Supplementary Material
Notice on Basic Agreement toEstablish a JV with IAT Automobile
Technology Co., Ltd.
Preparing for full-scale entry into therapidly growing Chinese EV market
Ryosan Company, Limited
September 4, 2023

株式会社リョーサン

Overview of JV•••

Ryosan has entered into a basic agreement to establish a joint-venture company(hereinafter, “New Co”) with IAT Automobile Technology Co., Ltd. (hereinafter “IAT”),
which is China’s largest independent automotive engineering company.
In China, the world’s largest electric-vehicle (EV) market, the development of platformsfor core components is rapidly expanding. The New Co will supply IAT’s customers,
including domestic automakers and Tier-1* companies, with the electronic parts
necessary to develop those platforms. In doing so, the New Co will leverage theknowledge of electronic parts and expertise in automotive technology that Ryosan has
accumulated over many years.
The New Co aims to create a new business model that goes beyond the framework of anelectronics trading company. By combining Ryosan’s knowledge with IAT’s knowledge as
an engineering company, the New Co will supply EV platforms that can prevail throughout
the market regardless of Keiretsu supply-chains.
*Parts manufacturers that deliver directly to automakers

Company
nameSichuan Xin Century Technology LLC

Location

Chengdu City, Sichuan Province, China

Representative

Qiwu Xuan, Chairman

Details ofoperations

Wholesaling of semiconductors and electronicparts

Capital50 million renminbiOwnership

IAT 60％, Ryosan 40％2

The Chinese EV Market••

China is the world’s biggest EV market, accounting for 67% of global market share inFY2022.
Sales of new-energy vehicles (NEVs) are expected to expand further, reaching 50% market
penetration by 2035.
Unit sales of NEVs worldwide

Main targets of Roadmap 2.0(Thousands of vehicles)

Size of automobile market
Size of automobile market(millions of vehicles)

10,0009,000
8,000

Share byvehicle
type

7,000
6,000
5,000
4,000
66.9%

3,000
2,000

55.6%

49.8%

1,000
54.6%

53.1%

43.8%

2018

2019

2020

02017

■China2021■Europe ■Americas

Source: Created by Ryosan using datafrom MarkLines Co., Ltd.

2022

■Other2025

2030

2035

32

3840

ICE

40-50%

15-25%

0%HEVs5-10%

20-25%

40-45%NEVs

20%

40% ormore

50% ormore

Source: The table above was created by Ryosan using datafrom MarkLines, “China Energy-saving Vehicle & NEV
Roadmap 2.0: Curbing Carbon Emissions for a GreenSociety”(April 20, 2021)(https://www.marklines.com/en/report/rep2142_202104)

 In October 2020, the China Society ofAutomotive Engineers (SAE China), anindustry think tank, published “Energysaving/NEV Technology Roadmap 2.0,”
announcing a target of zero internalcombustion-engine (ICE) vehicles by 2035.
3

Roles of the Partner Companies
IAT will provide Chinese domestic automakers with services such as development anddesign of EV platforms. Ryosan will provide the New Co with the electronic parts
necessary for production by each manufacturer based on the designs created by IAT.
Ryosan will also fulfill roles such as introducing new products and proposing solutions anddevices.

IAT

Ryosan・Supply of parts to the New
Co・Handling of new products
・Proposal of solutions anddevices to IAT・Technical support to IAT Supplyof parts

Ability to propose
parts (channels)

New Co・Development, design,
testing and prototyping ofthe EV platform
・Software development

・Supply of parts toautomakers and Tier 1
companies
Platform enables parts tobe standardized, enablingcollective purchasing

Connections and technicalcapability in China
Vehicle design services

Sale ofparts

Request for design anddevelopment of the EV
platform

Suppliers

Customers A, B, C…

Customers A, B, C…

Japanese-affiliated parts
makers
New parts makers inChina

Tier 1

Automakers
Production ofEV platform

4

Partner Companies’ Investment Objectives andSignificance for Ryosan’s Business
For Ryosan, entry into the world’s biggest EV market offers the prospect of investment results
beyond handling of parts, including discovery of new customers and new products. These
investment projects offer Ryosan an opportunity to leverage its accumulated expertise tomaximum advantage. As such, their significance for Ryosan as investments is enormous.

IATRyosan•

Increase of value-added for existing
suppliers by consolidating the needs of
the Chinese automobile market•

Breaking away from the individual design
contracting business and expanding into
the platform design area•

Creation of business opportunities byleveraging IAT’s solutions and businessplatform••

Expansion of products from new suppliers•

Acquisition of information on trends in theChinese EV market, which is ahead ofJapan

Securing a stable supply of relevant partsand expanding transactions with global
electronics suppliers, thereby
strengthening relations with Chineseautomakers•

Achieving these goals requires partners incooperating industries.

 This arrangement marks the first full-scale entry of a Japanese electronics
trading company into the Chinese EV supply chain.
Strategicsignificance The arrangement also crystallizes the trust Ryosan has cultivated with
Chinese companies over 50 years of business development in Chinesespeaking Asia.
 The arrangement is a successful model for horizontal expansion of theknowledge and expertise Ryosan has accumulated over many years in theautomotive electronics field.
5

Business Strategy of Ryosan

6Positioning of Local Business Initiatives in Chinese-speaking Asia•

By consolidating a local semiconductor trading company, investing in local SIers and deploying a unified Groupwide business network, Ryosan has autonomously expanded its local business in Chinese-speaking Asia. The
current establishment of a New Co with IAT, along with the management integration with Ryoyo ElectroCorporation, will enable fresh business opportunities through which to expand Ryosan’s trading area.
Trend in net sales from local business in Chinese-speaking Asia

1974
1982
1985
1986

1997

2000
2002

2009

Establishment of Hong
Kong Ryosan Limited
Establishment of Beijing
OfficeEstablishment of Shanghai
OfficeEstablishment ofShenzhen/Chengdu Office
Establishment of Zhong
Ling International
Trading (Shanghai) Co.,Ltd.
Establishment of Qingdao
OfficeEstablishment of Dalian
F.T.Z Ryosan
International Trading
Co., Ltd.
Establishment ofChangchun Office

1974

…

New businessdevelopment

Autonomous expansion oflocal trading area

Supplier-ledbusiness expansion

2017・Acquisition of EDALELECTRONICS Co.,
Ltd. as a consolidated
subsidiary・Purchase of a stakein Qingdao Sanyuan
Taike Electronics
Technology2017

2018

2022
Purchase of astake in YAMASEITECH CO., LTD.

*Compound annual growth ratefrom FY2017 to FY2022

Acceleration of expansionof trading area

Strategic
partnership with
IATManagement
integration with
Ryoyo Electro

Discovery ofsynergies

Further growth
acceleration

2019

2020

2021

2022

2023

2024

2025—
7

Positioning Within Group-wide Measures in Medium-term Business Plan
Implementation of measures in the 11th Medium-term Business Plan have expanded Ryosan’s
operations. As a result, Ryosan’s enterprise value is growing steadily. The strategic partnershipwith IAT will enable Ryosan to reach out to new players and improve its value further over themedium-to-long-term.
11th Medium-term Business Plan (FY2021–FY2023) 1 As of June 30, 2023

FY2021

FY2022PBR 0.59
ROE 5.3%

２ As of March 31, 2023

FY2023PBR 0.981
ROE 9.3%2

Strengthening ofbusiness in Chinesespeaking Asia
Expansion of productlineup••••Purchase of stake in YAMASEI TECH; collaboration withQingdao Sanyuan Taike Electronics Technology
Reorganization in South China region
Increase in strategic product sales of ¥21 billion (comparedwith FY2021)
11-company increase in agency contracts, increase in net salesof ¥3 billion (compared with FY2021)•Purchase of stake in Priken, inclusion in equity-method
affiliates
Reorganization of Solution Business Headquarters

Business makeover••

Establishment of Direct Marketing Team
Installation of system infrastructure

Increase in efficiency•Increase in efficiency through use of DX

Portfolio diversification•Strategicpartnershipwith IAT

Switch to systemof autonomous
divisionsManagementintegration with Ryoyo
ElectroDetails of initiatives and their results

Maximizationof enterprisevalue8

Appendix

9Overview of IAT
IAT is China’s biggest independent automotive engineering company. This company
is involved in design of completed automobiles, design and development ofautomobile parts and technical services (prototyping and evaluation).
Characteristics of IAT

Companyname

IAT Automobile Technology Co., Ltd.

Location

Beijing City, China The only engineering company listed on
the Shenzhen Stock Exchange

Representative

Qiwu Xuan, Chairman

Details ofoperations

Design of completed automobiles, design anddevelopment of automobile parts and technicalservices (prototyping and evaluation), etc.

 Possession of some of the world’s
strongest design, technology design andsoftware development teams and aworkforce that includes over 2,500
engineers An international leader possessing
leading-edge technology National-level industrial design center*

Capital497.43 million renminbi

DateestablishedMay 23, 2007

Major
shareholder

IAT (Beijing) Investment Consulting Co., Ltd.
(13.48%)

 A wide range of business partnerships
with over 100 major and emerging
automakers; track record of over 500
development and database-construction
projects*This term indicates ability to handle the fullrange of development tasks from automobile
design to prototyping and testing.
10Overview of Ryosan Company, LimitedCompany
nameRyosan Company, Limited

Head office

2-3-5 Higashi-Kanda, Chiyoda-ku, Tokyo

Representative

Kazuhiko Inaba, President

Details ofoperations

Sale of semiconductors, electronic parts andelectronic devices

Capital¥17,690,508,514

•

••
•

Date
established

November 18, 1953

Listingexchange

Prime Market, Tokyo Stock Exchange(Securities code: 8140)

A major and long-serving semiconductor
trading company, Ryosan was established in1947 and incorporated in 1953. In
November 2023, Ryosan celebrates the 70 thanniversary of its foundation.
Ryosan is expanding its operations,underpinned by a solid customer basefocused on automotive industries.
Workforce includes over 100 highly
specialized engineers.
Possesses a network of over 40 locations inJapan and overseas. Ryosan began
operations in Chinese-speaking Asia in 1974
(a half-century of operations).

Share of net sales by region (FY2022)
Net sales(Billions of yen)

350

325.6

300
250

Other

Operating income (Billions of yen)

3.5％
15.4

1614272.6

108.8¥325.6 billion8150

6100Japan
51.4％

19.1％

12219.8200

Asia(ex-Japan, ex-China)

4.6

450

China

20
March 2021

March 2022

March 2023

26.1％

0
March 2021

March 2022

March 2023

11

Ryosan’s Results in the Automotive Field
With its strengths in the automotive field, an extensive product lineup and relationships withmajor Japanese-affiliated customers, Ryosan is focused on the development of its automotivebusiness.

Automotive product lineup

Trend in sales by market(Billions of yen)




3,500

3,000

2,500

Results of participation in automotive projects<Industry organization of which Ryosan is a member>
Ryosan is an associate member of the Japan Automotive Software
Platform and Architecture (JASPAR) Consortium.

2,000

1,500

1,000500

Renesas Electronics Corp.  Winbond Electronics
CorporationSeiko Epson Corp.
Japan Aviation Electronics
Alps Alpine Co., Ltd.
Industry, Ltd.
Fujipream Corp.
 Macronix International Co.,
Toppan Inc.
Ltd. Etc.

51.3％ 53.9%

38.4%

46.9% 42.0%0
2018年度FY2018 2019年度
FY2019 2020年度
FY2020 2021年度
FY2021 2022年度
FY2022<Results in automotive development >•Solutions for AD/ADAS in collaboration
with partners•48V DC-DC converter reference
for mild HV•
Provision of middleware for on-board,wireless video transmission solutions•
Functional safety and security technology•
Development of automotive software(IVI, BCM, DMS, OTA, on-board communications）■Automotive
electronics■Consumer■Communications■Industrial
equipment
車載電装
コンシューマ
情報通信産業機器
その他■Other12