Future Outlook

Copyright © 2019 Harmonic Drive Systems Inc.

Orders by Region

Copyright © 2019 Harmonic Drive Systems Inc.

Consolidated orders, by region
External environment■ Slowdown of market growth in China, affected by US‐China trade friction and fiscal reforms→Recently, some signs of recovery in the Chinese market.
■ “Overheating of investments” in industrial robots in 2017‐18 now undergoing correction.
→Overall orders are now in a downtrend (according to Japan Robot Association).
■ “Advance orders” we received in previous years have led to inventory adjustments.
→Distributors and customers alike are adjusting inventories (but cancellations and requests fordelayed deliveries have recently toned down).
Internal environment■ Customers are still satisfied with our products and services; customer relations are solid.
■ By increasing our production capacity, we have worked through order backlogs and normalized leadtimes.
FY2018Harmonic Drive AG becomes subsidiary(Millions of yen)
25,00020,00015,00014,43914,022

15,715

15,645
9,526

10,0006,449

11,544

5,000

5,820

5,412

6,543

0

1,301435
Q1 2016

1,133402
Q2 2016

1,035495
Q3 2016

3,901
1,867

2,247

1,562

1,707

2,076

1,894

2,006

1,269
941

3,834

4,264

4,442

3,681

4,695

4,088

3,994

3,117
1,030
3,029

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

EuropeNorth AmericaAsia

20Copyright © 2019 Harmonic Drive Systems Inc.

Trends in Main Fields of Application

Copyright © 2019 Harmonic Drive Systems Inc.

1. Industrial robots■ Chinese manufacturers are holding back capex plans, cautious of the market slowdown.
■ But some nascent signs of a recovery in the Chinese market are appearing.
■ Meanwhile, investment appetite for labor‐saving and automation remain strong.

Worldwide outlook for number of industrial robots sold
Estimated annual worldwide supply of industrial robots
2009‐2017 and 2018*‐2021*
700+14% perannum

Thousands of units

600

553

500
+30%

400

381

300
200

221

100
0166

159

178

2011

2012

2013

121

254

+10%

484

421

294

60
2009

*Forecast630

2010

2014

2015

2016

2017

2018*

2019*

2020*

2021*

Source: IFR World Robotics 2018

22Copyright © 2019 Harmonic Drive Systems Inc.

2. Collaborative robots (co‐bots)■ Expanding adoption in the manufacturing and service sectors■ Robust demand, centered on Europe
Expected size of the market for co‐bots(by sales amount and units)Sales(billions of yen)

309

488

800

1,2652,040

2017–2020 (forecast)

6Approx. 4.3x
CAGR: 62.4%

5

Thousands of units

0.9

4
1.5

3

0.6
1.0

2
10

1.9

0.4

0.1
0.2
0.3
0.1
2016

0.6

0.2
0.4
0.4
0.2
2017
(Actual)

0.3

0.5

2018
(Estimate)

2019(Forecast)

JapanAsia

1.1

0.7

Europe0.8
Source: Techman Robot Inc.

US2020(Forecast)

Source: “Reality and Future Outlook of Worldwide
Robot Related Market 2018; Vol.1 FA
Robot Market Edition,” Fuji Keizai Group
23Copyright © 2019 Harmonic Drive Systems Inc.

3. Semiconductor manufacturing equipment,LED and OLED manufacturing equipment
Semiconductor manufacturing equipment■ Growth in the smartphone market is decelerating.
■ Capex has been curbed at a major US information technology firm,resulting in a decrease in memory demand.
■ But demand is solid for AI, VR, and CASE (automobile‐related).
■ We also expect demand to be fueled by 5G‐related investment.
(3G [voice]→4G [data]→5G [video])

LED and OLED manufacturing equipment■ Falling demand for small/medium‐sized FPDs, as smartphone growth decelerates.
■ But budding demand for OLEDs used in large TVs and onboard automotive electronics.

24

Copyright © 2019 Harmonic Drive Systems Inc.

New Productsand Applications

Copyright © 2019 Harmonic Drive Systems Inc.

Power‐assisted suits & AGVs

Our products contributeto making devices
more compact.

For high‐torque applications

For high‐speed applications

HarmonicDrive®

HarmonicPlanetary ®
26

Copyright © 2019 Harmonic Drive Systems Inc.

Power‐assisted suits & AGVs
★New product: FLA Series
Our new actuator series is lighter and thinner than previous versions, allowing us tomeet diverse user requirements.
 Specialized design realizes lighter weight and extreme flatness:
Lightest 390g Length 39.8mm <FLA‐11A type> Extensive product lineup:
4 models × 3 reduction ratios × 2 voltages Various combinations
Speed reducer
DC24V type
DC48V type
Flat brushless DC motor

HarmonicDrive®
Best suited for power assistance
1/50, 1/100 reduction ratios
HarmonicPlanetary®
Best suited for AGVs
1/8 or 1/9 reduction ratios
27Copyright © 2019 Harmonic Drive Systems Inc.

Power‐assisted suits & AGVs
We aim to reach a broad customer base by offering products in collaboration withYaskawa Electric Corporation.

Actuators

Harmonic Drive Systems

DriversYaskawa Controls

 End users
FY2018 performance: Inquiries from 70 companies in Japan and overseas

28

Copyright © 2019 Harmonic Drive Systems Inc.

Global sales expansion of MINI‐MICRO series
Small collaborative robots,
semiconductor manufacturing
equipment

Table top robots

www.mecademic.com

Advanced medicine,amusement

Source: Mecademic Inc.

Industry’s smallest
Φ5mm

Source: Techman Robot Inc.

CSF micro series

CSF mini series

CSF‐2UP series

Starting from Φ10mm

Starting from □20mm

Starting from □50mm

Global sales expansion of our highly‐competitive and unmatched products made possible through ourGroup’s unique strengths.
We look to establish our products as the “de facto standard” in the above‐mentioned markets that arepoised to grow further.
29Copyright © 2019 Harmonic Drive Systems Inc.

Helping to bring a revolutionary type of new engine into
practical use■ Nissan Motor Co., Ltd.
 Used in actuator for variable compression ratio (VCR) engine
 One HarmonicDrive® used in each engine

Significantly improved fuel performance Compression ratio continuously changes according to driving
conditions
 Significantly improved thermal efficiency
 Has been something of a dream among internal engine
technologies, under development for more than 20 years

 Expected to drive next‐generation technologies
State‐of‐the‐art technology contributing to the fusion of internal
combustion engines and electric vehicles
Source: Nissan Motor Co., Ltd.

30

Copyright © 2019 Harmonic Drive Systems Inc.

Initiatives to Improve QCDS
Aimed at Achieving Our
Mid‐Term Management Targets

Copyright © 2019 Harmonic Drive Systems Inc.

1. Roadmap to raising production capacity
1. Strain wave gearing devices
To Jan. 2017

(Numbers indicate units produced per month)Aug. 2017 Apr. 2018

Mar. 2019

To Mar. 2021 and beyond

Hotaka Factory

50,000Japan:
Harmonic
Drive
Systems Inc.

66,00085,000+130,000

Ariake Facrory
Ariake Factory(new factory building)

Total fortwo plants:
200,000

120,000–
150,000
Germany:
Harmonic
Drive AG

Limburg Factory

10,000+US:
Harmonic
Drive LLC

Boston Factory

3,000

15,000+
New factory

10,000–30,000Total 98,000+ Total 148,000+

2. Crossed roller bearingsJapan:
HarmonicPrecision
Corp.

Current Factory

Germany:
HarmonicDrive AG

Limburg Factory

60,000+30,000–50,000

Total 240,000–
280,000

120,000–
150,000

70,000+
New factory

10,000+Total 70,000+ Total 80,000+

150,000

New factory

30,000Total 180,000
32
Copyright © 2019 Harmonic Drive Systems Inc.

2. Construction of new plant building at the Ariake Factory(Azumino, Nagano Prefecture)Production base for strain wave gearing devices (HarmonicDrive®)
Factory designed in anticipation of production increases over the medium term
(total floor space of 21,818sqm)
We plan to step up capital investment in equipment and increase personnel in stages, keeping aclose watch on demand trends

Sep. 2018

NowMay 2019

Jul. 2019

Construction
startedUnderconstruction

Construction to becompleted

Groundbreaking ceremony

Building area

New plant under construction

Image of completed plant

33

Copyright © 2019 Harmonic Drive Systems Inc.

3. Construction of new plant building at the Matsumoto
Factory (Matsumoto, Nagano Prefecture)Production base for crossed roller bearings
Factory designed in anticipation of production increases over the medium term(total floor space of 23,659sqm)
Operations to commence in March 2019 after moving part of the assembly and processing lines

Dec. 2017

Jan. 2019

Construction
startedConstruction
completedNow
May 2019

Commence someoperations after moving
production lines

Site preparation

34

Copyright © 2019 Harmonic Drive Systems Inc.

4.

Construction of new factory building at the US Factory(Beverly, Massachusetts)
Production base for strain wave gearing devices (HarmonicDrive®)
Designed to increased North American local production ratio and meet future demand increases (total floor
space of 8,830sqm)

Jul. 2018

Now
May 2019

Jul. 2019

Constructionstarted

Underconstruction

Construction to becompleted

Site preparation
Current progress
Image of completed plant

35

Copyright © 2019 Harmonic Drive Systems Inc.

5.

Efforts to increase productivity■The production system our Group envisions
 We aim to manufacture products that meet the individual needs of customers to the finest
detail, backed by our advanced technology and skills.
 Small‐lot, multi‐variety production

 Medium‐lot, small‐variety production[Applications: small‐lot robots, semiconductors,
and other general equipment]
1. Our engineers possess advanced skills (processing,assembly, and inspection) that will help flexibly meetcustomer needs.
2. We have an extensive track record of small‐lot, multi‐variety production, leveraging our optimal production
technology and management system.

[Applications: automotive products andmass‐production robots]
1. Our production lines are geared toward automation.
2. We also use our long‐standing knowledge and expertise
to optimize our automation equipment.

Two‐pronged approachto improve QCDS

■Q: Further improve quality■C: Strengthen cost competitiveness■D: Shorten lead times■S: Enhance ability to customize
36

Copyright © 2019 Harmonic Drive Systems Inc.

Current Mid‐Term Management Planand Aiming for Further Growth
Toward 2030 and 2050

Copyright © 2019 Harmonic Drive Systems Inc.

Mid‐term management plan and long‐term vision

Consolidated sales (billions of yen)

Planned
sales

20.4

Actualsales

18.1

21.0

26.0

29.0

25.9

28.2

35.0

30.0

54.3

100.0

68.5

67.8

Good balance among threebusinesses
50thanniversary
Previous mid‐term
Earlier mid‐termmanagement
plan
management planPrevious mid‐termmanagement plan

Current mid‐termmanagement plan

FY2012FY2015FY2018–FY2014–FY2017–FY2020MTRD

FY2030AD–

FY205038

Copyright © 2019 Harmonic Drive Systems Inc.

The performance targets and other numerical data presented
herein are forecasts based on information available to the HDSGroup at the time this material was prepared, and are subject
to the influence of uncertainties including those in theeconomic and competitive environment. Actual performance
may therefore differ materially from the forecasts given in thismaterial.

For more information:
Please contact us as follows for material contents and investor information of all kinds.
Corporate Planning 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/Copyright © 2019 Harmonic Drive Systems Inc.