Note:
This English translation is made for reference purposes only, and in the event of any
discrepancies between the English version and the Japanese version, the Japaneseversion prevails.

Commencement date of electronic provision measures: May 31, 2023

Notice of the Ninth Ordinary General Meeting of Shareholders (Items
Omitted from the Paper Copy)

Business Report
Share Subscription Rights and Others
Systems to Ensure Appropriateness of Business and Operational Status of Such Systems

Consolidated Financial Statements
Consolidated Statement of Changes in Net Assets
Notes to the Consolidated Financial Statements

Non-consolidated Financial Statements
Non-consolidated Statement of Changes in Net Assets
Notes to the Non-consolidated Financial Statements

Pursuant to laws and regulations as well as Article 13 of the Articles of Incorporation of the Company, theabove matters are not stated in the documents to be delivered to shareholders who have requested deliveryof documents (Electronic Provision of Matters).

Socionext Inc.

-1-

Share Subscription Rights and Others
Share subscription rights held by the Company’s officers as compensation for execution of duties as of the endof the fiscal year under review
Name
Date of resolution to issue
Number of rights issued
Type and number of shares tobe issued
Payment amount for sharesubscription rights
Value of assets to becontributed upon exercise ofshare subscription rights
Period of exercise
Conditions of exercise
Director(excluding
Audit &
Supervisory
Committee
Members andOutsideDirectors)
Share
Outsideacquisition
Directorrights held by (excluding
officers
Audit &
Supervisory
Committee
Members)
Director(Audit &Supervisory
Committee
Member)First issue of share subscription rights
Second issue of share subscription rights
April 22, 2015
July 20, 2016
30,2409,360Common stock
7,560 shares Common stock
2,340 shares(For each share subscription right 0.25 shares) (For each share subscription right 0.25 shares)
No payment is required in exchange for share
No payment is required in exchange for sharesubscription rights
subscription rights
For each share subscription right
500 yen For each share subscription right
618 yen(Per share
2,000 yen) (Per share
2,472 yen)
From April 23, 2017
to April 22, 2025
Notes:

From July 21, 2018
to July 20, 2026
Notes:

Number of rights issued
Number of shares to be issued
Number of holders

30,2407,560 shares
3

Number of rights issued
Number of shares to be issued
Number of holders

9,360
2,340 shares
1

Number of rights issued
Number of shares to be issued
Number of holders000

Number of rights issued
Number of shares to be issued
Number of holders000

Number of rights issued
Number of shares to be issued
Number of holders000

Number of rights issued
Number of shares to be issued
Number of holders

0
0
0

-2-

Date of resolution to issue
Number of rights issued
Type and number of shares tobe issued
Payment amount for sharesubscription rights
Value of assets to becontributed upon exercise ofshare subscription rights
Period of exercise
Conditions of exercise
Director(excluding
Audit &
Supervisory
Committee
Members andOutsideDirectors)
Share
Outsideacquisition
Directorrights held
(excluding
by officers
Audit &
Supervisory
Committee
Members)
Director(Audit &Supervisory
Committee
Member)Third issue of share subscription rights
Fourth issue of share subscription rights
July 24, 2017
July 25, 201810,08080,900Common stock
2,520 shares Common stock
20,225 shares(For each share subscription right 0.25 shares) (For each share subscription right 0.25 shares)
No payment is required in exchange for share
No payment is required in exchange for sharesubscription rights
subscription rights
For each share subscription right
641 yen For each share subscription right
641 yen(Per share
2,564 yen) (Per share
2,564 yen)
From July 25, 2019
to July 24, 2027
Notes:

From July 26, 2020
to July 25, 2028
Notes:

Number of rights issued
Number of shares to be issued
Number of holders

10,0802,520 shares
2

Number of rights issued
Number of shares to be issued
Number of holders

80,90020,225 shares
3

Number of rights issued
Number of shares to be issued
Number of holders000

Number of rights issued
Number of shares to be issued
Number of holders000

Number of rights issued
Number of shares to be issued
Number of holders000

Number of rights issued
Number of shares to be issued
Number of holders

0
0
0

-3-

Date of resolution to issue
Number of rights issued
Type and number of shares
to be issued
Payment amount for sharesubscription rights
Value of assets to becontributed upon exerciseof share subscription rights
Period of exercise
Conditions of exercise
Director(excluding
Audit &
Supervisory
Committee
Members andOutsideDirectors)
Share
Outsideacquisition Director
rights held (excluding
by officers Audit &Supervisory
Committee
Members)
Director(Audit &Supervisory
Committee
Member)Sixth issue of share subscription rights
Eighth issue of share subscription rights
July 29, 2019
March 24, 2021
51,70073,700Common stock
12,925 shares
Common stock
18,425 shares(For each share subscription right 0.25 shares)(For each share subscription right 0.25 shares)
No payment is required in exchange for share
No payment is required in exchange for sharesubscription rights
subscription rights
For each share subscription right
641 yenFor each share subscription right
641 yen(Per share
2,564 yen)(Per share
2,564 yen)
From July 30, 2021
to July 29, 2029
Notes:

From March 25, 2023
to March 24, 2031
Notes:

Number of rights issued
Number of shares to be issued
Number of holders

51,70012,925 shares
2

Number of rights issued
Number of shares to be issued
Number of holders

24,4006,100 shares
3

Number of rights issued
Number of shares to be issued
Number of holders000

Number of rights issued
Number of shares to be issued
Number of holders000

Number of rights issued
Number of shares to be issued
Number of holders000

Number of rights issued
Number of shares to be issued
Number of holders

49,30012,325 shares
1(Note) The main conditions for exercising share acquisition rights are as follows:
1.
At the time of exercise of share acquisition rights, a position of either director, executive officer or
employee (hereafter referred to as “Directors, etc.”) must be held in the Company or any subsidiaries oraffiliates of the Company, which are stipulated in “Regulations on Terminology, Forms and Preparation
Methods of Financial Statements, etc.” (hereafter, the Company’s subsidiaries and affiliates will becollectively referred to as the “Affiliates”). However, this shall not apply to the case of retirement or
resignation from the position of Directors, etc. of the Company or the Affiliates for the reasonsdescribed below.
1) Retirement or resignation due to reaching the age of retirement or completion of the term of office2) Retirement due to death3) A career change mediated by the Company
4) In the event that the Company determined by its reasonable discretion that the resignation isvoluntary due to illness or other unavoidable circumstances
2.
Share subscription rights may be exercised not more than twice a year, provided that the number ofshares to be issued upon exercise is an integer multiple of the number of shares in one unit of theCompany. However, notwithstanding this provision, a holder of share subscription rights for which thenumber of shares underlying all the share subscription rights he or she holds is less than an integer
multiple of the number of shares in one unit of the Company may exercise his or her share subscription
rights for less than an integer multiple of the number of shares in one unit only when he or she
exercises all of his or her share subscription rights for less than an integer multiple of the number ofshares in one unit.
3.
Upon the death of a holder of share subscription rights, the holder may exercise his or her sharesubscription rights only if one of his or her legal heirs inherits all of the share subscription rights. If thelegal heir in question dies, the rights in question will be extinguished.
4.
If a holder of share subscription rights is subject to suspension from work or a pay cut at the Company
or the Affiliates, he or she may not exercise his or her share subscription rights for one year from theissuance of such measure.
5.
Share subscription rights may not be exercised if the holder of the share subscription rights is in dispute
-4-

6.
7.

with the Company or the Affiliates.
Even if the initial date of the period for exercise has arrived, share subscription rights may not be
exercised until six months after the listing of the Company’s Common Stock on a financial instruments
exchange.
Even if the initial date of the period for exercise has arrived, share subscription rights may not be
exercised when the holder of the subscription rights is stationed overseas.

-5-

Systems to Ensure Appropriateness of Business and Operational Status of Such Systems(1)
Outline of decision regarding systems to ensure appropriateness of businessAt the meeting of the Board of Directors held on March 30, 2022, the Company resolved a basic policy
regarding the development of systems (internal control systems) provided for in the Companies Act and theRegulations for Enforcement of the Companies Act.
The policy provides for the systems necessary to ensure the appropriateness of business and operations asprovided for in Article 399-13, Paragraph 1, Item 1, (b) and (c) of the Companies Act and in Article 110-4 ofthe Regulations for Enforcement of the Companies Act, and establishes the basic policy for the developmentof internal control system for the Socionext (hereafter collectively referred to as the “Socionext” including the
below “Group company”) comprised of the Company and the Company’s consolidated subsidiaries (hereafterreferred to as the “the Group Company”). An outline of the policy is as follows.
1.
1)

2)
3)
4)

5)

6)
7)
8)
9)
2.
1)
2)
3)

Systems to ensure that the execution of the duties by Socionext Personnel complies with laws andregulations and the Articles of Incorporation
Directors and executive officers involved in the execution of their duties at the Company (hereafterreferred to as “Management”) shall take the lead in complying with the “CSR Policy” established forcompliance, including compliance with laws and regulations and the Articles of Incorporation, and shallalso actively work to promote compliance based on the ethics of the Company’s Management.
The management of the Company shall ensure that all Socionext Personnel comply with the “CSR
Policy,” and shall promote compliance throughout the Socionext through continuous education and othermeasures.
The management of the Company shall clarify laws and regulations pertaining to business activities,
develop the necessary internal rules, education and monitoring systems to ensure compliance, andpromote compliance throughout the Socionext.
If an officer or employee of the Company becomes aware of any facts that may constitute a material
breach of compliance in connection with the conduct of business activities, he or she shall immediately
notify the Board of Directors of the Company and Audit & Supervisory Committee of the Company ofsuch fact through the normal line of business.
Management of the Company shall establish and operate a Whistle-Blowing System that secures aprotection system for whistle-blowers, etc., in order to enable early detection of compliance issues andappropriate responses to them through a communication channel that is independent of normal businesslines.
The Board of Directors of the Company shall receive regular reports on the execution of duties from theperson performing the duties and shall confirm that there is no non-compliance in the execution of duties.
Management of the Company shall strengthen the development of an internal control system through theevaluation and audit of internal control over financial reporting to ensure the appropriateness of financial
reporting.
Management of the Company shall conduct an internal audit in order to confirm the status of businessexecution, ensure compliance with laws and regulations and the Articles of Incorporation, etc. and make
improvements in operational efficiency.
Management of the Company shall take a firm stand against antisocial forces, have no relationship withthem, and deal with them systematically in coordination with external professional organizations.
Systems under which information regarding execution of duties by Directors shall be retained andmanagedManagement of the Company shall properly store and manage documents involved in the execution of
their duties (including electromagnetic records) and other important information, in accordance with theImportant Document Management Regulations, after appointing a person in charge of retention.
Directors of the Company shall have access at all times to documents to confirm the status of theexecution of their duties, and the person in charge of retention of each document shall ensure that thedirectors of the Company shall have access at all times.
With regard to information security, a system of responsibility shall be clarified relating to information
security and specific measures shall be implemented and ensured in accordance with the provisions on
information security.

-6-

3.
1)
2)
3)

4)

4.
1)

2)
3)
4)
5)
6)

5.
1)

2)

3)
4)
5)

Regulations and other systems for the risk management of loss
Management of the Company shall aim to achieve business continuity, enhancement of corporate value
and sustainable development of corporate activities of the Socionext, and shall develop appropriate risk
management systems to deal with risks that may impede this.
Management of the Company constantly assesses and verifies risks that could cause losses to theSocionext and reports important matters to the Company’s Board of Directors.
Management of the Company shall conduct risk control, including preventive measures, with respect tothe risks recognized in the preceding paragraph and other risks assumed in the course of conducting
business, and shall take actions to minimize losses. In addition, in order to minimize losses arising fromthe occurrence of risks, the Risk Compliance Committee, etc. shall be established in the Company andnecessary measures shall be implemented, and risks that occur shall be regularly analyzed and reported
to the Board of Directors, etc. of the Company to take actions to prevent the recurrence of similar risks.
In order to collect risk information that cannot be grasped by the provisions in the preceding three items,
Management of the Company shall set up a Whistle-Blowing System in the Company and operate it
while ensuring a system to protect whistle-blowers.
Systems to ensure efficient execution of duties by Directors
The Company shall separate the supervisory and executive functions of management, and the Board of
Directors of the Company shall determine basic management policies and important business execution
etc., and supervise executive functions. The Company also introduces an executive officer system, andamong the executive decision-making bodies, the Management Committee discusses basic management
policies and strategies and makes decisions on important matters related to management execution. Of
the matters discussed by the Management Committee, important matters shall be reported to or decided
by the Board of Directors.
The Board of Directors of the Company shall clarify the duties of the management and other executive
organizations of the Company and shall have them perform their duties in accordance with theirrespective duties.
Management of the Company shall make decisions on execution of duties in accordance with appropriate
decision-making procedures established by the Board of Directors, the Management Committee and theinternal approval system, etc. of the Company.
Management of the Company shall ensure that all employees are fully aware of management policies,etc., and shall set and realize specific goals to achieve management goals.
Management of the Company shall promote the continuous development of internal control systems andthe reform of business processes in order to pursue the efficiency of the business.
The Company’s Board of Directors shall monitor and supervise the achievement of management
objectives by having the Company’s management and other executive bodies conduct monthly financial
reporting, business execution reporting, etc.
Systems to ensure the appropriateness of operations of the Corporate Group composed of theCompany and its subsidiaries
With the aim of sustainably enhancing the corporate value of the Socionext, the Company shall establish
and enact the systems and provisions 1 through 4 above based on the “CSR Policy,” and shall establish asystem to receive reports on matters related to execution of duties from the Management, executive
officers, employees executing business, persons handling operations and other equivalent persons of theGroup Company. In addition, they shall provide guidance, support and supervision on the developmentof a system for efficient, legitimate and appropriate business execution as a corporate group.
The Company shall establish common rules regarding the delegation of authority from the representative
director of the Company (If there is more than one person, it should be the person in the highest position;
the same shall apply hereafter) to the Group Company, including the authority and process fordetermining important matters of the Group Company.
The representative director of the Company shall designate the division in charge of the Group Company,
and the officer in charge of the business execution of such division shall confirm the implementation andcompliance of the preceding two items through presidents of the Group Company, etc.
Management of the Company and the Group Company shall confirm the management policy of theSocionext and issues for achieving the management goals through regular liaison meetings, etc.
Directors of the Company shall evaluate internal control over financial reporting of the Group Company
in accordance with domestic and foreign laws and regulations, and carry out improvement activities
based on the results.
-7-

6)

The Company’s internal audit organization shall conduct an internal audit of the entire Socionext.

6.

Matters relating to Socionext Personnel assisting with the duties of Audit & Supervisory Committee
and matters relating to the independence, etc. of such Socionext Personnel from Directors(excluding Audit & Supervisory Committee Members).
The Company shall have Socionext Personnel to assist with the duties of the Audit & Supervisory
Committee of the Company and shall assign appropriate personnel with the abilities and knowledge
required by the Audit & Supervisory Committee of the Company.
In order to ensure the independence of the Socionext Personnel referred to in the preceding item and theeffectiveness of directions given to such Socionext Personnel by Audit & Supervisory Committee of theCompany, Management of the Company shall obtain the consent of the Audit & Supervisory Committeeof the Company with respect to matters relating to personnel, such as appointment, transfer andcompensation of such Socionext Personnel.
In principle, Management of the Company shall not allow the Socionext Personnel described in 1) above
to serve concurrently with any other organizations. However, when it becomes necessary to have theSocionext Personnel with special expertise concurrently serve at the request of the Audit & Supervisory
Committee of the Company, consideration shall be given to ensuring the independence set forth in thepreceding paragraph.

1)
2)

3)

7.
1)
2)

3)
4)

8.
1)
2)
3)
4)

System for reporting to the Audit & Supervisory Committee
Management of the Company and the Group Company shall provide Audit & Supervisory Committee
Members of the Company with an opportunity to attend important meetings.
Management, accounting advisors, auditors, executive officers, employees executing business, persons
handling operations, other equivalent persons and employees of the Company and the Group Company
shall immediately report to the Audit & Supervisory Committee of the Company when a risk affecting
their management or performance occurs or when they become aware of a fact that constitutes a material
breach of compliance with respect to the conduct of their business activities.
Management and employees of the Company and the Group Company shall periodically report theperformance of their duties to the Audit & Supervisory Committee of the Company.
No Management, accounting advisors, auditors, executive officers, employees executing business,
persons handling operations and other equivalent persons of the Company and the Group Company shalltreat any managers or employees unfavorably for the reason of making a report under the preceding two
items.
System for Ensuring Effectiveness of Audit by Audit & Supervisory Committee
Management of the Company and the Group Company shall regularly exchange information with Audit& Supervisory Committee Members of the Company.
The Company’s internal audit organization shall periodically report its audit findings to the Audit &Supervisory Committee of the Company.
The Audit & Supervisory Committee of the Company shall, from time to time, have the Accounting
Auditor of the Company explain and report on the results of the audit and other matters and shallregularly exchange information with the Accounting Auditor of the Company.
Expenses incurred in the performance of the duties of the Audit & Supervisory Committee of theCompany shall be in accordance with Article 399-2, Paragraph 4 of the Companies Act, and managementof the Company shall establish procedures for the requests in the same paragraph.

-8-

(2)

Outline of the Implementation Status of Systems to Ensure the Appropriateness of Business
Operations
An outline of the implementation status of the system to ensure the appropriateness of business operations
during the fiscal year under review is as follows.
1.
*
*
*
*
*

2.
*

*
*

3.
*
*
*
*

4.
*

*
*

Systems to ensure that the execution of the duties by Socionext personnel complies with laws andregulations and the Articles of Incorporation
We strive to comply with laws and regulations by ensuring that all Socionext Personnel are fully awareof our management philosophy, management vision, Action Policy, the CSR Policy and compliancecodes.
Specifically, we are strengthening our compliance system by appointing a Risk Compliance Officer foreach division under the Risk Compliance Committee.
In order to prevent transactions with anti-social forces and inappropriate transactions with related parties,
we check the appropriateness of transactions as an essential response in our business processes.
Our financial reporting system is audited by the Accounting Auditor in accordance with the Companies
Act and the Financial Instruments and Exchange Act. We regularly exchange opinions and share
information with the Accounting Auditor.
We use e-learning to provide all Socionext Personnel with various types of compliance education,
including matters related to prevention of insider trading, information security, harassment andprocurement transactions.
Systems under which information regarding execution of duties by Directors shall be retained andmanagedIn accordance with the Important Document Management Regulations, minutes of general meetings ofshareholders, minutes of meetings of the Board of Directors, minutes of meetings of Management
Committee and the approval documents, etc. as the documents related to management’s execution ofduties are properly stored and managed with a person responsible for the storage and the method ofstorage specified.
The Company has established a system in which Directors and Audit & Supervisory Committee
Members can view documents to confirm the status of execution of duties at all times.
In accordance with the Information Security Code, we have clarified our systems and responsibilities tomaintain and manage information security. We are continuously working to strengthen information
security by establishing telecommuting information management guidelines to ensure information
security as telecommuting becomes more widespread, and entrusting IT Management Partners Co., Ltd.
to handle operations in the IT management Division as needed.
Regulations and other systems for the risk management of loss
In addition to the Board of Directors Regulations and the Management Committee Regulations, theCompany has established the Risk Management Code and has developed a risk management system not
only in Japan but also overseas.
We have established a risk management process and regularly conduct a company-wide risk review by
the Management Committee. Through this process, we grasp the latest risk status, develop measures andcountermeasures against risks, check the progress and report to the Board of Directors.
As part of the BCM/BCP initiative, we develop basic policies and rules, action plans and manuals, andconduct training to continuously improve our response and recovery capabilities during normal times.
In addition to the above, we are developing and expanding our global Whistle-Blowing System and makethe rules for the usage known. During the fiscal year under review, there were no serious violations oflaws or regulations, and there were no whistle-blower incidents.
Systems to ensure efficient execution of duties by Directors
In addition to clarifying the business model and the business areas of Solution SoC and promoting abusiness transformation and shift of resources to growth areas, which we have implemented to date, we
are focusing on large-scale global business opportunities and development for business expansion andgrowth.
In order to enable efficient and timely allocation of development resources, we are continuously
strengthening our management structure.
We are working to establish multi-year management, achieve quarterly management targets, promotecomprehensive cost and gross margin improvements, upgrade our market strategy and make up-front
-9-

*

5.
*

*

*
6.
*

development investments in design wins and lead generation, globalize and improve the efficiency of
SCM, globalize and improve the efficiency of corporate operations, strengthen management and build IT
infrastructure.
In line with our listing on the Prime Market of the Tokyo Stock Exchange, we have strengthened our
public relations and investor relations functions and newly established institutional legal functions,among other measures, in order to establish a structure for execution of duties as a listed company. In
addition, in order to strengthen governance and increase corporate value, the ESG Promotion Office was
newly established to promote the construction, execution and disclosure of ESG-related businessprocesses required internally and externally.
Systems to ensure the appropriateness of operations of the Corporate Group composed of theCompany and its subsidiaries
In accordance with the Management Committee Regulations, the Socionext Approval Authority and theAffiliates Management Regulations, important matters relating to the business activities of the Group
Company are set forth and administered by the Management Committee as matters to be approved andreported. In addition, presidents of the Group Company make monthly business reports to theManagement Committee members, etc.
In the Group Company, the Company officers and employees are assigned to serve as officers of theGroup Company to strengthen guidance, support and supervision on the development of operational
systems. In addition, with the aim of establishing a system of internal regulations with an awareness ofthe global management system, we have established the codes applicable to the entire Group Company tostrengthen the management system of the Group Company.
With the aim of realizing a speedy decision-making process for the Company in the global market, weare strengthening cooperation between the Group Company and the business and corporate divisions.
Matters relating to Socionext Personnel assisting with the duties of Audit & Supervisory Committee
and matters relating to the independence, etc. of such Socionext Personnel from Directors
As an organization to support the duties of Audit & Supervisory Committee Members, the Company has
strengthened its system for reporting and providing information to Audit & Supervisory Committee
Members and has established a system for the effective execution of audits by the Audit & Supervisory
Committee, including the establishment of a dedicated Audit & Supervisory Committee Secretariat.

7.
*

System for reporting to the Audit & Supervisory Committee
Audit & Supervisory Committee Members attend important meetings such as the Board of Directors, theManagement Committee, and meetings for performance reporting, and conduct investigations andinterviews with each division and exchange opinions with Directors of the Company.

8.
*

System for Ensuring Effectiveness of Audit by Audit & Supervisory Committee
In terms of relationship with the Accounting Auditor, we exchange information and opinions while
monitoring the independence and appropriateness of their audit, and we also discuss the selection of the
Accounting Auditor.
We work closely with the Internal Audit Department, which is the internal audit division, to improve
effectiveness and efficiency of audits by exchanging information and opinions with each other on aregular basis and when necessary.

*- 10 -

Consolidated Statement of Changes in Net Assets (April 1, 2022 to March 31, 2023)(Million yen)
Shareholders’ equity

Balance as of April 1, 2022
Changes during the year
Issuance of new shares
Profit attributable toowners of parent
Acquisition of treasury
stock
Cancellation of treasury
stock
Transfer from retained
earnings to capital surplus
Net changes in items
other than those inshareholders’ equity
Total changes during theyear
Balance as of March 31,
2023

Common stock

Capital surplus

30,20030,200Retainedearnings

Treasury stock

28,867-

Total
shareholders’equity89,267-

19,763

19,763

(0)
0

(0)

(0)

0

-

(0)

-

-

-

19,76330,20030,20048,630

Accumulated other comprehensive
incomeTotal
Foreignaccumulated
currency
othertranslation
comprehensive
adjustments
income330
330

Balance as of April 1, 2022
Changes during the year
Issuance of new shares
Profit attributable toowners of parent
Acquisition of treasury
stock
Cancellation of treasury
stock
Transfer from retained
earnings to capital surplus
Net changes in items otherthan those in shareholders’492
equityTotal changes during the year
492
Balance as of March 31, 2023
822
(Note) Monetary amounts are rounded to the nearest million yen.

- 11 -

Share
subscription
rights12-

Total net
assets89,60919,763
(0)
-

492
492
822

492
12

20,255
109,864

19,763109,030

Notes to the Consolidated Financial Statements
1.

Note to the Significant Matters as the Basis for the Preparation of the Consolidated Financial
Statements
Consolidated Financial statements are prepared in accordance with the Regulations on Corporate Accounting(Ministry of Justice Order No. 13 of February 7, 2006, as last amended Ministry of Justice Order No. 43 ofDecember 26, 2022).
(1)
Scope of Consolidation
Number of consolidated subsidiaries and names of consolidated subsidiaries
The consolidated financial statements consolidate all six subsidiaries.
(Names of consolidated subsidiaries)
Socionext America Inc.
Socionext Europe GmbH
Socionext Technology Pacific Asia Ltd.
Socionext Technology (Shanghai) Co., Ltd.
Socionext Taiwan Inc.
Socionext Korea Ltd.
(2)
Application of equity method
Number and names of affiliates accounted for by the equity method(Affiliates)
Trinity Semiconductor Research LLC(3)
Fiscal years and other matters of consolidated subsidiaries
Among the consolidated subsidiaries, Socionext Technology (Shanghai) Co., Ltd., whose account closing dateis December 31, has been consolidated using the financial statements provisionally closed as of the closing
date of the consolidated financial statements.
(4)
Accounting Policies
1)
Basis and method for valuation of assetsa.
Securities
Other securities:*
Other than stocks with no market valueMarket value method based on market prices as of the
fiscal year-end
Method of processing the difference between acquisition
cost and market value... All changes in unrealized holding
gain or loss, net of the applicable income taxes, areincluded directly in net assets.
Method of determining cost of sale at time of sale... Cost
method using moving average method*
Stocks etc. with no market value
Cost method using the moving average methodb.
Derivatives
Market valuec.
Inventories
Inventories held for ordinary sale*
Finished goods
Cost method using the gross average method*
Work in process
Cost method using the gross average method
Inventories with reduced profitability have been written down in book value.
2)
Method of depreciation and amortization for significant depreciable assetsa.
Property, plant and equipment (excluding leased assets)
Depreciation is calculated by the straight-line method.
The useful lives are estimated as follows, reflecting the collection period according to the actual situation.
Buildings and structures, net
2 to 20 years
Machinery and equipment, net
3 to 5 years
Tools, furniture and fixtures
3 to 10 yearsb.
Intangible assets
Depreciation is calculated by the straight-line method.
- 12 -

Among all, technology assets and internal-use software are amortized using the straight-line method over theirestimated useful lives (up to five years) for internal use.
c.
Leased assets
Leased assets under finance leases that do not transfer ownership of the leased assets are calculated using thestraight-line method with the lease term as the useful life and a residual value of zero.
3)
Basis of recording revenues and expenses
With respect to the sale of semiconductor products, the Company recognizes revenue at the time of delivery of
the product (or at the time of deemed arrival of the product if the lead time of transportation can be measured)
because the Company judges that the Company’s performance obligation is fulfilled when the customer gains
control over the product at the time of delivery of the product.
2.
Notes to Changes in Accounting Policies(Application of Implementation Guidance on Accounting Standard for Fair Value Measurement)
Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31, June17, 2021; hereafter referred to as the “Guidance on Accounting Standard for Fair Value Measurement”) has
been applied from the beginning of the fiscal year under review, and the new accounting policies set forth in
the Guidance on Accounting Standard for Fair Value Measurement are being applied over the future inaccordance with the transitional treatment set forth in Article 27, Paragraph 2 of the Guidance on AccountingStandard for Fair Value Measurement.
The application of this accounting standard has no impact on the consolidated financial statements.
3.
Notes on recognition of revenues(1)
Detailed information of revenues from contracts with customers
Net sales of finished goods
NRE Sales
Other
Revenues from contracts with customers
Sales to external customers

156,751 million yen
34,867 million yen
1,149 million yen
192,767 million yen
192,767 million yen(2)
Information that is the basis for understanding the revenues generated by contracts with customers
The Group Company is engaged in research, design and development, manufacturing, sales and service ofsemiconductor products, with revenues primarily from the sales of semiconductor products.
With respect to product sales, we recognize revenues when control of the product is transferred to thecustomer, that is, when the product is delivered to the customer, the legal ownership, physical possession andsignificant risks and economic value associated with the ownership of the product are transferred to thecustomer, and we gain the right to receive payment from the customer.
With respect to NRE sales, we recognize revenue when the products developed are delivered to the customer
and the customer confirms receipt and evaluation of the deliverables, as significant risk and economic value
are transferred to the customer and we gain the right to receive payment from the customer.
Revenues from these product sales and NRE sales are measured at transaction prices associated with thecontract with customers.
The consideration for the transaction is received within one year after the fulfillment of the performanceobligation and does not include any material financial factor.
(3)
Information on the relationship between fulfillment of performance obligations under contracts withcustomers and cash flows arising from such contracts, and the amount and timing of revenues expected to berecognized in the following fiscal year and thereafter from contracts with customers existing at the end of the
fiscal year under review
1)Balance of contract assets and contract liabilities
Balance as of April 1, 2022
Balance as of March 31, 2023
Contract liabilities
295 million yen
824 million yen
Contract liabilities primarily relate to advances received under contracts with customers before fulfilling
performance obligations.
Contract liabilities are reversed as revenues are recognized. “Contract liabilities” are included in “Other” inthe consolidated balance sheet.
- 13 -

2)
Transaction price allocated to the outstanding performance obligation
In the Group Company, payment terms under individual performance obligations are up to one year, and notransactions have long-term prepaid or deferred payment terms.
4.
Notes on Accounting Estimates
Items whose amounts are recorded in the consolidated financial statements for the fiscal year under review
based on accounting estimates and which may have a material impact on the consolidated financial statements
for the following fiscal year are as follows:*
Recoverability of deferred tax assets(1)
Amount recorded in the consolidated financial statements for the fiscal year under review
Deferred tax assets 6,897 million yen(2)
Information on the content of significant accounting estimates for identified items
Deferred tax assets are recognized only for tax credits and deductible temporary differences that are more
likely to be applicable to future taxable income. The timing and amount of taxable income may be affected by
future changes in uncertain economic conditions, and if the timing and amount of taxable income differ fromthe estimates, it may have a material impact on the amount recognized in the consolidated financial statements
for the following fiscal year and thereafter.
5.
*

Notes to the Consolidated Balance Sheet
Accumulated Depreciation of Property, Plant and Equipment
Buildings and structures, net
2,577 million yen
Machinery and equipment, net
99 million yen
Tools, furniture and fixtures
27,707 million yen
Total
30,383 million yen

6.
Notes to Consolidated Statement of Changes in Net Assets(1)
Type and total number of issued shares at the end of the fiscal year under review
Common stock
33,666,666(2)
Dividend of Retained Earnings
Dividends whose record date is in the fiscal year under review, but which come into effect in the following
fiscal year
Total
Amountamount ofofType of
Source ofDate to comeResolution schedule
dividend
dividend
Record datesharesdividend
into effect(millionper share
yen)
(yen)
May 19, 2023
CommonRetained
Board of Directors
7,070
210
March 31, 2023
June 7, 2023
stock
earnings
meetings(3)

Type and number of shares subject to share subscription rights (excluding those for which the firstday of the exercise period has not yet arrived) at the end of the fiscal year under review
Not applicable
7.
Notes on Financial Instruments(1)
Matters concerning financial instruments
1)
Policy for financial instruments
The Group Company invests in financial assets with a higher degree of safety after securing the liquidity
necessary for its business activities.
Our policy is to use derivatives to avoid the risk of foreign exchange fluctuations in trade receivables andpayables and not to engage in speculative transactions.
2)
Details of financial instruments and related risks
Accounts receivable-trade, our trade receivables, are exposed to customer credit risk. In addition, someforeign currency-denominated trade receivables are exposed to foreign exchange risk, but except for those notexceeding the balance of the same foreign currency-denominated accounts payable-trade, we hedge them
- 14 -

using forward foreign exchange contracts.
Accounts payable-trade, our trade payables, are mostly due within two months. Certain foreign currencydenominated balances are exposed to foreign exchange risk, but are continuously within the range of the same
foreign currency-denominated accounts receivable balance.
3)
Risk management system relating to financial instrumentsa.
Management of credit risk (default risk of customers )In accordance with the receivables management rules, the Company regularly monitors the businessconditions of its business partners and manages the due dates and balances of each partner in order to identify
concerns for collection at an early stage and mitigate risks.
b.
Management of market risks (fluctuation risks in foreign exchange rates, interest rates, etc.)
The Company uses forward foreign exchange contracts to hedge foreign currency-denominated tradereceivables and payables against the fluctuation risks in foreign exchange that are managed by currency andby due dates.
c.
Management of liquidity risk in financing activities (our payment default risk)
In the Company, a department in charge prepares and updates cash flow plans in a timely manner based onreports from each department, and manages risks by maintaining liquidity on hand.
4)
Supplementary explanation of matters relating to fair value of financial instruments
As fair value measurement of financial instruments incorporates variable factors, adopting different
assumptions could result in different values.
(2)
Fair value of financial instruments“Cash on hand and in banks” is omitted because it is cash, and the market values of “Deposits,” “Accounts
receivable-trade,” “Accounts receivable-other,” “Accounts payable-trade,” “Accounts payable-other,” and“Accrued expenses” are omitted too, as they are close to their book values, being settled in a short period of
time.
(3)
Items related to breakdown by level of market value of financial instruments
1)
Financial instruments which are reported at market value on the consolidated balance sheet
Not applicable
2)
Financial instruments which are not reported at market value on the consolidated balance sheet
Descriptions are omitted due to lack of significance.
8.
Notes to Per-share Information(1)
Net assets per share
3,262.93 yen(2)Profit per share for the fiscal year under review 587.02 yen
The Company conducted a 4-for-1 share consolidation of its common stock, Type A shares and Type B shareseach on September 5, 2022. In addition, due to the exercise of put options by its shareholders, the Company
acquired all the Type A shares and Type B shares on September 6, 2022 and delivered as consideration
1.3466666 shares of common stock for Type A shares per share and 1 share of common stock for Type B
shares per share. The Company cancelled all the Type A shares and Type B shares. Profit per share iscomputed based on the assumption that the share consolidation and other events above were conducted at the
beginning of the fiscal year ended March 31, 2023.

- 15 -

Consolidated Statement of Changes in Net Assets (April 1, 2022 to March 31, 2023)(Million yen)
Shareholders’ equity
Capital surplus
Commonstock
Balance as of April 1, 2022
Changes during the year
Issuance of new shares
ProfitAcquisition of treasury
stock
Cancellation of treasury
stock
Transfer from retained
earnings to capitalsurplus
Total changes during theyear
Balance as of March 31,
2023

Legal
capitalsurplus30,200

Other
capitalsurplus30,200Total
capitalsurplus-30,200Retained earnings
Other retained
earnings
Total retained
Retainedearnings
earnings brought
forward24,86024,86018,07818,078

(0)

(0)

0

0

(0)

(0)

-

-

-

-

18,07818,07830,20030,200-30,20042,93942,939

Shareholders’ equity
Total
Treasuryshareholders’stockequity85,260Share
subscription
rightsBalance as of April 1, 2022
Changes during the year
Issuance of new shares
Profit18,078Acquisition of treasury
(0)
(0)
stock
Cancellation of treasury
0stock
Transfer from retained
earnings to capitalsurplus
Total changes during the
18,078year
Balance as of March 31,
103,3392023(Note) Monetary amounts are rounded down to the nearest million yen.

- 16 -

12

Total net
assets85,272
18,078(0)--

18,07812

103,351

Notes to the Non-consolidated Financial Statements
1.
Notes to Significant Accounting Policies(1) Financial statements are prepared in accordance with the Rules of Corporate Accounting (the Ministry ofJustice Ordinance No. 13 of February 7, 2006, as last amended the Ministry of Justice Ordinance No. 43
of December 26, 2022).
(2) Basis and method for valuation of assetsa.
Securities
1)
Shares of subsidiaries and affiliates
Cost method using the moving average method
2)
Other securities:*
Other than stocks with no market value Market value method based on market prices as of the fiscal
year-end
Method of processing the difference between acquisition costand market value... All changes in unrealized holding gain or
loss, net of the applicable income taxes, are included directly in
net assets.
Method of determining cost of sale at time of sale... Cost method
using moving average method*
Stocks etc. with no market value
Cost method using the moving average methodb.
Derivatives, etc.
*
Derivatives
Market valuec.
Inventories
inventories held for ordinary sale*
Finished goods
Cost method using the gross average method*
Work in process
Cost method using the gross average method
Inventories with reduced profitability have been written down in book value.
(3) Methods of depreciation and amortization for non-current assets
1)
Property, plant and equipment (excluding leased assets)
Depreciation is calculated by the straight-line method.
The useful lives are estimated as follows, reflecting the collection period according to the actual situation.
Buildings and structures, net
6 to 20 years
Machinery and equipment, net
3 to 5 years
Tools, furniture and fixtures
3 to 10 years
2)
Intangible assets
Depreciation is calculated by the straight-line method.
Among all, technology assets and internal-use software are amortized using the straight-line method over theirestimated useful lives (up to five years) for internal use.
3)
Leased assets
Leased assets under finance leases that do not transfer ownership of the leased assets are calculated using thestraight-line method with the lease term as the useful life and a residual value of zero.
(4) Basis of recording revenues and expenses
With respect to the sale of semiconductor products, the Company recognizes the revenue at the time ofdelivery of the product (or at the time of deemed arrival of the product if the lead time of transportation can bemeasured) because the Company judges that the Company’s performance obligation is fulfilled when thecustomer gains control over the product at the time of delivery of the product.
2.
Notes to Changes in Accounting Policies(Application of Implementation Guidance on Accounting Standard for Fair Value Measurement)
Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31, June17, 2021; hereafter referred to as the “Guidance on Accounting Standard for Fair Value Measurement”) has
been applied from the beginning of the fiscal year under review, and the new accounting policies set forth in
the Guidance on Accounting Standard for Fair Value Measurement are being applied over the future inaccordance with the transitional treatment set forth in Article 27, Paragraph 2 of the Guidance on AccountingStandard for Fair Value Measurement.
- 17 -

The application of this accounting standard has no impact on the non-consolidated financial statements.
3.
Notes on Accounting Estimates
Items whose amounts are recorded in the non-consolidated financial statements for the fiscal year underreview based on accounting estimates and which may have a material impact on the non-consolidated
financial statements for the following fiscal year are as follows:*
Recoverability of deferred tax assets(1)
Amount recorded in the non-consolidated financial statements for the fiscal year under review
Deferred tax assets
6,751 million yen(2)
Information on the content of significant accounting estimates for identified items
Deferred tax assets are recognized only for tax credits and deductible temporary differences that are more
likely to be applicable to future taxable income. The timing and amount of taxable income may be affected by
future changes in uncertain economic conditions, and if the timing and amount of taxable income differ fromthe estimates, it may have a material impact on the amount recognized in the non-consolidated financial
statements for the following fiscal year and thereafter.
4.
(1)

Notes to the Non-consolidated Statement of Financial Position
Accumulated Depreciation of Property, Plant and Equipment
Buildings and structures, net
1,502 million yen
Machinery and equipment, net
68 million yen
Tools, furniture and fixtures
26,170 million yen
Total
27,742 million yen(2)

Monetary receivables from and monetary payables to the affiliates
Short-term monetary receivables
24,179 million yen
Short-term monetary payables
1,060 million yen

5.

Notes to Non-consolidated Statement of Income
Transaction with the affiliates
Operating transactions
Net sales
103,250 million yen
Purchases
12,810 million yen
Non-operating transactions
Dividend income
785 million yen

6.

Notes to Tax-Effect Accounting
Breakdown of Major Factors for Deferred Tax Assets and Deferred Tax Liabilities
Deferred tax assets
Accrued bonus
1,088 million yen
Accrued social insurance expenses on bonus
170 million yen
Inventories
3,530 million yen
Accrued enterprise taxes
492 million yen
Non-current assets
1,141 million yen
Lump-sum depreciable assets
62 million yen
Asset retirement obligations
116 million yen
Loss on valuation of investment securities
68 million yen
Other
149 million yen
Subtotal of deferred tax assets
6,820 million yen
Valuation allowance(68) million yen
Total deferred tax assets
6,751 million yen- 18 -

7.
Notes to Transaction with Related Parties
Subsidiaries, Affiliates and Other Parties
Type

Subsidiaries

Subsidiaries

Name ofcompanies
and others

Socionext
America
Inc.

Socionext
Technology
Pacific Asia
Ltd.

Percentage ofvoting rights
held (owned)

Ownership
Direct 100.0%

Ownership
Direct 100.0%

Relationshipwith relatedparties

Sales of theCompany’s
products andoutsourcing ofoperations, etc.

Sales of theCompany’s
products andoutsourcing ofoperations, etc.

Details oftransactions

Transaction
amount(Millionyen)

Sales ofproducts, etc.

31,444

Outsourcingof operations,
etc.

5,703

Sales ofproducts, etc.

62,611

Outsourcingof operations,
etc.

1,901

Item

Balance asof March 31,2023(Millionyen)

Accounts
receivable-trade, net
Accounts
receivable-other
Accounts
payabletrade
Accounts
receivable-trade, net
Accounts
receivable-other
Accounts
payabletrade

3,897
5
356
18,293170

Transaction terms and decision policies of transaction terms(Note) Transaction terms of the above companies are determined in a similar manner as those for generaltransactions.
8.
Notes to Per-share Information(1)
Net assets per share
3,069.48 yen(2)Profit per share for the fiscal year under review536.99 yen
The Company conducted a 4-for-1 share consolidation of its common stock, Type A shares and Type B shareseach on September 5, 2022. In addition, due to the exercise of put options by its shareholders, the Company
acquired all the Type A shares and Type B shares on September 6, 2022 and delivered as consideration
1.3466666 shares of common stock for Type A shares per share and 1 share of common stock for Type B
shares per share. The Company cancelled all the Type A shares and Type B shares. Profit per share iscomputed based on the assumption that the share consolidation and other events above were conducted at the
beginning of the fiscal year ended March 31, 2023.

- 19 -

29