Seiko Holdings Corporation
2Q21 Consolidated Results Presentation
Summary of Q&A


Date:

Wednesday, November 10, from 3:00-4:00 p.m.

Place:

Seiko Holdings Corporation, Head Office and webconferenceRespondent:

Shuji Takahashi, President
Shimesu Takizawa, Executive Director and CFO
Hiromi Nakagawa, General Manager, Corporate
Planning Department

Summary of Q&A :<Watches Business>
Q1. The gross profit margin (GP%) improved in 1H21 thanks to the recovery of
the Watches Business. Are the domestic Watches Business and the growthof overseas businesses contributing to the increase in GP%? If domestic
businesses recover, could GP% deteriorate?
A1. In the past, overseas businesses had rather low profitability because they
had a higher proportion of affordable-priced products than domestic
businesses. However, the growth of Global Brands (GB) has raised theprofitability of overseas businesses to the same level as domestic
businesses. Since domestic profitability is not lower, a recovery in Japan
will not reduce GP%. We believe that the recovery of the domestic market
will raise the domestic GP% as well.

Q2. Was demand in the Chinese watches market rather weak in 2Q21?
A2. Moves by the Chinese government to reduce wealth disparities andpromote common prosperity have changed the sales methods of somee-commerce distributors, which have affected sales in some areas.

Q3. Grand Seiko (GS) has three movement types: mechanical, spring drive,and quartz. Even watches with similar designs have different prices
depending on the caliber of the movement. Will this strategy hinder sales ofhigh-end products going forward?
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A3. Because the design is of crucial importance for high-end watches, it isessential to develop products with one design and one voice.
While affordable-priced watches also use quartz movements, GS uses
special quartz movements with torque that is as strong as mechanicalmovements, which can rotate thick hands like those used in mechanicalwatches. This enables us to offer a variety of designs to customers. Quartz
models will not hinder sales of mechanical or spring drive models.

Q4. Please tell us about measures to regain strength in the domestic watchesmarket in 2H21.
A4. High-priced products such as GS and Credor are recovering. As for
mid-priced products, many customers have traditionally purchased themaround bonus times and Christmas. So We believe that if the coronavirus
pandemic has subsided by Christmas or the end of the year, we canrecover a good portion of sales.

Q5. Are you controlling expenses in the domestic Watches Business in line with
net sales?
A5. We are assuming that inbound demand from visitors from overseas will notrecover in Japan. We are planning to grow with a focus on one-to-one
marketing and e-commerce. We believe this will be more effective than ourconventional marketing approach of mass advertisements.

Q6. What are your thoughts on GB growth in 2H21, FY22 and beyond?
A6. We will continue to grow GB in 2H21, FY22 and beyond. In particular, we
are aiming to grow GB in the large market of high-end mechanical watches.

<Electronic Devices Business>
Q7. The risk of raw material shortages has been factored into the profits of theElectronic Devices Business. Is this risk also factored into net sales?
A7. It is factored into net sales to some extent. However, we think that theimpact on profits is greater.
Q8. Currently, market conditions for high-performance metals forsemiconductor production equipment are highly favorable. How long do
you think this situation will continue?
A8. We believe that it will continue for FY21. Although some risks are expected2

in FY22 and beyond, we expect the trend of steady demand to continue in
IoT and 5G-related businesses.

Q9. Please tell us about expected risks in 2H21 and countermeasures.
A9. We are planning to counter the risk of raw material shortages mainly byexpanding our supplier base and the risk of electricity shortages in China
mainly by revising our operating schedules and purchasing our own power
generators.

<Other>Q10. Why has the inter-segment adjustment of operating profit increased?
A10. Transactions between the Electronic Devices Business and the Watches
Business increased because production sites of electronic devices began
to manufacture watch components. This increase will not continue goingforward.
Q11. How will you grow the Watches Business as well as the ElectronicDevices Business and the Systems Solutions Business in 2H21, FY22and beyond? Please tell us about the Group’s management.
A11. Although the Watches Business will continue to be the main pillar of ourbusiness, it is highly susceptible to economic fluctuations. On that point,
the Electronic Devices Business and the Systems Solutions Business arecoming to play a complementary role. Our next Mid-Term Management
Plan will advance a strategy of these three businesses complementing
each other to further strengthen profitability.

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