Future Outlook

21
Copyright © 2019 Harmonic Drive Systems Inc.

Ⅰ．Orders and Initiatives

22
Copyright © 2019 Harmonic Drive Systems Inc.

Ⅰ-1. Consolidated orders, by region
External environment
Prolonged US–China trade friction is prompting concerns about a global economic slowdown.
→ Manufacturers are less willing to make capital investments, adopting a wait-and-see attitude.
An “overheating of investments” in industrial robots mainly for China in 2017 and 2018 is now
undergoing correction.
→ Overall orders are 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; customer relations are solid (no change in ourcompetitive advantage).
By increasing our production capacity, we have worked through order backlogs and normalized leadtimes.
FY2019Harmonic Drive AG becomes subsidiary(Millions of yen)
25,00020,00015,00014,43910,0005,000
014,022

15,715

15,645
9,526

11,544
5,820

6,543

1,707

2,076

1,894

2,006

1,867

6,449
2,247

3,901
1,562

3,117
1,030
3,029

3,181
1,478
3,016

2,629
746
4,695
4,442
1,269
4,264
4,088
3,994
3,834
3,681
1,035
2,202
1,301
1,133
941
495
435402Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019
5,412

EuropeNorth AmericaAsia

23Copyright © 2019 Harmonic Drive Systems Inc.

Ⅰ-2. Initiatives to counter a prolonged downturn in demand Freeze some capex plans Reduce overhead expenses
 Lower personnel costs

Maintain business foundations to allow
response to future market recoveryand growth24
Copyright © 2019 Harmonic Drive Systems Inc.

Ⅱ．Trends in Main Fields ofApplication25
Copyright © 2019 Harmonic Drive Systems Inc.

Ⅱ-1. Worldwide outlook for number ofindustrial robots sold
 Downward revision due to slowdown in Chinese market growth Meanwhile, robust appetite for investment in labor-saving and automation
International Federation of Robotics

26
Copyright © 2019 Harmonic Drive Systems Inc.

Ⅱ-2. Collaborative robots (co-bots)
 Expanding adoption in the manufacturing and service
sectors
 Robust demand, centered on Europe
 Business alliance between Omron and Techman Robot Inc.
 Business alliance between Canon and Universal Robots

Courtesy of Techman Robot Inc.

27
Copyright © 2019 Harmonic Drive Systems Inc.

Ⅱ-3. Semiconductor manufacturing equipment,
LED and OLED manufacturing equipment
Semiconductor manufacturing equipment
 Growth in the smartphone market is decelerating.
 Capex by large US IT companies is currently leveling off, but signs
point to a startup in investment.
 Non-memory demand is starting to recover.
 Demand is solid for AI, VR, and CASE (automobile-related).
 We also expect 5G-related investment to fuel demand.
⇒Demand in related markets is beginning to emerge (base stations,new smartphone models).
(3G [voice] → 4G [data] → 5G [video])

LED and OLED manufacturing equipment Demand for small and medium-sized FPDs is falling, as smartphone growth decelerates.
 However, demand is budding for OLEDs used in large TVs and onboard automotive electronics.

28Copyright © 2019 Harmonic Drive Systems Inc.

Ⅲ．New Applications

29Copyright © 2019 Harmonic Drive Systems Inc.

Ⅲ-1. Sales history and growth drivers
New target
marketenvironment(Billions of yen)
50500
45450

Aerospace, mobility

Sales (non-consolidated basis)40400

FPD manufacturing equipment

35350

Requirements

30300

Semiconductor manufacturing
equipment

25250
20200

Growth drivers

15150

Industrial robots (further expansion)

10100
550

0

Advanced medical
technology

Machine tools'71'72'73'74'75'76'77'78'79'80'81'82'83'84'85'86'87'88'89'90'91'92'93'94'95'96'97'98'99'00'01'02'03'04'05'06'07'08'09'10'11'12'13 14 15 16 17 18

 Large hollow structures Ultra flatness
 Ultra compactness
 High precision
 High torque, long life Ultra lightweight Cost reduction
 Response to Industry 4.0,
IoT, and other trends(Fiscal year)

30
Copyright © 2019 Harmonic Drive Systems Inc.

Ⅲ-2. Next-generation motion control

Surgical robots

Flying cars

 All steadily expanding growth markets
 Responding to specific inquiries with a view
toward mass production
Compact

Lightweight

DurableHighprecision

Next-generation
mobility

Reliable

Assist suits
31
Courtesy of Hashimoto Lab, Shinshu University

Copyright © 2019 Harmonic Drive Systems Inc.

Ⅲ-3. Development of new products for new applications
Small collaborative robots,
semiconductor
manufacturing equipment

Tabletop robots

www.mecademic.com

Advanced medicine,amusement

Source: Techman Robot Inc.

Source: Mecademic Inc.

Applications should accelerate further, as demand increases to makevarious types of equipment more compact and lightweight.
Customers have growing expectations for our products.
CSFﾏｲｸﾛｼﾘｰｽﾞ

CSFﾐﾆｼﾘｰｽﾞ

CSF-2UPｼﾘｰｽﾞ

We are developing a new series with market launch scheduled for FY2020.
We plan to exhibit a prototype at the International Robot Exhibition 2019.
32

Copyright © 2019 Harmonic Drive Systems Inc.

Ⅲ-4. Growing areas of application
 Steadily growing market for leading-edge medical equipment
 Increasingly, robotic surgery being covered by medical insurance Growing number of potential players in Japan and overseas

 Customized development to meet customer requirements
 Rollout across our entire product lineup (HD, MT, and AD):
Conceptualize on the basis of ultra compactness and highprecision

 Automotive: Used in variable compression ratio(VCR) engines Surpasses various countries’ environmental restrictions due to substantially
improved thermal efficiency
 Expected use in more than 80% of internal combustion engines by 2040
(IEA forecast) Steadily responding to mass production demand since 2018

 Full-fledged rollout of VCR engines anticipated

Courtesy of Nissan Motor Co., Ltd.

33

Copyright © 2019 Harmonic Drive Systems Inc.

Ⅲ-5. New area of application: the aerospace industry
 MaaS “flying taxis”
 Nearly 100 venture companies around the world
 Responding to demand for reducers in response toshift to commercialization and mass production

 Requirements our products are expected to meet:
Light weight, high torque, high reliability

 Space debris business Growing focus on this new space business We have a track record in space applications, so
have an opportunity to contribute to this businesswith our products

 Continue to monitor trends
34

Copyright © 2019 Harmonic Drive Systems Inc.

Ⅲ-6. New applications:
Hayabusa and Hayabusa2 planetary probes
Hayabusa2 operating its ion engine as it approaches 162173 Ryugu, an asteroid

Image provided by the Japan Aerospace Exploration Agency (JAXA)

Harmonic Drive® used in the actuator of the gimbal mechanism
35
on an ion engine manufactured by Moog (US)Copyright © 2019 Harmonic Drive Systems Inc.

Ⅳ. Initiative for Achieving
Mid-Term Management Plan Targets:Raising QCDS Capability

36
Copyright © 2019 Harmonic Drive Systems Inc.

Ⅳ-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 (peak)Target production capacity

130,000+

Total for two
factories:
200,000

Hotoka Factory

50,000Japan:
HarmonicDriveSystems Inc.

66,00085,000+
Ariake Factory

Ariake Factory(new plant building)

120,000–150,000
Limburg Factory
Germany:
Harmonic
Drive AGUS:
Harmonic
Drive LLC

10,000+
Boston Factory

2. Crossed roller bearings
Japan:
HarmonicPrecision
Corp.
Germany:
Harmonic
Drive AG

Current factory

3,000

15,000+30,000–50,000

New factory

10,000–30,000Total: 98,000+

Total: 148,000+

60,000+70,000+
New factory

Limburg Factory

10,000+Total: 70,000+

New factory

Total: 240,000–
280,000

120,000–
150,000

150,000

30,000Total: 80,000+

Total: 180,000+37

Copyright © 2019 Harmonic Drive Systems Inc.

Ⅳ-2. Raising capacity at production facilitiesAriake Factory(Azumino, Nagano Prefecture)

Matsumoto Factory(Matsumoto, Nagano Prefecture)

Harmonic Drive LLC’s
new factory (US)Harmonic Drive AG’s
second factory (Germany)

38

Copyright © 2019 Harmonic Drive Systems Inc.

Ⅳ-3. Status of initiatives to raise productivity
and enhance quality
 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

 Large and medium-lot, small-variety production

 Production management system

 Mass-production lines for FA applications

 Further improve quality

 Mass-production lines for automotive
applications[Applications: small-lot robots, semiconductors, andother 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, multivariety production, leveraging our optimal production
technology and management system.

Use IT to create flexible systems.

Continue reinforcing efforts to cultivate specialists.

 Strengthen partner companies’ capacity

Support efforts to strengthen structures to meet future
growth opportunities.

[Applications: automotive products and massproduction robots]
1. Our production lines are geared toward automation.
2. We also use our long-standing knowledge andexpertise to optimize our automation equipment.
3. Sophisticated production technology and quality
control enable us to maintain a high first-pass yield.

Steadily expand process automation.

With the exception of some existing lines, introduce newlines that are highly automated and provide highly finishedproducts.

39

Copyright © 2019 Harmonic Drive Systems Inc.

Ⅳ-4. Status of initiatives to raise productivity
and enhance quality
 Automated lines
 Automated processing line for mainstay products Automated assembly process We maintain quality control by using sophisticated measurement technology.
 Production capacity can be increased without being affected by personnel
numbers.
 We are putting in place an environment to cultivate workers as engineersable to handle more advanced processes and pass on this knowledge.

Hone technologies/skills and achieve automation

40Copyright © 2019 Harmonic Drive Systems Inc.

Ⅴ. Current Mid-Term Management Planand Aiming for Further Growth
toward 2030 and 2050

41Copyright © 2019 Harmonic Drive Systems Inc.

Ⅴ-1.Mid-term management plan and long-term vision

Consolidated sales (billions of yen)
Target20.4

Actual

18.1

21.0

26.0

29.0

25.9

28.2

30.0

35.0

68.5

54.3

67.0

100.0

50thanniversary

Earlier
mid-term
Previous mid-term
前中期経営計画
management plan management plan
FY2012 to FY2014

FY2015 to FY2017

Current mid-term
management plan
FY2018 to FY2020

Good balance among
three businesses
MTRDAD

FY2030 to FY2050

42Copyright © 2019 Harmonic Drive Systems Inc.

The performance targets and other numerical data
presented herein are forecasts based on information
available to the HDS Group at the time this material wasprepared, and are subject to the influence of uncertainties
including those in the economic and competitiveenvironment. Actual performance may therefore differ
materially from the forecasts given in this material.

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.