Future Outlook

Copyright © 2015 Harmonic Drive Systems Inc.

Our Growth Trajectory
Aimed-for newmarket environment

Net sales (non-consolidated)(100 mil. yen)

Service robot mobility, etc.

Applications driving growth
Demand driver uses

Leading-edge
medicalequipment
Customer needs

Flat panel displays

Large hollow
Extreme flatness
Extreme compactness
High precision
High torque, long life
Extreme lightness
Lower cost

Semiconductor manufacturing equipment

Industrial robots (further expand)
Machine tools(FY)

24
Copyright © 2015 Harmonic Drive Systems Inc.

Robot Industry Classifications
ClassificationReduction gear
requirements
High precision, highreliability

Use

Industrial robots

I. Industrial robots
Co-bots

Making things on thefactory floor

Low cost?

Professionalrobots

Medical, nursing care,rehabilitation, logistics,
resource extraction

Compact, lightweight, flat, highprecision

Consumer robots

Consumer electronics,
hobbies, toys

Low cost

II. Service robots

Source: IFR and KDDI Research Institute with our additions(100 mil. Yen)

Many different nations,companies, and research
institutions have high hopes
for expansion of the robot
industry.

120,000
100,000
80,000Service field,etc.
Manufacturing60,000
40,00020,00002015

2020

20252035

Source: MITI/NEDO FY2010 market survey of the future of the robot industry 25
Copyright © 2015 Harmonic Drive Systems Inc.

Drivers of Further Growth
Emerging of the market for collaborative robots (“co-bots”)
Start-up firms

UniversalRethink
LifeRobotics
From Life Robotics website

Entry of leading makers

From Rethink Robotics
websiteJapan/Europe
leading robotmakers

Superiority of co-bots
1. Safety (no need for barrier)
2. Shorter teaching time
3. ・・・・
From UNIVERSAL ROBOTS
website26
Copyright © 2015 Harmonic Drive Systems Inc.

Co-bots vs. Labor Costs(€/hour)

401183 to 6
1

Based on Barclays report
27Copyright © 2015 Harmonic Drive Systems Inc.

co-bots Market
Rate of labor cost reduction due to rapid expansion of industrial robot use
The more economically developed a country, the higher its labor costs, raising
expectations for robot introduction.
Fig. 1: Rate of labor cost reduction with rapid expansionof industrial robot use (2014 vs. 2025)%, based on labor cost after adjusting for productivity

Market potential(100 mil. yen)
25 nation avg. ~16%

Indonesia

India

MexicoSpainAustria

BrazilNetherlands

SwedenRussiaItaly

Belgium

Switzerland

FrancePoland

Thailand

25 nation avg.

Czech Repub.

China (Note)

Australia

Germany

U.K.

TaiwanUSA

CanadaJapan

S. Korea
Scenario
Aggressive
Conservative

By 2025, robots are expected to handle 23% of tasks that can be automated.
Note: Data for Yangtze River Delta
Source: STAN Bilateral Trade Database, U.S. Bureau of Labor Statistics, BCG analysis

28
Copyright © 2015 Harmonic Drive Systems Inc.

co-bots Market Growth Forecast($m)
14,000Approx 1.5 trillion yen market

12,00010,0008,000
6,0004,0002,00002014 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

From Barclays report

29Copyright © 2015 Harmonic Drive Systems Inc.

Lineage of New Product Development
Total Motion Control
Strain wave gearing(HarmonicDrive®)

Era

Planetary Gears(AccuDrive®,
HarmonicPlnetary®)

Mechatronics

New technology？
2010

Hollow
Flat, hollow
Compact

2000

Silk hat type
Extreme flatness

High torqueCup type
Extreme flatness

Epicyclic speed reducer
with flexible internal gear
teeth

Silk hat typeFlat, high performance

1990

Opticalscanner

Cup type
Flat, high performance

Flat, hollow

Silk hat type

1980

Right angle typeAC servo
actuator

Linearactuator

DC servo
actuator

Cup type
High precision

1970

Precision epicyclic
speed reducer

For phase adjustment

1960

First Japan-madeHD

1950

HD invented

Pancake typeWide-ranging product lineup
Copyright © 2015 Harmonic Drive Systems Inc. 30

New Products: Environment of existing products
and aims

Market for small, lightweight portable robots- Collaborative robots (co-bots)- Service robots- AGV (Automatic Guided Vehicles)

31
Copyright © 2015 Harmonic Drive Systems Inc.

Research and Development Enabling the Future
Germany
Harmonic Drive AGUSHarmonic Drive LLC

Basic research

Production
technology
development

Materials
development

Durability testing
32Copyright © 2015 Harmonic Drive Systems Inc.

Boosting Collaboration
Collaboration withother companies

Can be combined with Σ-7 Servopack and SHA-Y
Illustration of MECHATROLINK-III System
Machine controller for MECHATROLINK-III
MP-3300 Series

2013.6
Mitsubishi Electric
MELSERVO J4 + SHA-M

2014.7
Panasonic
MINASA5 II/A5 II Series +SHA-P

HarmonicDrive®
SHA-Y Series

SERVOPACK for SHA-Y
Σ-7-FT81 Series

Σ-7 Series Standard
SERVOPACK

Yaskawa Electric
Σ-7 motor (standard)

Link and select easily withMECHATROLINK-III communication

2015.8
Yaskawa Electric
Σ-7 Series + SHA-YRotation accuracy similar to that of direct drive!
Incorporated readily in MECHATROLINK-III system
Copyright © 2015 Harmonic Drive Systems Inc. 33

Total Motion Control and Relation to New CoreTechnologies
Cloud

The concept of Total Motion Control
Big Data/AI

ICT

Speed
reducers

Sensors

MotorsControllers
Otherelements

Drivers

SoftwareNewmaterials
Power supply

IoT34

Copyright © 2015 Harmonic Drive Systems Inc.

Visualization of Growth Trajectory

On to a new growth stage(100 mi. yen)
50thanniversaryof founding(Target net sales)(Actual net sales)
259

500

350

290

210181(272)Previous Mid-termManagement Plan
FY2012FY2014Long-term Vision

Current Mid-termManagement Plan
FY2015FY2017FY2018FY202035Copyright © 2015 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 and Finance 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/