Inherited
ULVAC-Style

Message to Our Readers

Message to OurReaders

About ULVACULVAC’s Vision

ULVAC’s Strategy

CorporateGovernance

Financial Data/Corporate Information

Message from Top ManagementVacuum Technology
to Create Social Valueand Contribute to
the Future of People,
Society, and the Planet

Setsuo Iwashita
President and Chief Executive Officer

Beyond epochs, inheriting theULVAC’s founding spirit Vacuum
technology for value creation
ULVAC’s history began in 1952 with agroup of young people who were eager tocontribute to the development of industry
and science through the application ofvacuum technology. The company started
as a distributor of imported products. In
its third year, the company succeeded in
manufacturing vacuum heat treatment
furnaces in Japan. Since then, always
abreast of the changing times, ULVAC has
been the source of various types of vacuum
equipment, including vacuum metallurgicalequipment for the heavy chemical industry,vacuum heat treatment furnaces for the
automotive and home appliance industries,
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and evaporation roll coaters for capacitors,
as well as vacuum deposition equipment for
semiconductors and electronic devices in
the 1980s and vacuum deposition equipment
for flat panel displays since the 1990s.
We take pride in the fact that the value
we offer has contributed to the developmentof industry and science and the growthof our customers’ businesses while also
underpinning people’s affluent lifestyles.
In recent years, technological innovation
has been accelerating toward realizationof the smart society, typified by the trend
toward electrification of automobiles andautonomous driving, progress in digitalization,
and advances in AI and robotics. Meanwhile,
decarbonization initiatives are proliferating
to address global environmental issues.
All this technological innovation together
with initiatives to resolve social issues has
spurred demand for ever more sophisticatedsemiconductor memory and logic, MEMS
and sensors, electronic and power devices,
batteries, etc. In this context, ULVAC iscommitted to meeting these needs byleveraging its vacuum thin-film processing
technology, micromachining technologies, andfundamental technologies for equipment andmaking comprehensive use of them.

Seize changes in the businessenvironment as opportunities togrowIn the semiconductor industry, capital
investment by semiconductor manufacturers
is slowing in the short term, in line with theslowing tempo of demand for smartphones,
PCs, etc. However, over the medium tolong term, expectations for generative
AI are likely to spur semiconductor
demand. Moreover, from the perspectiveof addressing geopolitical risks, there isongoing planning and construction of new
semiconductor plants worldwide. Vigorous
investment has been continuing in theelectronics industry, too. Notable examples
are investment in power devices, reflecting
the impact of policies promoting mass
adoption of EVs with the aim of achievingcarbon neutrality, digitalization for thesmart society and technological innovation
affecting various electronic devices, as wellas investment to increase production. In theflat panel display (FPD) industry, IT panels fortablets and PCs are transitioning from LCD
to OLED and investment in large-size OLED
is expected to increase in the near future. In
the industrial battery industry, investment inmass production of EV batteries to achievesmaller size, larger capacity and higher
safety is also gaining momentum.
We intend to develop technologies that
address these social issues, aiming toachieve growth through business practices
that contribute to sustainability of the global
environment and development of society.

Achievements and issues of theprevious mid-term management
plan
Basic policies of the previous mid-term
management plan (covering the period fromFY 2020 to FY 2022) were “investment
in development for growth (selectionand concentration)” and “profit oriented
management through structural change.”
Our objective was to clarify the growthfields ULVAC should target as well as
the overall direction, while concentrating
management resources so as to succeed
in developing technologies and products.
In order to secure financial resources fordevelopment, we considered it necessary toimprove the profit margin by enhancing ourmanufacturing capabilities.
Regarding the first policy, “investment
in development for growth (selection andconcentration),” led by growth drivers,
including logic, power devices, and various
electronic devices, orders received for FY
2022 were 1.6 times greater than in FY 2019.
Net sales also grew and exceeded the initialplan. These results attest to the fact that we
seized the opportunities created in recent
years by social and market changes as well
as by technological innovation. The entry
into the metal hard mask (MHM) process
related to EUV led to the application ofULVAC equipment to other semiconductor
production processes. Orders received
increased mainly for equipment for powerdevices and optical devices. We began mass
production of roll-to-roll vacuum evaporationequipment used in EV battery production.
These are major achievements under theprevious mid-term management plan.
As for the second policy, “profitoriented management through structuralchange,” the key strategies were to“strengthen manufacturing capabilities”
and “strengthen the management base.”
Specific measures included the gradualtransition to a planned production structure
mainly for semiconductor and powerdevices, etc., promotion of standardization,
consolidation of subsidiaries in Japan andoverseas, in addition to the development
and implementation of various systems
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Inherited
ULVAC-Style

Message to Our Readersfor productivity improvement. As a result,the profit margin improved steadily
until the first half of FY 2021. However,subsequently, longer parts delivery leadtimes mainly attributable to supply chain
disruption diminished the improvement
impact and the profit margin fell short of
the target. Moreover, a root-cause analysisof the non-attainment of the target clarified
ULVAC’s internal issues. We will addressthese issues under the new mid-term
management plan. Furthermore, regarding
the strengthening of the management
base, we steadily increased shareholders’equity during the period of the previous
mid-term management plan and secured
financial stability. Under the new midterm management plan, we will continue
our efforts to establish a more robust
management base by resolving, one by one,the issues that have been clarified.
Meanwhile, in a project led by young
employees, the question of what the ideal
configuration of the ULVAC Group should bein 10 years’ time was thoroughly discussed.
The outcome of the project is Vision 2032
“Continue to Be a ‘Field of Potentiality’for the Future,” which was announced on
the occasion of the 70th anniversary of
our founding in 2022. Vision 2032 alignsand expresses the corporate culture andvalues inherited from ULVAC’s foundation
with the future. The “Field of Potentiality”

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ULVAC VALUE REPORT 2023

refers to a “vacuum field” with potentiality
where new value may be created. The term
“Field of Potentiality” also alludes to “themargin of a person’s mind.” An “emptyspace” in one’s mind is a “container” thatcatches the thoughts of people inside andoutside the company. Vision 2032 indicates
our commitment to pursuing the value ofvacuum technology, continuing to rise to thechallenge of technological innovation, andcontributing to the resolution of global issues
through the innovation.

Strengthen manufacturing
capabilities in the three years of
the new mid-term management
plan to achieve growth
We formulated the new mid-term
management plan (FY 2023-FY 2025) bybackcasting from Vision 2032 and in lightof the issues clarified in the course of theprevious mid-term management plan.
Under the basic policies, “creating social
value through vacuum technology” and“enhancing profit and capital efficiencyoriented management,” we set priority
strategies, namely, “strengthening productcompetitiveness in growth businesses,“improving global productivity,” and“strengthening the management base,” aswell as specific initiatives corresponding toeach priority strategy. These policies andstrategies are largely a continuation of thoseunder the previous mid-term management
plan.
Various devices essential for a sustainable
society cannot be produced without vacuum
technology. The fields in which we canprovide social value are expanding and wewill continue to innovate and create value
in them. To this end, we intend to enhance
the competitiveness of our growth driverproducts and promote innovation together
with our customers.
During the period of the previous mid-term
management plan, we faced the problem
of longer delivery lead times for procured
parts. Treating this as a good opportunity
to thoroughly review our conventional
manufacturing systems, we recognized theMessage to Our
Readers

About ULVACULVAC’s Visionneed to ensure our systems are attuned
to the reality of the current times. During
the period covered by the new mid-term
management plan, we will continue
our efforts to strengthen manufacturing
capabilities so as to improve profit margins.
For this purpose, we will strive to further
improve global productivity by promoting
planned production through implementationof measures, such as improving efficiency
by reviewing business processes andintroducing various information systems.
Recognizing that our policy on returning
profit to shareholders is of great importance,
we aim to increase dividends over thelong term through further growth. On theother hand, as we operate in an industry
subject to rapid market fluctuations andtechnological innovation, we believe it isnecessary to secure sufficient funds for R&Dinvestment in growth fields and to secureand maintain a stable financial base. Taking
into consideration our policy, the financialbase, and other factors, we plan to increase
the performance-linked dividend payout ratio
from 30% to 35% from FY 2023.

Expanding the circle of cocreation with an eye to the future
In order to fulfill Vision 2032, it is crucial
for us to form an organization that can fully
leverage our comprehensive capabilities in a
rapidly evolving technological society. At thesame time, strengthening our managementfoundation and increasing resilience.
This aligns with ULVAC’s basic corporate
philosophy: “The ULVAC Group aims tocontribute to the development of industries
and science by comprehensively utilizing its
vacuum and peripheral technologies throughthe mutual cooperation and collaboration of
the Group companies.”
Regarding structural changes inFY2023, we implemented two significantreorganizations. Firstly, the introduction ofthe HQ system, comprising seven HQs:
Administration, Research & Development,
Sales, Production, Equipments Business,Components Business, and CS Business.
In particular, in the equipment business,

ULVAC’s StrategyCorporate
Governance

Financial Data/Corporate Information

devices in various fields, in the course of theirevolution, have incorporated technologies
from other fields. To offer value to customers
beyond traditional structures, we formed
the Equipments Business HQ, to oversee
the Semiconductor Equipment Division, theAdvanced Electronics Equipment Division,and the FPD Division, enhancing interdivisional collaboration and synergy.
Additionally, we established the Sustainable
Management Department, directly reportingto the President. This department is
responsible for monitoring and guiding global
activities aligned with our Sustainability
Policy, such as carbon neutrality initiatives andhuman rights considerations. Going forward,
ULVAC will clarify the responsibilities of eachorganization with regard to the relationshipbetween ULVAC’s business and sustainability,
evaluate performance, and share themeasures globally and vigorously promotethem.
With the aim of expanding the application
fields of vacuum technology, we areencouraged to seek more co-creation
opportunities and innovations globally,
considering “what we want to achieve
together” with our customers, universities,
research institutes, and communities. For
example, we decided to establish TechnologyCenter PYEONGTAEK in South Korea and its
construction began in March 2023. Bringing
collaboration and technological support close
to customers will help us cultivate fruitfulpartnerships with them.
Our objective is to keep contributing
to the future of people, society, and theplanet through vacuum technology and its
peripheral technologies. ULVAC is dedicatedto rigorously implementing our mid-term
management plan and attaining our set
objectives.
We encourage our stakeholders to join
ULVAC on this significant journey as we
expand the circle of co-creation towards
the future. We greatly value and seek yourongoing support in all our endeavors.

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