Future Outlook21

Situation after initial year of medium-termbusiness plan
(millions of yen)

2012/032013/03

2014/03

2014/03(Previous period)(Current period)

23,40024,00021,65722,00020,00018,00016,00014,00018,06918,300

2,246

2,395

3,333

3,159

3,196
16,075

2,062

4,061

18,800

2,600

3,565
4,563

3,500

2,883

12,00010,0008,000
6,000

12,48912,746(actual)(実績)(med.-termplan)(中期計画)

11,212

14,40012,70015,272

4,000
2,000
0

HarmonicDrive®

(actual)（実績）

Mechatronics(med.-termplan)(中期計画)(est.
actual)（業績予想）

Planetary Gear

(med.-termplan)(中期計画）(rounded down in millions of yen)

22

Factors in shortfall from initial year targets

External
1. Slow growth of emerging economies
2. Ripple effects of financial uncertainty in European market
3. Changing consumption patterns in Japanese economy

Internal
Slowness in product and market development over past
several years
23Dips in demand cycle(millions of yen)
20,000

History of Net Sales(non-consolidated basis)

Future uses

Flat panel display equipment

15,000Demand drivers
Semiconductor equipment
10,000

Robotics

5,000

Before dawn
0

Machine tools'71 '72 '73 '74 '75 '76 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 1213（FY） 24

Basic approach in medium-term business plan

Keys to medium-term growth
1. Management giving top priority to quality andsafety
2. Strengthening of core technologies
3. Wider choice of product variations
4. Stepped up sales expansion in Asia

Basic approach unchanged from whenplan was first drawn up
25

Priority measures for meeting goals ofmedium-term plan

1. Further expansion of markets for
precision planetary gear speedreducers
2. Market cultivation by means of newproducts
3. Stepped up sales expansion in
Asian markets
26How strain wave and planetary gears differ
Strain wave gearing
HarmonicDrive®

Planetary gear
AccuDrive®
HarmonicPlanetary®

Brands made by
HDS Group

Reduction Ratio

1/30 ～ 1/320

1/3 ～ 1/45

BacklashZero Backlash

Low Backlash

Main application
Requiredspecifications

Robotics
Joint drive

Machine tools
Automatic tool changer
Table drive• Many specialspecifications• Mostly standard
specifications

Target segment image ⅰ
Accuracy
Robotics,
Semiconductor
Equipment
Transporters,
Processing
Equipment etc.

General Industrial
MachineryHigh
positioning
accuracy

Normalpositioning
accuracy

Focusing on
expansion ofTorqueGeneral Gear

Price
Note: This graph is conceptual. This shape, size, and position of images used do not accurately reflect market size or product positioning28

Target segment image ⅱ
Accuracy
Robotics,
Semiconductor
Equipment
Transporters,
Processing
Equipment etc.

General Industrial
MachineryHigh
positioning
accuracy
NewProductNormalpositioning
accuracy

High-output
products
HPGP series
NewProduct
For Korean(Asian)market
HPN series

Focusing on
expansion oftorque
General Gear

High-accuracy
positioning, Lownoise, Short leadtime, Low price

Current
mainproducts
HPG seriesHigh torque, Highaccuracy
positioning, Lowbacklash

High-accuracy
positioning,
Low- backlash

Price

Note: This graph is conceptual. This shape, size, and position of images used do not accurately reflect market size or product positioning

29

South Korean joint venture company
established
SAMICK ADM CO., LTD.
Head Office

Daegu Metropolitan City, S. Korea

FoundedFebruary 20, 2013

Capital3 billion won

Equity shares

HDSI： 51.0%
SAMICK HDS: 49.0%

Employees

11 (24 projected by 2015)

Plant floor area

2,460m2

Businessdomain

Production of high-precision
planetary reducers

Target net sales

Approx. 1.5 billion yen (2015)30

Core technology and wider choice of productvariations
Improving the basic performance ofspeed reducers

Making products easier forcustomers to use
Integration
Peripherals
technology
development

More powerful

LighterweightHigherprecision

Smaller size

Product variations meeting different needs for different applications
Light weight

High response

Hollow shape

Low vibration

Positioning accuracy

Flat shape

High-capacity bearings

Low noiseFast31

Expansion of product variations

New productNew product[HarmonicDrive® ][Mechatronics]

Place lightweight unitary typeproducts on the market

Add AC servo actuatormodels, expand options

32

A never-ending upward spiral of technology
and skills■HDS and speed reducers over the years
Harmonic drive gearing(HarmonicDrive®)

Planetary gears

Era(AccuDrive®
HarmonicPlanetary®)

Steady R&D and building up skills

2020s

2010s
Orthogonalaxis typeTheoreticalresearch

Hollow
shaft

Silk hattype

2000s

Ultra flat
Planetary
reduction gearwith elastic
element

HightorqueType

Cup type

Production
technology
development

Materials
development

Ultra flat

Silk hat typeFlat, highperformance

1990s

Cup type

High-precision
planetary
reduction gear

Flat, highperformance

Durability testing

Silk hat type
Cup type

1980s

Highprecision

For phaseadjuster

Pancake type

1970s
First domestic
product

1960s
1950s

33
Harmonic Drive invented

Stepped up sales expansion in Asia
China

South Korea

Sales expansion mainly
through sales
subsidiaries (also use ofsales agents)• New product sales
expansion• Technology services• Marketing
Focus markets:• Industrial robots• Machine tools• Semiconductor
manufacturing equipment

Sales expansion using techsavvy sales agents

Singapore

Use of machine parts trading
firm for sales expansion• New product sales
expansion
Focus markets:• Machine tools• FPD manufacturing
equipment• New product sales
expansion• Customized product orders

Focus markets:• Machine tools• Semiconductor
manufacturing equipment• FPD manufacturing
equipment

TaiwanUse of machine parts trading
firm for sales expansion• New product sales
expansion
Focus markets:• Machine tools• FPD manufacturing
equipment
34

Total Motion Control
Businessdomain

Providing the value of Total Motion Control
in precision control fields

Schematic Concept of Total Motion Control

Sensors
Controllers
Other System
Elements

Speed
Reducers
MotorsDrivers35