3) Autonomous motorcycle Yamaha Motor Co., Ltd.’s MOTOROiD
Uses batteries as weights and pendulum principles to control balance Used in actuators to control vehicle position Our AC servo actuators contributehelp control vehicle balance
・Used to control steering and center of gravity
・Non-backlash contributes to improved
controllability
・High marks for being lightweight and compact
Source: Yamaha Motor Co., Ltd.

◇ Unveiled at the 2017 Tokyo Motor Show
◇ On display at the Yamaha Motor Booth at World Robot
Summit 2018 (October 17–21)

35

Copyright © 2018 Harmonic Drive Systems Inc.

Initiatives Aimed at Achieving
Medium-Term Management Plan Targets“Raising QCDS Capacity”

36
Copyright © 2018 Harmonic Drive Systems Inc.

1. Roadmap to raising production capacity
1. Strain wave gearing devices
To Jan. 2017

(Numbers indicate units produced per month)

Aug.
2017

Apr.
2018

Oct.
2018

66,00085,000+105,000+－Mar. 2021－

Hotaka Factory

50,000Japan:
Harmonic
Drive
Systems Inc.

Ariake Factory

Ariake Factory(new plant building)

Total for two
factories:
200,000

120,000–
150,000
Germany:
HarmonicDrive AG
US:Harmonic
Drive LLC

Limburg Factory

10,000 +Boston Factory

2. Crossed roller bearings
Japan:
HarmonicPrecision
Corp.
Germany:
HarmonicDrive AG

Current factory

30,000–50,00015,000+
New factory

3,000

10,000–30,000Total 98,000+ Total: 123,000+

60,000+70,000+
New factory

Limburg Factory

10,000+

New factory

Total 70,000+ Total 80,000+

Total 240,000–
280,000

120,000–
150,000

150,000

30,000Total 180,000

37

Copyright © 2018 Harmonic Drive Systems Inc.

2. Construction of new plant building at
the Ariake Factory (Azumino, Nagano Prefecture) Production base for strain wave gearing devices (Harmonic Drive®) Factory designed in anticipation of production increases over the mediumterm (total floor space of 21,818sqm)
 We plan to increase capital investment in equipment and increase thenumber of personnel in stages, keeping a close watch on demand trends
Now
Sep. 2018

Construction started

Nov. 2018

Jul. 2019

Under construction

Construction to be completed

Groundbring ceremony

Building area
Artist’s rendition of completed facility

38
Copyright © 2018 Harmonic Drive Systems Inc.

3. Construction of new plant building atthe Matsumoto Factory (Matsumoto, Nagano Prefecture) Production base for crossed roller bearings
 Factory designed in anticipation of production increases over the medium
term (total floor space of 23,659sqm)
Now

Dec. 2017

Nov. 2018

Jan. 2019

Construction started

Under construction

Construction to be completed

Site preparation

Current progress
Artist’s rendition of completed facility

39
Copyright © 2018 Harmonic Drive Systems Inc.

4. Construction of new plant building at the US Factory(Beverly, Massachusetts)
 Production base for strain wave gearing devices (Harmonic Drive®) Designed to increased North American local production ratio and meet future
demand increases (total floor space of 8,830sqm)
NowJul. 2018

Nov. 2018

Jul. 2019

Construction started

Under construction

Construction to be completed

Site preparation
Current progress
Artist’s rendition of completed facility

40
Copyright © 2018 Harmonic Drive Systems Inc.

5. Efforts to increase productivity
 Expand automated lines
 Promote cross-trained workers
 Achieve ongoing improvements in fabrication, assembly,
and testing processes Normalize and shortendelivery times
 Pursue further quality
increases Enhance costcompetitiveness41
Copyright © 2018 Harmonic Drive Systems Inc.

Current Mid-term management planand Aiming for Further Growth
toward 2030 and 2050

42
Copyright © 2018 Harmonic Drive Systems Inc.

Mid-term management plan and long-term vision

Consolidated sales (billions of yen)
Plannedsales 20.4
Actualsales

18.1

21.0

26.0

29.0

25.9

28.2

30.0

35.0

68.5

54.3

67.0E

100.0

50thanniversary
前mid-term
Earlier
mid-termmanagement
management
planplan
FY2012–FY2014Previous mid-term
management plan
FY2015–FY2017

Current mid-term
management plan
FY2018–FY2020Good balance among
three businesses
MTADRD
FY2030–FY2050

43
Copyright © 2018 Harmonic Drive Systems Inc.

The performance targets and other numerical data
presented herein are forecasts based on information
available to the HDS Group at the time this material wasprepared, and are subject to the influence of uncertainties
including those in the economic and competitiveenvironment. Actual performance may therefore differ
materially from the forecasts given in this material.

For more information:
Please contact us as follows for material contents and investor information of all kinds.
Corporate Planning Division, Harmonic Drive Systems Inc.
Ichigo Omori bldg. 7F, 6-25-3 Minami-Oi, Shinagawa-ku, Tokyo 140-0013 Japan
Email: ir@hds.co.jp
Website: https://www.hds.co.jp/

Copyright © 2018 Harmonic Drive Systems Inc.