Future Outlook

23

Dip in short-term demand cycle
Emerging nation demand losing steam; Europe’s problems persist(millions of yen)
20,000

History of Net Sales(non-consolidated basis)
Flat panel display equipment

15,000Demand drivers
Semiconductor equipment
10,000

Robotics
5,000

Machine tools

Before dawn

'1
1'0
9'0
7'0
5'0
3'0
1'9
9'9
7'9
5'9
3'9
1'8
9'8
7'8
5'8
3'8
1'7
9'7
7'7
5'7
3'7
10（FY）

24

Medium-term outlook for external environment
1. Stiffer competition and ups and downs for electronics firms
2. Weakening of domestic manufacturing industry bases
3. Japan’s traits as a nation and manufacturing craft

Our management foundation■Global markets are our target■Accumulation of hard-to-imitate technologies and skills■Financial strength to withstand short-term demand fluctuations
For these reasons, the external environment does not present major
obstacles to medium-term growth of our business.
25

Drivers of mid-term management plan achievement

Keys to medium-term growth
1. Management giving top priority toquality and safety
2. Strengthening of core technologies
3. Wider choice of product variations
4. Stepped up sales expansion in Asia
26

Stepped up sales expansion in Asia
China
Sales expansion mainly
through sales
subsidiaries (also useof sales agents)• New product sales
expansion• Technology services• Marketing
Focus markets:• Industrial robots• Machine tools• Semiconductor
manufacturing
equipment

Singapore
Use of machine parts
trading firm for sales
expansion• New product sales
expansion
Focus markets:• Machine tools• FPD manufacturing
equipment

South Korea
Sales expansion using
tech-savvy sales
agents• New product sales
expansion• Customized productorders

Focus markets:• Machine tools• Semiconductor
manufacturing equipment• FPD manufacturing
equipment

TaiwanUse of machine parts
trading firm for sales
expansion• New product sales
expansion
Focus markets:• Machine tools• FPD manufacturing
equipment27

Wider choice of product variations
Improving the basic performance of
speed reducers

Making products easier forcustomers to use
Integration
Peripherals
technology
development

More powerful

Lighterweight

Higherprecision

Smaller size

Product variations meeting different needs for different applications
Light weight

Fast

Hollow shape

Low vibration

Positioning accuracy

Flat shape

High-capacity bearings

Low noise28

New product: Lightweight HarmonicDrive®

Lightweight HarmonicDrive®
Achieves 20–30% lighter reducer weight atsame torque capacity(compared to our previous products)■Advantages¾ Improved load capacity due to lighter-weight(more compact) robots¾ Shorter robot cycle time due to lightweight¾ Lower energy use due to lightweight■Target markets¾ Industrial robots¾ Service robots¾ Semiconductor manufacturing equipment¾ New applications, new markets
29New product: High-torque planetary gear reducer

HPGP Series HarmonicPlanetary®
Achieves around 33% greater torque atsame weight and dimensions(compared to our previous products)■Advantages¾ More compact equipment possible¾ Shorter cycle time
¾ Longer lifetime¾ Lower energy use due to lightweight■Target markets¾ Industrial robots (hand axis, running axis)¾ Semiconductor manufacturing equipment¾ Machine tools
30

The benefits of lightweight reducers
Enable motor downsizing at the reducer stem, along withgreater robot speed and load capacity !

＞＜＞＜Lighter reducer
weight at eachaxis means: ^ ^^^(1) Lightweighttip axis!
(2) Because the tip axis
is light, the stem canbe made faster!
31

A never-ending upward spiral of technology and skills■HDS and speed reducers over the years
Planetary gears

Era

Harmonic drive gearing(HarmonicDrive®)(AccuDrive®
HarmonicPlanetary®)

Steady R&D and building up skills

2020s

2010s

TheoreticalresearchHollow
shaft
Orthogonalaxis type
Silk hattype
Ultra flat

2000s
Planetaryreduction gearwith elastic
element

HightorqueType

Cup type

Production
technology
development

Materials
development

Ultra flat

Silk hat typeFlat, highperformance

1990s

Cup type

High-precision
planetary
reduction gear

Flat, highperformance

Durability testing

Silk hat type
Cup type

1980s

Highprecision

For phaseadjuster

Pancake type

1970s
First domestic
product

1960s
1950s

Harmonic Drive invented

32

Total Motion Control
Businessdomain

Providing the value of Total Motion Control
in precision control fields

3333

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 and Finance Department, Harmonic Drive Systems Inc.
Believe Omori 7F, 6-25-3 Minami-Oi, Shinagawa-ku, Tokyo 140-0013 Japan
Email: ir@hds.co.jp
Website: https://www.hds.co.jp/