New Growth Strategy:“Revive Vision 2030”
Ushio Inc.

May 14, 2024

PRIME | 6925

IndexPart 1

Overview of New Growth Strategy

P3Part 2

Review of Previous Medium-Term Management Plan

P8

See supplementary materials on pages 38~42 for review of previous medium-term management plan

Specific Measures for New Growth Strategy: Revive Vision 2030
Part 3

Overview P14 / Business StrategyP17 / Financial Strategy P27

P13

See supplementary materials on pages 43~52 for business strategy

Part 4

ESG Initiatives

P33

See supplementary materials on pages 53~55 for ESG Initiatives

Appendix

Supplement to Review of Previous Medium-Term Management Plan

P38

Supplement to Business Strategies

P43

Supplement to ESG Initiatives

P53

Copyright (C) 2024 Ushio Inc., All Rights reserved.

2

Part 1

Overview of New Growth Strategy

Copyright (C) 2024 Ushio Inc., All Rights reserved.

3

Backdrop to Review of Medium-Term Management Plan
Semiconductor market changing

Other companies’ light sources
emerging

Semiconductor market landscape hastransformed owing largely to extended
slowdowns in the server and PC sectors

Emergence of other companies’ light sources
for EUV mask inspections prompted astrategic reassessment

Revised strategy
in response to significant changes in climate for Industrial Processes business

Developed New Growth Strategy:

Revive Vision 2030

Using the word “Revive,” we express Ushio’s determination
to “realize our goals through great transformation”
Copyright (C) 2024 Ushio Inc., All Rights reserved.

4

Guiding Principles for 2030
MissionUtilizing “light” as a means to provide not only “illumination” but also “energy,”
contribute to the resolution of social issues and to technological innovation across the globe

VisionBecome a “light” innovation company
Grow alongside customers, primarily in Industrial Processes area
Industrial Processes (IP)Help create comfortable andconvenient social infrastructurewith optical processing technologies
Visual Imaging (VI)
Delight people and deliver sharedexperiences to people throughimaging and lighting technologies
Large-scale video production and operation ofentertainment spaces (theme parks, cinemas, events),
Control rooms and video systems for public facilities
and businesses

Manufacturing processes, such as for:
Semiconductors, electronic devices,EV, Building materials and printing, etc.

Life Sciences (LS)
Apply optical technology
for better living and a better planet

Photonics Solutions (PHS)Collaborate with customers to co-create anddeliver value through photonics technologythat contributes to social progress
Use with semiconductor manufacturing equipment,
Integration with laser cinema and AR/VR,
Medical examinations, such as for genetic sequencing,
ophthalmology, and internal medicine

Extension of healthy life expectancy(Environmental hygiene, healthcare, pharmaceuticals,
drug development), Contribution to improving andpreserving the human environment,
Eliminating conditions that cause disease andcontributing to the maintenance of health

Copyright (C) 2024 Ushio Inc., All Rights reserved.

5

Revive Vision 2030 Goals
Coefficient targets

Phase IROE 8% or more

Phase II(~FY2026)※ One year delay behind previous medium-term management plan（～FY2030）(Swiftly attain Over 1x PBR)

ROE 12% or more
Reference: Operating margin

12% or more

PolicyPursue growth strategy emphasizing management efficiency
Focus growth, development
investments, and resourceson IP Businessto drive expansion

Enhance“efficiency”

Balancegrowth investments
andcapital efficiency
Copyright (C) 2024 Ushio Inc., All Rights reserved.

6

Revive Vision 2030 Goals
Highly effective business andfinancial strategies
Businessstrategies

Financialstrategies

Phase I
（FY2024～
FY2026）

Phase II
（FY2027～
FY2030）⚫ Transform portfolio (bolster unprofitable businesses)⚫ Step up advanced packaging business growth⚫ Optimize capital⚫ Enhance financial discipline and streamline assets⚫ Accelerate transfers from financial assets to business assets bydivesting securities

Business strategy: Transform business portfolio by redefining strategic fields
Financial strategy: Repurchase shares and pay ¥65.0~¥75.0 billion in dividends
to deliver ROE of at least 8%
Business strategy: Optimize Phase I outcomes and deliver steady business growth

Financial strategy: Flexibly repurchase shares and keep shareholders’ equity below¥200.0 billion, and focus on growth investments in allocating cash

Copyright (C) 2024 Ushio Inc., All Rights reserved.

7

Part 2

Review of Previous Medium-Term Management Plan

Copyright (C) 2024 Ushio Inc., All Rights reserved.

8

Revising Our Forecasts ①
Our performance deteriorates in FY2024 amid significant business climate changes.
Recovery trend is expected in FY2025, the final year of our previous medium-term management plan, but should be
below targets.
Progress under previous plan and latest forecasts
Net sales (under previous plan)

Net sales (latest forecasts)

Operating margin (under previous plan)

8.8%

2,500

9.5%

9.1%
7.2%

2,000

5.9%
1,500

Operating margin (latest forecasts)
10.0%

7.9%

9.0%
8.0%

7.0%

7.0%

5.2%

6.6%

4.2%

6.0%
5.0%

1,000

4.0%
3.0%

2.9%
500

2.0%

0.6%

1.0%
0

Billions of yen
Net sales (underprevious plan)

0.0%

FY17
FY2017173.4

FY18
FY2018165.1

FY19
FY2019159.0

FY20
FY2020118.5

FY21
FY2021148.8

FY22
FY2022175.0(Latest forecasts)＊
Operating margin(under previous plan)(Latest forecasts)＊

5.9%

5.2%

4.2%

0.6%

8.8%

9.1%

FY23
FY2023

FY24
FY2024FY25
FY2025

188.0

210.0

220.0

179.4

175.0

200.0

6.6%

7.9%

9.5%

7.2%

2.9%

7.0%

*Figures for FY2023 are results

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9

Revising Our Forecasts ②
In FY2025, the final year of the previous medium-term management plan, sales of lithography equipment and EUV
light sources in the IP Business should be far below target despite plans to expand growth investments for the future.
With anticipated earnings gains in the VI Business insufficient to cover the shortfall, operating profit should be around¥7.0 billion lower than under the previous plan.
Operating profit under previous plan and latest forecast(Operating profit for FY2025: in billions of yen)
21.0

＋3.5

14.0

-5.5
-1.5

-2.0
-1.5

Previous plan

Industrial Processes
Lithography equipment

Industrial Processes
Optical equipment, etc.

Industrial Processes
Lithography lamps

Visual Imaging

Life Sciences, Photonics
Solutions, etc.

Latest forecast

Copyright (C) 2024 Ushio Inc., All Rights reserved.

10Internal factors

External factors

Factors in Forecast Revisions

Semiconductor manufacturing equipment market trends and rapid
slowdown in PC package substrate market
Major market correction in Q1 FY2023.
Negative growth forecasts of back-end process equipment manufacturers

Strategic partnershipwith Applied Materials
New growth potential through a full lineupof lithography equipment in the strategic
partnership with Applied Materials
See P24-25
for details

See Appendix on
P39 for details①
Reliance on key customer segments
in growing businesses②
Changing EUV competitiveenvironment③
Impact of unprofitablebusiness areas

PC demand slowdown and server demandswings affecting key customer segments,
requiring significant outlook revision

Emerging other companies’ light sources
necessitating outlook revision

Unprofitable business areas lacking effective
profitability measures

See Appendix on
P40 for details

See Appendix on
P41 for details

See Appendix on
P42 for details

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11

New Growth Strategy Framework based on Key Challenges
Develop New Growth Strategy framework

in view of internal and external factors prompting outlook revision.
Strengthen strategic focus areas, transform business portfolio,
and closely monitor plans to feasibly enhance corporate value.
Bolster unprofitable businesses
And transform business portfolio

Expand promising IP business

Development
investment policy

Review capital policies, including
capital efficiency and balance sheet

Accelerate growth
In Advanced Packaging market

Copyright (C) 2024 Ushio Inc., All Rights reserved.

12

Part 3Specific Measures for

New Growth Strategy: Revive Vision 2030

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13

Overview

Positioning of Revive Vision 2030
Shift focus from pursuing volume to enhancing efficiency.
Concentrate investments in strategic areas to lay growth groundwork, targeting return on equity (ROE) exceeding
8% in Phase I and swiftly delivering achieving PBR exceeding 1x.
Revive Vision 2030
FY2020

FY2021

FY2022

FY2023

FY2025

FY2024FY2026

Revive Vision 2030 Phase I[ FY2024～FY2026 ]1st Medium-Term Management Plan
[ FY2020～FY2022 ]FY2027

FY2028FY2029FY2030

Revive Vision 2030 Phase II[ FY2027～FY2030 ]2nd Medium-Term Management Plan
[ FY2023～FY2025 ]Significant deviation from plannecessitating fundamental
review of growth strategy

Phase I of
New Growth Strategy

Phase II of
New Growth Strategy

Transformbusiness portfolio

Deliver steadybusiness growth
Optimize Phase I outcomes

1st Medium-Term
Management Plan

2nd Medium-Term
Management Plan

Reform structure

Cultivate growth

Transform business portfolio
by redefining strategic fields

FY2022 results

FY2025 targets

FY2026 targets

ROE: 5.7%

ROE: 8% or more

(Operating margin: 9.1%)
Net Sales: ¥175.0 billion(Operating margin: 9.5%)(Net sales: ¥220.0 billion)

ROE*:

8 % or more

(Reference values)
Operating margin*: 10% or more
Net sales: ¥200.0 billion

FY2030 (final year) targets

ROE*:

12 % or more

(Reference values)
Operating margin*: 12% or more
Net sales: ¥200.0～¥250.0 billion* Ushio could experience unexpected temporary performance impacts from engaging in selection and concentration initiatives (business acquisitions, divestitures, and withdrawals) in transforming its business portfolio
to enhance corporate value. It will promptly disclose any such developments.

Copyright (C) 2024 Ushio Inc., All Rights reserved.

14

Overview

Basic Policies and Overview of New Growth Strategy (Phase I)
Redefine strategic areas and reinforce strategic focus areas while transforming business portfolio, emphasizing
selection and concentration
Strategies
Bolster unprofitable businesses
and transform business portfolio

Business strategies

Details on P17～22

Expand promising IP business
Details on P23

Accelerate growthin Advanced Packaging market
Details on P24～25

Development investment policy

Financialstrategies

Details on P26

Review capital policies, including
capital efficiency and balance sheet
Details on P27～32

Phase I (FY2024～2026) targets

FY2030 targets⚫ Invest heavily in priority businesses (areas), notably Industrial Processes, by efficiently
allocating operational resources, while also assessing unprofitable businesses based on
their potential and other pertinent factors

ROE⚫ [in IP business] Sales: ¥82.1 billion in FY2023 → ¥110.0 billion in FY2026 →¥140.0~150.0 billion in FY2030
Operating margin: 13.2% in FY2023 → Exceeding 14% in FY2026 →18～20％ in FY2030

12% or more

⚫ In promising Industrial Processes, target related lithographic equipment CAGR of atleast 15% from FY2023 to FY2030(Reference values)
Operating margin:⚫ Review and balance investment plans⚫ Prioritize and expand investments in promising Industrial Processes areas⚫ In Photonics Solutions and Life Sciences (including new businesses), focus on areas
offering better growth prospects

12% or more
Net sales:¥200.0～¥250.0billion⚫ Target ROE exceeding 8% in FY2026 and PBR exceeding 1x as swiftly as possible⚫ Plan to spend ¥65.0~¥75.0 billion repurchasing shares and paying dividends, setting
dividends at a minimum of ¥70 per share⚫ Reduce securities holdings by at least ¥35.0 billion (more than ¥15.0 billion in Phase II)⚫ Lower shareholders’ equity to ¥200.0 billion or less

Copyright (C) 2024 Ushio Inc., All Rights reserved.

15

Overview

Reference Values by Segments(Billions of yen)

FY2023 results
Segment
Sales

Industrial
Processes(IP)

Phase I（FY2026）

Operatingprofit/ loss

Operatingmargin

10.8

13%

82.1

Sales

110.0

Operatingprofit/ loss

Operatingmargin15.5

14%FY2030 Goals

Operating margin:12％ or more(Net sales: ¥200.0～¥250.0 billion)

VisualImaging(VI)
Life
Sciences
(LS)

80.5

5.8

7%

70.0

5.5

8%
Build business portfolio centeredon Industrial Processes

5.2

-2.3

-45%

7.0

-1.0

-14%

（IP: Target operating margin of 18～20％)

Cultivate new businesses(including Life Sciences)

Photonics
Solutions
(PHS)

10.2

Consolidated
totals*

179.4

-1.5

-15%

12.0

0.3

3%
Make Visual Imaging and photonics Solutions
stable cash-generating businesses

12.9

7%

200.0

20.0

10％

(Target operating margin of at least 12%)*Consolidated totals include “Others” segment

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16

Business Strategy

Bolster unprofitable businesses and transform business portfolio

Portfolio Transformation Approach
Transform portfolio to enhance profitability bybolstering unprofitable businesses(FY2030: Generate operating margin of 12% or more)

Shift to areas
where USHIO can
exploit its uniquestrengths

Focus on areas in which USHIO can leverage its expertise in lighttechnology to deliver significant added value, tapping a global
niche leadership approach that has shaped its corporate culture
and strengthening its position since its founding

Industrial Processes (IP)
Accelerate growth through active investment as a priority business⚫ Invest in advanced packaging area, which offers particular promise⚫ Invest in semiconductor process and other areas offering growthpotential and review EUV business strategy

Review
investment plans
Undertake clear
business
assessments

Invest in priority
businesses andassessunprofitable ones

Review and balance investment plans
Assess by setting hurdle rates factoring in weighted average costof capital (WACC)※See P27 for WACC concept

Invest heavily in priority businesses by efficiently allocating
operational resources while also assessing unprofitable businesses
based on their potential and other pertinent factors

Visual Imaging (VI)
Enhance profitability by reinforcing earnings structures and selectively
judging sub-businesses

Life Sciences (LS)
Strengthen assessment of potential and invest only in promising
growth areas

Photonics Solutions (PHS)
Focus on areas with demonstrable potential and strengths andselectively judge areas for downsizing and withdrawal
Note: Constantly reassess Visual Imaging and Photonics Solutions businesses withview to generating anticipated profit margins
Copyright (C) 2024 Ushio Inc., All Rights reserved.

17

Business Strategy

Bolster unprofitable businesses and transform business portfolio

Business Portfolio Transformation for All Segments

LS

As a priority business, expand
investment to grow

Cultivate by selectively judging
areas in which to invest

Industrial Processes (IP)Life Sciences (LS)While investing to create future corebusinesses, will streamline investments
to prioritize areas offering more
promising growth paths

LS

Generate stable earnings by bolstering unprofitable businesses

Visual Imaging (VI)

Photonics Solutions (PHS)IP

Making futurepriority businesses

Concentrate development and growthinvestments and allocate resources tocreate new products and expand growth
opportunities

IP

Businesses to cultivate

Priority businesses
Investment
Sales

Problematic businesses
Requiring reviews andrestructuring and possible
selective judgment for
downsizing or withdrawal

Investment

Sales growth

Assess investment
effectiveness andcreate next-generation
businesses…Goals for 2030

…Now

Sales

PHS

Investment
Sales

Shift to thosegenerating ongoinggrowth by investing
Stable profitability
businesses
Shift to those
producing stable
cash flows

VI
Selective
judgment

PHS

Consider selectively judging andpositioning some sub-businesses asstable cash generators

VI
Profitability

Shift focus from pursuing scale to enhancing
businesses that generate stable cash flows
by improving profitability and selectively
judge sub-businesses to continue

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18

Business Strategy

Bolster unprofitable businesses and transform business portfolio

IP

Segment Portfolios and Measures (IP)Concentrate development and growth investments and allocate resources to create new products and expand
growth opportunities
Specific measures

Envisaged Industrial Processes business portfolio
Businesses to cultivate

EUV(Other Optical
Equipment)

Focus
on growtharea
IP2

Other IP businesses,
including optical processes(Optical Equipment Lamps
and Other Optical Equipment)

IP1(UV and OA Lamps)

Stable earnings businesses
Profitability…Now…Goals for 2030

Note: Circle sizes in chart indicate represent business scales. See P18 for scales by segment.

(Lithography Equipment)
IP2

Other IP businesses,
including opticalprocesses(Optical Equipment Lamps
and Other Optical
Equipment)

IP3

EUV

Development
Investment(Slide 26)

Measures
Concentrate development investments andresources on projects related to strategic
partnership with Applied Materials to create fullproduct lineup to become leading company inadvanced packaging area

IP1

See P24-25 for details

Focus on promising semiconductor-related field
to pursue business expansion while investing tobolster product competitivenessIP2

See P45-46 for details

Continue product development with view toentering the market with High-NA lithography,
etc. while looking to downsize or withdraw frommarket if business is no longer feasible

IP3

See P47 for details

Stabilize

Problematic businesses

Next-generation
lithography equipment(Other Optical
Equipment)

UV and OA lamps

Stabilize
business

DigitalLithography System*＋

Grow by increasing andsustaining investments

DigitalLithography
System＋Next-generation
Lithographyequipment(Lithography
Equipment)

Assessbusinessfeasibility
IP3(sub-segment)

Expandbusiness
IP1

Existing
lithographyequipment

Sales growth

Priority areas

Priority businesses

UV and OA lamps(UV and OA Lamps)

Maintain as stable cash-generating businessthrough ongoing investments to boost
competitiveness based on stable market trends

IP2

UV Lamp: See P48 for details

Leading Prospective Growth Driver Businesses

Pursuing new potential in market for inspection and analysis equipment, particularly inincreasingly sophisticated semiconductor area, by leveraging our unique light source
technologies* Direct Imaging lithography equipment using digital lithography technology through partnership with Applied Materials

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19

Business Strategy

Bolster unprofitable businesses and transform business portfolio

VI

Segment Portfolios and Measures (VI)
Shift focus from pursuing scale to enhancing businesses that generate stable cash flows by improving profitability
and selectively judge sub-businesses to continue
Specific measures

Envisaged Visual Imaging business portfolio
Businesses to cultivate

Priority areas

Priority businesses(General Imaging)

Grow byincreasing
investments

Nationwide 360
Audio Visual Services(sub-segment)
VI1

Nationwide 360
Audio Visual
Services(General Imaging)

Improve
profitability(Cinema)

Optimize
Earnings

Profitability…Now… Goals for 2030

Other areas(General Imaging)…Selective judgment

Note: Circle sizes in chart indicate represent business scales. See P18 for scales by segment.

VI1

With market growth limited, focus on improving
and enhancing profitability rather than pursuingbusiness scale while considering for selectively
judging sub-businesses⚫Improve profitability through selection andconcentration while considering for selective
judgment⚫Increase proportion of recurring businesses andproduct services earnings

Imaging equipment(Cinema)⚫Efficiently optimize product lineup to remaincompetitive by strengthening cooperation in
production outsourcing and other areas

Downsize business due to shifting to solid-state
light sources

Stable earnings businesses

Projector Lamps⚫Consolidate resources to scale up operations
and drive revenue growth

See P50 for details

ShrinkProblematic businesses

Imagingequipment

Control investments andgenerate stable earnings

Sales growth(Genera Imaging)

Improve
profitability

Prioritize in Nationwide 360 Audio Visual Services, ahigh value-added business

See P50 for details

Expandbusiness
VI1

Other areas

Development
Investment(Slide 26)

Measures

Projector lamps(Projector Lamps)⚫Maintain and expand market share, andoptimize earnings through prioritizing cost
reductions by consolidating sites and improving
commercial flows
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20

Business Strategy

Bolster unprofitable businesses and transform business portfolio

LS

Segment Portfolios and Measures (LS)While investing to create future core businesses, will streamline investments to prioritize areas offering more
promising growth paths
Specific measures

Envisaged Life Science business portfolio
Businesses to cultivate

Sales growth

Making futurepriority businesses

Cultivate promisingproducts for the future
while controllinginvestments byselectively judging areas

New areas(including Care222)
LS1

Promising productgroupsMedical devices and
Healthcare business

Development
Investment(Slide 26)

Develop promising product categories for
tomorrow while managing investments byselectively judging focus areas
Expand business while controlling investments
and monitoring business progress

LS1

LS1

Keep refreshing product lineup and secure stableearnings in areas with consistent demand andproven revenue streams

Promising product groups⚫ Pioneer progress in bio-functional chips through surface modification
technology employing specific wavelengths to address drug discovery
challenges

New areas(including
Care222)

Problematic businesses

Stable earnings businesses
Profitability… Goals for 2030

Cultivate new
businesses

Promising productgroupsMeasures(sub-segment)

Stabilize

Cultivatebusiness
LS1…Now

Priority areas

Priority businesses…Selective judgment⚫ New pulsed light spectroscopy technology contributing to quality inspections
Phase I: Joint development withpromising partners

Phase II: Start production
and sales

Note: Circle sizes in chart indicate represent business scales. See P18 for scales by segment.

Copyright (C) 2024 Ushio Inc., All Rights reserved.

21

Business Strategy

Bolster unprofitable businesses and transform business portfolio

PHS

Segment Portfolios and Measures (PHS)Consider selectively judging and positioning some sub-businesses as stable cash generators
Specific measures

Envisaged Photonics Solution business portfolio
Businesses to cultivate

Selectively
Judge

Improve
profitability
PHS1

Highly profitablebusinesses

Measures(sub-segment)

Stabilize

While seeking to improve
profitability, selectively judge
some sub-businesses if
improvements are unlikely

Sales growth

Priority areas

Priority businesses

Selectively judge
sub-businesses

Selectively judge sub-businesses that areuncompetitive and have few prospects for growthand earnings improvement

Highly profitablebusinesses

For businesses offering high profitability, develop
them to generate stable cash flows throughappropriate investments

PHS1

Development
Investment(Slide 26)

PHS1

Highly profitable businesses⚫ Expand businesses, focusing on module business in response to megatrends
offering growth potential⚫ Collaborate (through acquisitions and alliances) with key growth area leaders
Priority megatrends

Problematic businesses

Stable earnings businesses

Profitability…Now… Goals for 2030

…Selective judgment

Including semiconductors,
medical care, andaugmented/virtual reality
Solid-state
light sources(LD/LED)

Laser
moduleNote: Circle sizes in chart indicate represent business scales. See P18 for scales by segment.

Copyright (C) 2024 Ushio Inc., All Rights reserved.

22

Business Strategy

Expand promising IP businessIP

Industrial Processes Strategic Policies
Grow and reinforce IP business with advanced packaging business, focusing resources to accelerate businessdevelopment
Strategic policies (Vision)
Expand presence in growing advanced packaging market andachieve high profitability by strategically selecting and focusing
on priority areas
Focus
investments
on priority
areas⚫ Concentrate resources and investments in semiconductor
fields* offering growth potential*Advanced packaging area and thermal processes thatoffering market growth potential

Strengthen
product lineup⚫ Strengthen product lineup through strategic partnershipwith Advanced Materials to expand presence in evolving
advanced packaging area
⚫ Introducing new LED light sources for thermal processes,
cultivating semiconductor thermal solutions area withthree light sources⚫ Strengthen product lineup of UV lamps to expand into
new business fields

Improve
profitability⚫ Strategically enhance product mix in line with businessclimate changes⚫ Create business structure covering sales through aftersales service, primarily for lithography equipment⚫ Look to assess areas with little business potential

Business climate
Semiconductor market
Signs of demand recovery emerging, anticipating market expansion acrossmedium through long terms, primarily for AI development demand
Advanced packaging market
Server and PC markets deteriorating, lowering related capital investments, but AIrelated investments expanding on broad adoptive of generative AI, which should
drive transition to larger package substrates and chiplets, thus increasing demand
for advanced packaging substrates
Flat panel display market
While the rebound from stay-at-home demand spiked by COVID-19 pandemic
situation has bottomed out, market needs should remain stagnant for foreseeable
futureCoefficient targets
Billions of yen
1,200
1,000

Despite FY2024 drop,
anticipating recovery
110.0
from FY2025⚫ Expand human resources on Industrial Processes for thebusiness by reskilling from other businesses

Targeting operating marginof 18%～20％

82.1

25%

800

20%

600
400

Human
resources
strategy

30%

14%

13%

(estimated sales of¥140.0～¥150.0 billion)

200

15%
10%
5%

0

0%

FY2023(Result)

Phase I
(FY2026)
Sales

Phase II
(FY2030)

Operating margin

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23

Business Strategy
Expandbusiness

Accelerate growth in Advanced Packaging market

IP

Expand Presence in Advanced Packaging Market①

Become leading company in advanced packaging market by building full product lineup and expanding customer
coverage
Strategic policies（Vision）
Business climate

Become leading company in advanced packaging market⚫ High-performance computing and data centers becoming foundational infrastructure as
generative AI advances worldwide, with advanced semiconductor market growing to cater toescalating data volumes⚫ Partnership with Applied Materials adds Digital Lithography System and builds full productlineup, including existing steppers and direct imaging lithography equipment, to cater todiverse applications and customer needs in ever-evolving packaging substrate market
Advanced Packaging

Resolution

Panel
DI

Increasing I/O
count

End Application

HPC / Data center<1um

Mobility / PC

5um

IOT / Edge

>10um

Wafer
Stepper

Digital Lithography
SystemDI

DI
Digital Lithography
SystemUSHIO(ADT*)DI

Business strategies(ADT*)② Strengthen sales by growing customer base
⚫ Incorporating newly added Digital Lithography System should reduce reliance on
current key customers, diversifying customer base and ensuring sales stability

Building stablesales baseEnvisaged product portfolio
through partnership with
Applied Materials⚫ To meet the increasing data volume and power demands, new packaging substrate
structures have been developed to enhance semiconductor performance and efficiency, witha reassessment of semiconductor materials accompanying a shift toward larger chips andchiplets

Building full lineup① Building full lineup⚫ Leverage partnership with Applied Materials to address demand for 2µm andbelow and boost presence and competitiveness in semiconductor-related sector⚫ Expand reach for needs, including for existing DI lithography equipment, andachieve organic substrates growth by collaborating more with ADTEC
Engineering⚫ Strengthen sales and after-sales business strategy by combining existing
lithography equipment with new products to offer turnkey solutions for all
customer needs⚫ Enhance sales to non-traditional customer segments through full product lineup⚫ Strategically lower proportion of sales to key customers to reduce the risk ofrelying on specific ones

＊ ADT＝ ADTEC Engineering, our group company

Copyright (C) 2024 Ushio Inc., All Rights reserved.

24

Business Strategy
Expandbusiness

Accelerate growth in Advanced Packaging market

IP

Expand Presence in Advanced Packaging Market ②

Leverage partnership with Allied Materials to drive sales growth in expanding advanced packaging market throughDigital Lithography System
Advanced packaging market to cater with Digital Lithography
System
FY2025Overall sales for lithography equipment for advanced packaging *SAM＞＄800 million

FY2030

SAM＞＄250 million
USHIO’s
targetUSHIO’s
Target

20％ or more

50％ or moreof shareof share

FY2023→FY2030
CAGR exceeding 15%●SAM to expand from $250 million in FY2025 to $800 million in FY2030
Cutting-edge IC package substrates should evolve significantly with AI advances,which drives:→Rising demand for chiplets and larger package substrates→More sophisticated package substrates to cater to semiconductor performance and power
efficiency improvements(→greater requirements for sub-2 µm to sub-sub-µm packages)●Why we project Digital Lithography System adoption in the market
Incorporating the digital lithography technology (DLT) into conventional DI
lithography equipment enables:→ [For larger package substrates] Handling larger substrates without compromisingproductivity or conventional tact times→ [For more sophisticated package substrates] Accurate response to distortion and die
placement errors arising from chipletization＝＞ Adaptability to changes in interposer substrates, including panelization, bridge
structures (silicon + resin), and redistribution layers

FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030*Including steppers, digital imaging lithography equipment, and digital lithography system

Copyright (C) 2024 Ushio Inc., All Rights reserved.

25

Business Strategy

Development investment policy

Development investment policy
Invest to achieve earnings contributions in Phase II towards the 2030 goals.
However, more closely monitor investment period and profit contribution and review investment area allocations
annually.
Consider reviewing investment strategy for EUV under Industrial Processes, Visual Imaging, and Photonics
Solutions in line with their business directions.

Billions of yen

IPIndustrial Processes

Cumulative
development
investment

Visual Imaging

LSLife Sciences

PHS
Photonics Solutions

Total

Icons represent priority
areas on P19-22(FY2024~2026)

28.0

Lithographyequipment

Approximately¥15.0 billion●Develop and launch Digital Lithography System with Applied Materials●Develop next-generation lithography equipment

EUV

Approximately¥6.0 billion●Develop to enhance brightness and stability and reduce costs to enter
High-NA area

Approximately¥7.0 billion●UV Lamp: Enhance illumination and service lives, Develop new lamps
for emerging fields●Semiconductor thermal processes: Innovate LED heating sources, etc.

Approximately¥7.5 billion●Develop new products for providing high added value, etc.

OthersVI

Details

Development investment details

7.5

Imagingequipment

8.5

ーApproximately¥8.5 billion●Invest in and cultivate products for promising areas●Undertaking initiatives to create promising businesses

3.5ー

Approximately¥3.5 billion●Develop to expand product lineup and become more competitive

IP1

See P19 for details
IP3

See P19 for details

IP2

See P19 for details
VI1

See P20 for details
LS1

See P21 for details
PHS1

See P22 for details

47.5
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26

Financial Strategy

Review capital policies, including capital efficiency and balance sheet

Initiatives to Boost PBRAchieve ROE target exceeding cost of shareholders' equity* and swiftly attain PBR exceeding 1x by steadily
deploying new growth strategy and optimizing capital by enhancing shareholder returns

ROE
See P28
for details

PBR
improvement

PER* Cost of shareholders‘ equity: Approximately 7％

Earnings growth
Enhance
operating margin

Capital optimization
Shareholders’ equity:¥200.0 billion or lessMaterialize new growth strategy bytransforming portfolio

Reduce capital by repurchasing shares andpaying dividends

Steadily deploy each new growth strategy measure and rigorously monitor plansto enhance effectiveness

Estimated weight average cost of capital (WACC): Approximately 6%
Copyright (C) 2024 Ushio Inc., All Rights reserved.

27

Financial Strategy

Review capital policies, including capital efficiency and balance sheet

Stance and Specific Measures to Improve ROE
Reach ROE of 12% or higher by deploying new growth strategy and enhancing balance sheets, including by
optimizing capital (see slide 29)
FY2023(Result)

ROE

4.5 %

Net profit margin

6.0 %Net profit/Sales

Assets turnover
Sales/Total assets

Financial leverage
Total assets/Shareholders’equity0.53 times

1.42 -fold

FY2026

Measures to improve ROE

8 %以上

FY2030：12 % or more

８%

AroundAroundAround⚫ Improve net profit margin by deploying all new growth strategy
measures in line with portfolio transformation

0.6 times⚫ While planning higher working capital from expansion of business for advanced
packaging, reduce asset levels by improving production lead times, particularly
for lithography equipment⚫ Accelerate the sales of securities to shift funds from financial assets into businessassets and shareholder returns

1.7 -fold⚫ In Phase I: Increase shareholder returns by lifting share repurchases and setting
minimum dividend levels to optimize capital*. (*keep shareholders’ equity below¥200.0 billion)⚫ In Phase II: Flexibly repurchasing shares⚫ Use interest-bearing debt to enhance financial leverage

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28

Financial Strategy

Review capital policies, including capital efficiency and balance sheet

Balance Sheet Management Policies
Maintain financial discipline and improve asset efficiency while expanding growth investments

Balance sheet management policies
⚫

⚫

⚫

⚫

FY2023 (Result)

Keep shareholders’ equity below ¥200.0
billion by controlling capital throughincreased shareholder returns
Accelerate the sales of securities to shiftfunds from financial assets into businessassets and shareholder returns
While planning working capital expansions
in Phase II through growth investments
and business growth, more closely monitor
asset turnover ratio

Envisaged FY2030 Balance SheetFY2026

Liabilities
Liabilities¥100.5billionCurrent
assets¥140.0～¥150.0Current
assetsbillion¥220.0～¥230.0¥211.5billion

Net assets
Net assets¥236.9billionFixed
assets¥180.0～¥190.0

Fixed
assetsbillion¥100.0～¥110.0¥126.0billionROE

4.5%

Liabilities

While planning higher
increase in working capitalfrom business expansion,
mitigate increase throughsuch means as improving
in production lead times

billionUse interest-bearing debt to enhancefinancial leverage

Current
assetsbillionROE

8.0%

or moreNet assets

Fixed
assets
Accelerate the salesof investment
securities

Invest flexibly in share
repurchases

ROE

12.0%
or moreNote: Arrows show changes from FY2026
Copyright (C) 2024 Ushio Inc., All Rights reserved.

29

Financial Strategy

Review capital policies, including capital efficiency and balance sheet

Cash Allocation and Growth Investments
Under Phase I, boost ROE to at least 8% by divesting securities and allocating interest-bearing debt to drive growthand boost shareholder returns, swiftly boosting PBR to above 1x(Under Phase II, target ROE above 12% by expanding growth investments based on operating cash flows while balancing
shareholder returns)
Phase I [ FY2024~2026 ]Reach ROE 8% or more/
Achieve PBR exceeding 1x[ Cash-in ]Phase II [ FY2027~2030 ]ROE target: 12 %Planned growth investments in Phase I[ Cash-out ][ Envisaged Cash-out ]Interest-bearing debt,
etc.

¥25.0 billion or more

Growth investments¥40.0 billion or
more

Securities sales¥35.0 billion

Growthinvestments⚫Lithography equipment for advanced packaging:
Approximately ¥7.0 billion⚫EUV light sources for EUV mask inspections:
Approximately ¥3.0 billion⚫Upgrading outdated facilities, etc.

Expandgrowthinvestments(including M&A)
Share repurchases＋

Dividends
Operating cash
frow
¥50.0 billion¥65.0 ~ ¥75.0
billion(Reference) Free cash flow:
Approximately ¥50.0 billion¥40.0billion or more
(over three years)

M&A policy⚫IP: Focus on advanced packaging area
⚫VI: Partnerships necessary to drive growth in highvalue-added businesses⚫LS: Strengthen and expand promising products andemerging businesses⚫PHS: Solidify and expand businesses by investing incomplementary peer companies

Sharerepurchase＋
Dividends
Undertakeflexibly and steadily(Reference) Free cash flow:
Approximately ¥80.0 billion

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30

Financial Strategy

Review capital policies, including capital efficiency and balance sheet

Securities Divestment Schedule and Reducing Policy Shareholdings
Securities* Divestment Schedule (on cash flow basis)

FY2023 Result

Phase I (FY2024～FY2026)

Phase II (FY2027～FY2030)¥13.1 billion

Approx. ¥35.0 billion

More than ¥15.0 billion*Policy shareholdings, long-term bonds and net investment securities

Reducing Policy Shareholdings

Accelerate reductions in line with strategy
Billions of yen
7.87

10.05

Market value

8.42

11.86

Phase I

Book value

9.70

Number ofstocks

Accelerate
reductions

8.10

7.43

6.84

End-FY2012

End-FY2021

End-FY2022

End-FY2023

26

13

12

11

Phase II
to ZeroEnd-FY2026

End-FY2030

Copyright (C) 2024 Ushio Inc., All Rights reserved.

31

Financial Strategy

Review capital policies, including capital efficiency and balance sheet

Shareholder Return Policies
Phase I: Set minimum dividend at ¥70 per share and plan to repurchase ¥50.0~¥60.0 billion in shares(Phase II: Keep shareholders' equity below ¥200.0 billion by flexibly repurchasing shares)

Share buybacks

Dividends policy

YenBillions of yen

Projected dividends per share

30.0
70

50

50

70

30.0

70

FY2025-2026

50¥20.0~¥30.0 billion(Plan)FY2020Phase II

Phase I
¥70 per shareminimum

26

FY2021

FY2022

Maintain stabledividends

FY2023

FY2024FY2025

FY2026FY2027

Plan

Plan

Plan

Plan

and after

Phase I
¥50.0~¥60.0 billion

5.0

FY2022

FY2023

FY2024Plan

FY2025Plan

FY2026
Plan

Phase II
Flexibly
repurchase

FY2027and after

Copyright (C) 2024 Ushio Inc., All Rights reserved.

32

Part 4

ESG Initiatives

Copyright (C) 2024 Ushio Inc., All Rights reserved.

33

ESG

ESG initiatives

Bolster Sustainability — Manage Alongside Businesses
Uphold ESG initiatives to reach Revive Vision 2030 objectives, delivering real ESG value that is supported, sharedand understoodPhase
I

1st Medium-Term Management Plan

2nd Medium-Term Management Plan

FY2020

FY2023

FY2021

FY2022

Identified and prepared to tackle fivematerial issues(Previous plan)
FY2024

Revive Vision 2030

FY2025

FY2026FY2028FY2023 and beyond

Formulated five
management focuses

Undertake business growth and ESG efforts, clarifying nonfinancial key performance indicator goals and undertaking fullfledged activities to reach Revive Vision 2030 objectives

Key issues for constantly enhancing
corporate value while striving toresolve social issues over long term

FY2029

ReviveVision2030

Full deployment (KPI clarification) → Embed→ Self-propel and operate stably＜FY2021＞❶ Creating Businesses
with Greater Social Value➋ Developing Our Diverse
Talent to Get Closer to
Our Vision❸ Creating Working
Environments where It
Is Easy to Produce Results❹ Sustainably Reducing
Environmental Impact❺ Building a Robust
Management Base

FY2027Phase
II＜FY2022～＞
Established ESG Promotion Headquarters(April 2022)● Pursued five management focuses● Enhanced internal and external engagement
・Internal: Undertook and analyzed
employee engagement
・External: Analyzed and disclosed external
assessments● Tested key performance indicator
formulation hypotheses and set goals
Note: Renamed to the Sustainability Promotion Division in FY2024

The “Light”
Innovation
Company
Grow with customers,
primarily in industrial
processes＜Financial targets＞
ROE

12% or more
(Reference values)
Operating margin
12％ or more
Net sales¥200.0~¥250.0 billion

Copyright (C) 2024 Ushio Inc., All Rights reserved.

34

ESG

ESG initiatives

Measures to Improve Engagement
Largely achieved FY2023 goals, steadily undertaking activities in FY2024 and beyond to lift engagement, whichshould contribute to results

External engagement

Internal engagement

FY2023 activity outcome

FY2024 activity plan

Anticipated results
contributions① Communicate

Engagement score
FY2023 goal: 56％ FY2023 outcome: 56％ (+4pt YoY)

●Communicate more to bolster understandingof ESG●Raise awareness of connections between
individuals’ tasks and material issues② Deploy measures① Dialogue meetings② Implementing measures●Empower people to understand andexperience ESG⚫ Building understanding of the
management philosophy andmedium-term management plan

⚫ Fostering understanding ofmaterial issues⚫ Connecting issues to employee
roles and responsibilities③ Ongoing engagement surveys

Correlation of higher employee
engagement scores on operating
margins●Regularly monitor④Analyze engagement scores andrecommend●Verify effectiveness of measures and sharebenefits and issues

Engagement score
FTSE⇒ FY2023 goal: 3.5 FY2023 outcome: 4.0 (＋0.8 YoY)
S&P ⇒FY2023 goal: 40 FY2023 outcome: 43 (+6 YoY）
CDP ⇒FY2023 goal: B- FY2023 outcome: B- (previous year: C)① Analyzed to
improve score② Updated③ Commissioned 3rdsustainability website party emissions checks⚫ Usability improvement
Analyzed FTSE methodology ⚫ Completed non-financial
disclosure framework⚫ Boosted information
reliability⚫ Complied with regulations① Improve the analytical capacity of
key external assessments●Expanding the scope of methodologicalanalysis② Comply with mandatory disclosureof non-financial information① Correlation between external
assessments and PBR(ESG Promotion Headquarters’ research)② Selection in ESG investment
indices(Attract investments)③ Avoid performance downsides
through compliance

Copyright (C) 2024 Ushio Inc., All Rights reserved.

35

ESG

ESG initiatives

Controlling groupwide headcountin line with business policiesLS１

Analyze competitive talentstrategies in semiconductorrelated businesses andestablish framework tosecure people to support
business goals

VI

PHS

FY2030
Plan
IP

Invest more in people

2030

Headcount by segment

Structuralreforms

Revive Vision

Concentrate human capital investments
in growth businesses and reskilling

Human Capital Strategies—Basic Policies on Investing in Talent under New
Growth Strategy⚫ In advanced packaging area, particularly bolster personnel in such key areas astechnical sales, customer support, manufacturing engineering,production lines, and quality assurance⚫ Deploy reskilled people from other businesses particularly in customer support,
manufacturing engineering, production lines, and quality assurance⚫ Beef up personnel to cover key overseas customers, especially in Taiwan and
Korea⚫ Externally recruit personnel who are key to businesses⚫ Control total labor costs groupwide⚫ Streamlining manufacturing and consolidate sites in line with businessdirection

PHS
LS
IP

FY20233⚫ Deploy and train people in line with the business strategy, employing core policyof supporting reskilling to equipment technology and manufacturing⚫ Center strategy for recruiting talent on Industrial Processes (particularly
semiconductor manufacturing engineering). Promote recruitment of highlevel human resources with a special focus on lithography businesses

Now
VI

IP

VI

LS

PHS

Remuneration
structure

Transition to moremeaningful framework bychanging management
metrics from headcountmanagement to total labor
cost management

Hiring andtraining

２

Transfer employees fromother business areas andoptimize evaluations tobetter manage headcountand total labor costs⚫ Benchmarking against semiconductor manufacturing equipment industry
remuneration levels⚫ Making appropriate assessments to prevent unchecked hikes in total labor costs

Copyright (C) 2024 Ushio Inc., All Rights reserved.

36

Appendix

Copyright (C) 2024 Ushio Inc., All Rights reserved.

37

Supplement to Review of Previous Medium-Term
Management Plan

Copyright (C) 2024 Ushio Inc., All Rights reserved.

38

External factors

Semiconductor Manufacturing Equipment Market Trends and Rapid
Slowdown in PC Package Substrate Market
Package substrate market should remain stagnant from overcapacity amid production adjustments stemming fromslowing PC market demand.
Back-end process equipment makers have therefore experienced negative year-on-year downturns from Q3 FY2022.
PC market trends

Semiconductor manufacturing equipment market trends⚫ A teleworking surge due to the pandemic led to record sales of 350
million units in 2021, with demand decreasing as pandemic risks
waned from 2022 and production plunging in 2023.

⚫ As manufacturers raised capex amid market expansion through2022, overcapacity after 2023, when demand declined, should
continue through around 2025.

⚫ By 2023, pandemic-related demand had ceased, and althoughsupply-demand adjustments are ongoing, market conditions
should normalize by the H1 2024.

⚫ A back-end process equipment maker downturn accordingly
continued from Q3 FY2022.
Comparisons with performances of six companies in semiconductor
back-end equipment sector: YoY sales growth (%)

Global PC market sales and forecasts (thousands of units)

Average of six companies in semiconductor back-end euipment sector
USHIO

400,000

ノートPC PC
Notebook

DesktopPC
デスクトップPC

80.00
60.00

300,000

40.00
20.00

200,000

0.00-20.00100,000-40.00-60.000
CY2021
2021

CY20222022

CY20232023

CY20242024

CY20252025

CY20262026

CY2027
2027

Q1

Q2

Q3

FY2020Source: Complied from MIC’s “Global Server Forecast” and IDC

Q4

Q1

Q2

Q3

FY2021

Q4

Q1

Q2

Q3

FY2022

Q4

Q1

Q2

Q3

FY2023

Source: Complied from investor relations materials of six companies

Copyright (C) 2024 Ushio Inc., All Rights reserved.

39

Internal factors ①

Reliance on Key Customer Segments in Growing Businesses
PC demand slowed, and server market shares changed a lot among companies despite rising demandHighly dependent on key customers, especially for mainstay steppers, which was prime factor in revenue and earnings
shortfalls
Outlook for stepper business,

Package substrate market sluggish
owing to slower PC demand

which depends heavily on key
customer segments, has therefore

See P39 for details

been significantly impacted

While server market demand expanding, shares
fluctuating significantly among companies
Worldwide server unit shipmentsby semiconductor supplier (thousands of units)CompanyIntel
A

Company

AMD
B

Stepper sales by customer segment
as envisioned under the previous
medium-term management plan

New growth strategy
aims toresolvedependency issues

Company■ Total Total
RISC
C Server

20,000Non-keycustomersegments

16,000See P24 for details

12,0008,000
4,000

Latest forecast indicates sales
decline in key customer segmentsKeycustomersegments

0
CY20192019

CY20202020

CY2021
2021

CY20222022

CY20232023 CY2024
2024

CY20252025 CY2026
2026

CY20272027

FY2023

FY2024FY2025

Source: Complied from MIC’s “Global Server Forecast” and IDC

Copyright (C) 2024 Ushio Inc., All Rights reserved.

40

Internal factors ②

Changing EUV Competitive Environment
Emergence of other companies’ light sources for EUV mask inspections necessitated outlook revision.
Latest sales forecast

Factors in revising forecast(compared with previous medium-term management plan)

Marketfactors

Customerfactors

Competitive
factors

FY2020

FY2021

FY2022

Sales (under previous plan)

FY2023

FY2024FY2025

FY2026

Internalfactors⚫ Declining customer investments mirror semiconductor market
downturn due to weak PC sales and other factors, including retreat
from pandemic-driven spikes⚫ Hard for some time to secure new offers due to the emergence ofother companies’ light sources⚫ Semiconductor suppliers imposing strict demands to reduce
operational costs⚫ Despite Ushio’s leading position in providing light sources for EUV
mask inspection applications, other companies’ light sources haveemerged⚫ Failed to address cost issues in particular

Sales (Latest forecasts)**Figures for FY2023 are results

Copyright (C) 2024 Ushio Inc., All Rights reserved.

41

Internal factors ③

Impact of Unprofitable Business Areas
Delay in development investments contributing to profits, affecting earnings under previous medium-term
management plan
IP business likely to fall significantly short of forecasts, disrupting scenario for covering unprofitable businesses
Discrepancy between operating profit under previous medium-term management plan and latest forecast(cumulative operating profits for FY2023~2025: in billions of yen)

IP

51.0

Performance should fall far short of forecasts owing to PC package
substrate-related transactions and changing semiconductor
market trends. Development cost recovery delayed amid delays incustomer assessments and launch timings for next-generation
lithography equipment and others, with earnings failing to reachthe levels needed to cover other segments

PHS

+7.5
-1.5
-21.0

LS
Previous medium termManagement plan
(FY2023~2025 total)

Losses increased as modulebusiness failed to overcome
device business challenges

32.0
-3.0

-1.0

Losses widened as development
investments failed to generate profits,
although reducing costs for Care222 andothers after pandemic demand spike ebbed

Industrial Processes

Visual Imaging

Life Sciences

Photonics Solutions

Other

Latest forecast(FY2023~2025 total)

Copyright (C) 2024 Ushio Inc., All Rights reserved.

42

Supplement to Business Strategies

Copyright (C) 2024 Ushio Inc., All Rights reserved.

43

IP

Supplement to Business Strategies

Industrial Processes Strategic Policies

Reprinted

Grow and reinforce IP business with advanced packaging business, focusing resources to accelerate businessdevelopment
Strategic policies (Vision)
Expand presence in growing advanced packaging market andachieve high profitability by strategically selecting and focusing
on priority areas
Focus
investments
on priority
areas⚫ Concentrate resources and investments in semiconductor
fields* offering growth potential*Advanced packaging area and thermal processes thatoffering market growth potential

Strengthen
product lineup⚫ Strengthen product lineup through strategic partnershipwith Advanced Materials to expand presence in evolving
advanced packaging area
⚫ Introducing new LED light sources for thermal processes,
cultivating semiconductor thermal solutions area withthree light sources⚫ Strengthen product lineup of UV lamps to expand into
new business fields

Improve
profitability⚫ Strategically enhance product mix in line with businessclimate changes⚫ Create business structure covering sales through aftersales service, primarily for lithography equipment⚫ Look to assess areas with little business potential

Business climate
Semiconductor market
Signs of demand recovery emerging, anticipating market expansion acrossmedium through long terms, primarily for AI development demand
Advanced packaging market
Server and PC markets deteriorating, lowering related capital investments, but AIrelated investments expanding on broad adoptive of generative AI, which should
drive transition to larger package substrates and chiplets, thus increasing demand
for advanced packaging substrates
Flat panel display market
While the rebound from stay-at-home demand spiked by COVID-19 pandemic
situation has bottomed out, market needs should remain stagnant for foreseeable
futureCoefficient targets
Billions of yen
1,200
1,000

Despite FY2024 drop,
anticipating recovery
110.0
from FY2025⚫ Expand human resources on Industrial Processes for thebusiness by reskilling from other businesses

Targeting operating marginof 18%～20％

82.1

25%

800

20%

600
400

Human
resources
strategy

30%

14%

13%

(estimated sales of¥140.0～¥150.0 billion)

200

15%
10%
5%

0

0%

FY2023(Result)

Phase I
(FY2026)
Sales

Phase II
(FY2030)

Operating margin

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44

IP
Focus
on growtharea

Supplement to Business Strategies

Shift Resources to Growth Businesses(Thermal Solution Area)

Other IP businesses, including optical processes① Thermal solution area

Focus on semiconductor thermal processes, growth market, and help semiconductor sector develop.

Strategic policies (Vision）

Estimated thermal solution area sales

Leverage flash Lamps (FLP), halogen lamps (HL), and newly added
LEDs to contribute to semiconductor sector development throughoptical thermal solutions⚫ Be trusted partner of semiconductor equipment
manufacturers
Business climate⚫ Increasing need for thermal processing technology with high temperature andthickness control due to advances in semiconductor miniaturization, leading tothinner films and three-dimensional structures⚫ Growth in epitaxial deposition processes for advanced logic and DRAM devices,
driving demand for epitaxial growth equipment⚫ Expansion of the semiconductor market is expected to significantly progress thesemiconductor front-end manufacturing equipment and silicon wafer markets⚫ Rising use of radiant heating in numerous heating processes
Business strategies⚫ Boost built-in adoption rate by major customers (HL)
⚫ Strengthen relationships with partner companies (FLP)⚫ Enter new areas with introducing LED light sources (LEDs)⚫ Offer three distinct light sources enabling more controllable heat treatment
technology

FY2021

FY2022

FY2023

FY2026

Ushio’s semiconductor thermal
process area focuses
Flash
lamps

Halogenlamps

LED＜Semiconductors＞

HL

FLP
Laser

LED
Luminescenceduration impossible
with FLP and HL

Epitaxial
Oxidation/diffusion
CVD
Annealing
Cleaning＜Contributions inadvanced areas＞⚫

Gate formation⚫

Contact formation⚫

Source-drain formation⚫

Channel formation⚫

Pattern collapse prevention

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45

IP
Focus
on growtharea

Supplement to Business Strategies

Shift Resources to Growth Businesses(Excimer Area)

Other IP businesses, including optical processes② Excimer area

Shift focus areas, such as development investments in semiconductors, printed circuit boards, and packaging, andmaintain stable business operations, reducing dependence on flat panel display market.
Strategic policies (Vision）

Estimated excimer area sales

Reduce dependence on flat panel displays and concentrate on newpriority areas⚫ Curb additional investments in flat panel display market,
where market implementations are deteriorating⚫ Conduct R&D in line with product roadmap for customers insemiconductor, printed circuit board, and packaging fields
Business climate⚫ Flat panel display market overstocked in reaction to pandemic demand hike,with postponements of new factory construction and capital investment⚫ Semiconductor and other markets should growBusiness strategies⚫ Maintain 95%* global share in flat panel display market while shifting resources
to semiconductors, printed circuit board, and packaging in view of slower market
growth⚫ Expand business by targeting such new markets as construction materials andvehicles/batteries markets＊ Market share in excimer irradiation units for cleaning panels (Ushio research, as of 31 March 2023)

FY2022

FY2023

FY2026
Unit

Excimer-related
markets
Key applications

Flat panel
display market(including for OLED)⚫ Panel cleaning, etc.

Lamp

Semiconductor
marketOther priority
markets(including printed
circuit boards andpackaging）(Construction
materials andvehicles/batteries)⚫ Film removal fromwafers etc.
⚫ Surface preparation
before plating/SR
application⚫ Building materials
matting⚫ Improving battery
performance

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46

IP
Businessfeasibility
assessments

Supplement to Business Strategies

Ongoing Efforts to Enter the High-NA area andAssess Business Feasibility

EUV

Review business strategy and intensify efforts with new customers to enter the High-NA area in view of emerging
other companies’ light sources.
However, possibly assessing business direction based on future market and development trends.
Strategic policies (Vision）

EUV business sales forecasts

Aim to enter the High-NA area

⚫ Continue developing products meeting performance (highbrightness and stability) and cost requirements in High-NA area
⚫ Adapt strategy in response to changes in business andtechnological trends, potentially downsizing or exiting businessLooking to enter
market after
FY2027

Business climate⚫ Emergence of other companies’ light sources making it hard for some time tosecure new offers⚫ Shift to High-NA progressing in APMI* market, with market requiring greaterbrightness and stability
Business strategies⚫ Minimize declining in profitability through total cost of ownership reduction
initiatives in response to revenue downturn from lower use⚫ Accelerate development with new customers, targeting further High-NA indevelopment and commercialization for future adoption (evaluations underway forsecuring new offers after FY2027)⚫ Also consider downsizing or exiting business should operating and development
environments differ from projections

FY2021

FY2022

FY2023

FY2024FY2026FY2027andbeyond*APMI: Actinic Patterned Mask Defect Inspection (mask defect inspection equipment using EUV light)

Copyright (C) 2024 Ushio Inc., All Rights reserved.

47

IP
Stabilize
business

Supplement to Business Strategies

Stabilize Earnings and Build Robust Earnings BaseUV Lamps

Further expand market share in semiconductor sector and break into new areas by strengthening relationships withsemiconductor inspection equipment manufacturers, and maintain dominant position and continue generating
stable and fundamental earnings.
Strategic policies (Vision）

UV lamps sales forecast

Keep contributing to Ushio’s revenue base

⚫ Further increase market share in semiconductor area
⚫ Expand business by strengthening ties with semiconductor
inspection equipment manufacturers
Business climate⚫ Semiconductor demand recovering, with expected increases in demand for i-line
lithography equipment driven by growing needs for cutting-edge IC package
substrates for logic and memory devices⚫ Demand for flat panel display should remain subdued due to reduced investments
in new installations post-pandemic⚫ Demand for defect inspection systems likely to rise on semiconductor
miniaturization
Business strategies⚫ Capture 80% or more market share through strategic initiatives and alliances(currently at 70%~75%)⚫ Launch new models to penetrate new fields by meeting inspection needs fromsemiconductor miniaturization⚫ Develop new offerings providing higher illumination and longer lifespans, as well as
products tailored for new fields⚫ Remain core earnings generator for Group by securing stable margins

FY2022

FY2023

FY2026

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48

VI

Supplement to Business Strategies

Visual Imaging Strategy Policies
Instead of pursuing scale, improve profitability by concentrating investments in high-profit, high-growth areas
while undertaking structural reforms and selective judgment for sub-businesses to boost profitability.
Strategic policies (Vision）
Intensify efforts to improve and enhance profitability

Control costs
and optimize
resources⚫ Lower management costs by optimally allocating resources
and cutting SG&A expenses through business structure
reviews and selective judgment⚫ For projector lamps, expect to see decreased demand,
reallocating resources to areas with growing demand

Optimize
product lineup⚫ Optimize product lineups and minimize fixed costs byleveraging original equipment and design manufacturing

Expandrecurringbusinesses⚫ Maintain and optimize stable earnings from maintenancecontract services[Recurring business sales ratio]
15% in FY2023 → Targets 20% in FY2026

Business climate
Cinema market
Recovery from the impact of COVID-19 underway, with strong replacement
demand for digital cinema projectors. Expect stable demand in the medium to longterm, though new installations may be limited due to factors like China’s economic
downturn
General imaging market
Capital investment in global events and theme parks should remain robust overmedium to long terms, although current economic downturn in China may reduceinvestment appetites
Common factors
Demand for projector lamps should gradually decline as the market shifts toward
laser projector light sources

Coefficient targets
Billions of yen
900

80.5

Optimize resource allocation and minimize
operational costs. Enhance profitability byfocusing investments in high-profit areas
70.0

800

14%
12%

700

Expandcustomertransactions⚫ In high-value-added sectors, intensify localized engagement
in Nationwide 360 Audio Visual Services and grow operationsin theme parks

600

8%

7%

500
400

Targeting operating
margin of 12% or more

6%
4%
2%

100

Selectively
judge subbusinesses

8%

300
200

⚫ Undertake selectively judgment for sub-businesses, markets,and product developments based on comprehensive factors
such as growth potential, market position, capability toincrease market share, and profit structure

10%

0

0%

FY2023(result)

Phase I
(FY2026)
Sales

Phase II
(FY2030)

Operating margin

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49

VI

Supplement to Business Strategies

Details of Measures (Visual Imaging)
Expandbusiness

Nationwide 360 Audio Visual Services, the high-value-added
business (priority business)

Improve
profitability

Lift proportion of recurring business associated with products(boost stable revenues)

Business climate

Customer needs⚫ Pandemic impact subsiding, demand for events with advanced visual effects
resurging and growing worldwide⚫ Effective turnkey services (including improved operability and convenience, quick
responses to issues, and regular maintenance)⚫ Strong demand for high-end projectors, LED panels, and other imaging equipment⚫ Lower running costs, such as for repairs and maintenance parts

Measures

Measures⚫ Enhance customer satisfaction by strengthening local support systems, especially in
key North American market⚫ Secure stable revenues by enhancing service offerings tailored to customer needs
alongside product sales⚫ Boost sales through development of broad product lineup to meet customer
demand; focus on resource concentration by adding new locations and enhancing
service capabilities

Envisaged ancillary services
Designing Solution

Remote monitoring
services and maintenanceTraining(Cinergy Remote Agent・NOC)

Inventory management(Critical Inventory Logistics)

Pay-as-you-go
services

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50

LS

Supplement to Business Strategies

Life Sciences Strategy Policies
While continuing to create new businesses to an extent, selectively judge areas with promising growth paths
and invest.
Strategic policies (Vision）
Reassess demand and focus on development and expenses
commensurate with demand, and minimize expenses while
cultivating sub-businesses

Addressplunging
demandCutdevelopment
and other
expenses⚫ Reduce expenses and inventory for Care222, which
has underperformed, to appropriate levels⚫ Reevaluate path to commercialization and paredevelopment investments⚫ Closely manage milestones⚫ Identify and decide swiftly on unprofitable areas

Business climate
Care222
Demand weak since pandemic; potential to strengthen customer appeal throughrevisions to regulations, standards, and evidence acquisition
Medical devices
Steady demand for new installations and replacements in domestic market;
differentiation through product downsizing and usability enhancements
Healthcare
Increase repeat and new customers by developing unique offerings in response
to moderate market growth

Coefficient targets
Billions of yen
7.0

80

Cultivatesubbusinesses

70⚫ Concentrate investments to sub-businesses withgrowth potential

10%
0%

5.2

60
50

-14%

40
30

Targeting profitability
that contributes tosustainable growth

-10%
-20%
-30%

20
10
0

-40%

-45%

-50%

FY2023(results)

Phase I
(FY2026)
Sales

Phase II
(FY2030)

Operating margin

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51

PHS

Supplement to Business Strategies

Photonics Solutions Strategy Policies
While selectively judge sub-businesses lacking competitiveness and growth potential, invest extensively in growthareas, including lamp replacements with solid-state light sources, and grow business through ongoing M&A andalliances.
Strategic policies (Vision）

Maintain business structure centered on highly profitable
module businesses and grow businessthrough M&A and partnerships
Selectively
judge subbusinesses⚫ Undertake selective judgment for low-growth andunderperforming sub-businesses

Business climate⚫ Steady growth amid shift to solid-state light sources and improved
energy efficiency⚫ Expansion and emergence of life sciences, augmented and virtual reality,and heterogenous integration markets

Coefficient targets
Billions of yen

Enhance
profitability⚫ Create synergies and rationalize operations⚫ Shift resources from mature and declining markets togrowth markets⚫ Constantly build and strengthen relationships withkey customers

160

20%

12.0

140

15%

10.2

120

10%

100

Expandinvestments
in growthareas⚫ Maintain and expand extensive investments inmegatrends offering significant growth potential⚫ Collaboration with key players leading growth areas

5%

80

3%

60

Targeting operating
margin of 12% or more

40
20

⚫ Seek business growth through M&A and partnerships

-5%
-10%

-15%

-15%

0

M&A andalliances

0%

-20%

FY2023(Results)

Phase I
(FY2026)
Sales

Phase II
(FY2030)

Operating margin

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52

Supplement to ESG Initiatives

Copyright (C) 2024 Ushio Inc., All Rights reserved.

53

ESG

Supplement to ESG Initiatives

Five Management Focuses (Materiality) and Goals for 2030
Management focuses

Goals for 2030

Key performance indices for FY2025⚫ Create businesses that address social issues ofclimate change, food supply, extending healthy life
expectancies, and digitizing business processes⚫

⚫ Undertake Group management and provide
systematic training with diverse personnel⚫ Ensure global employee mobility⚫ Human capital bolstered, with focus on
global/technical/managerial literacy capabilities⚫ Human capital identified through talent map thatmeets business needs, with rational management
system in place

Bolster talent to create new value thatgenerates profits and accelerates
growth strategies

Creating Working
Environments where It
Is Easy to Produce
Results⚫ Build corporate culture that embraces diversity⚫ Enable employees to be physically and mentally
healthy and enjoy their work
⚫ Ensure high engagement levels so company andemployees grow together⚫ Proportion of women in managerial positions: 15% ormore and 10% on consolidated and non-consolidatedbases, respectively⚫ Employee engagement score: 62% (up 10
percentage points from FY2022)

Provide attractive workplaces and work
practices for diverse people to boost
engagement and productivity

Sustainably Reducing
Environmental Impact⚫ Resolve social issues by undertaking biodiversity
initiatives and cutting greenhouse gas emissions
across value chain⚫ Offer products and services that lower
environmental impact⚫ Reductions of in-house greenhouse gas (Scope 1 and
2) emissions: At least 34% from FY2017 level⚫ Reductions of greenhouse gas emissions (Scope 3 cat.
11) from company’s products: At least 30% from
FY2017 levels⚫ Measure and convey benefits of products helping
shrink customers' environmental footprints

Business creation throughenvironmentally friendly products
Maintain and expand corporate value
by fulfillment corporate social
responsibilities⚫ Formulate and reach management, business, andemployee goals⚫ Manage business portfolio through timely efforts to
identify management resources⚫ Clarify business risks and groupwide risk responses⚫ Create corporate culture and framework forrespecting human rights across value chain⚫ Reinforce and deepen governance⚫ Beginning groupwide to respond to social demands
and earning some recognition for disclosure fromexternal evaluation organizations and stakeholders

Establish stable revenue base andsafeguard corporate value

Creating Businesses
with Greater Social
Value

Developing Our Diverse
Talent to Get Closer to
Our Vision

Building a Robust
Management Base

R&D structure that constantly generates new value,with some themes on track for commercialization

Economic value connection
Expand revenues and earnings bycreating new businesses

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54

ESG

Supplement to ESG Initiatives

Deepen Governance Structure
Solidify corporate governance to materialize Revive Vision 2030 and accelerate ESG management
CY2006・・・

CY2011・・・

CY2016・・・

CY2021・・・

CY2023・・・

Future initiatives●Appointed outside directors (2012)
Outside directors

Female directors
Voluntaryadvisory
committee●Outside directors became majority on Board (2016)●1 (2016)

Programs andpoliciesOther●3 (2020)●4 (2022)●Remuneration Advisory Committee (2015)●Nomination and Remuneration
Advisory Committee (2019)●Abolished retirement benefits for
directors and corporate auditors (2005)

Compensation
systems

ReviveVision2030●Executive compensation
revised (2020)●Adopted stock compensation (2015)●Execute succession plan
(Nomination andRemuneration Advisory
Committee)－Appoint new CEO●Revise executive
compensation⚫Enhance Board of
Directors disclosure－Deploying ESG benchmarks●Revise stock compensation
plan－Adopting key performanceindicators for reaching
med-term management
plan goals and increasing
stock compensation ratio●Shifted to delegating authority for executives (2008）⚫Reinforce Group
governance⚫Strengthen internal
controls⚫Bolster risk management●One-year terms for directors and executive
officers (2015)●Audit & Supervisory Committee (2016)⚫Use and enhance existing
structures and systems●Appoint outside director tochair Board of Directors

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55

4

Guiding Principles for 2030

5

Revive Vision 2030 Goals (Coefficient targets / Policy)

6

Revive Vision 2030 Goals (Business strategies / Financial strategies)

7

Revising Our Forecasts ①

9

Revising Our Forecasts ②

10

Factors in Forecast Revisions

11

New Growth Strategy Framework based on Key Challenges

ESG
Initiatives

Backdrop to Review of Medium-Term Management Plan

Bolster Sustainability — Manage Alongside Businesses

34

Measures to Improve Engagement

35

Human Capital Strategies—Basic Policies on Investing in Talent under New
Growth Strategy

36

Supplement to Review of Previous Medium-Term Management Plan
External factors：Semiconductor Manufacturing Equipment Market Trends
and Rapid Slowdown in PC Package Substrate Market

39

12Internal factors①: Reliance on Key Customer Segments in Growing
Businesses

40

Positioning of Revive Vision 2030

14Internal factors②: Changing EUV Competitive Environment

41

Basic Policies and Overview of New Growth Strategy (Phase I)

15

Internal factors③: Impact of Unprofitable Business Areas

42

Reference Values by Segments

16

Supplement to Business Strategies

Portfolio Transformation Approach17

Industrial Processes Strategic Policies (Reprinted)

44

Shift Resources to Growth Businesses (Thermal Solution Area)

45

Shift Resources to Growth Businesses (Excimer Area)

46

Ongoing Efforts to Enter the High-NA area and Assess Business Feasibility

47

Appendix

Specific Measures for New Growth Strategy:
Revive Vision 2030

Review ofPrevious
Medium-Term
Management Plan

Overview of
New Growth
Strategy

Index

Business Portfolio Transformation for All Segments

18

Segment Portfolios and Measures (IP)19

Segment Portfolios and Measures (VI)20

Segment Portfolios and Measures (LS)21

Stabilize Earnings and Build Robust Earnings Base48

Segment Portfolios and Measures (PHS)22

Visual Imaging Strategy Policies

49

Industrial Processes Strategic Policies

23

Details of Measures (Visual Imaging)

50

Expand Presence in Advanced Packaging Market ①

24Life Sciences Strategy Policies

51

Expand Presence in Advanced Packaging Market ②

25

Photonics Solutions Strategy Policies

52

Development investment policy

26

Supplement to ESG Initiatives

Initiatives to Boost PBR

27Five Management Focuses (Materiality) and Ideals for 2030

54

Stance and Specific Measures to Improve ROE

28

Deepen Governance Structure

55

Balance Sheet Management Policies

29

Cash Allocation and Growth Investments

30

Securities Divestment Schedule and Reducing Policy Shareholdings

31

Shareholder Return Policies

32
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56

Glossary
IP

Industrial Processes

RDL

Redistribution layer

BridgeAn approach to connecting multiple chips to facilitatecommunication between themInterposer

A substrate that connects circuits on both sides withthrough-silicon vias and links multiple chips

DI

Direct Imaging ： An exposure technique that draws
patterns directly without using a mask

Excimer

An excimer lamp and units or devices equipped with it

DI Lithographyequipment

A lithography equipment that uses direct imaging
technique to draw patterns

Thermal process

A semiconductor manufacturing process that heats wafers
to high temperatures

DLT

Digital Lithography Technology

Stepper

A projection lithography equipment that uses a step-andrepeat technique to expose patterns

DRAM

Dynamic random-access memory

Digital lithographysystemEpi

Epitaxial growth

Direct Imaging lithography equipment using digital
lithography technology through partnership with Applied
Materials

Advanced packaging

EUV

Extreme Ultraviolet Radiation

An advanced packaging field for 2.xD and 3D integration ofsemiconductors, including chiplets

VI

Visual Imaging

FLP

Flash lamp

DCP

Digital cinema projector

FPD

Flat panel display

ODM

Original design manufacturing

High-NA

An advanced EUV lithography technology enhances lightutilization efficiency

LS

Life Sciences

Care222

Far UV-C disinfection technology (222nm)

PHS

Photonics Solutions

Laser module

A device that emits a laser beam

Solid-state lightsourceA device that supplies to a solid material and emits lightspecific to that material when excited (an example being
an LED)

IP

IP

HL

Halogen lamp

OA

Office Automation

OLED

Organic light-emitting diode

VI

LS

PHS

PCB

Printed circuit board

PKG

Packaging

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57

Disclaimer

This report contains forward-looking statements, including earnings forecasts, which are based on information currently
available to the Company and on certain assumptions deemed to be reasonable. Please be advised that actual results may
differ substantially from those forward-looking statements due to various factors.

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58

＜Contact＞
Investor Relations Office, Ushio Inc.

MAIL: ir@ushio.co.jp
URL: https://www.ushio.co.jp/en/ir/

Copyright (C) 2024 Ushio Inc., All Rights reserved.