Medium-Term Vision

Interview with Top Management President and Representative Director Nobuyuki Otsuka

Regarding our progress on the mid-term management plan (for FY2019-2023), whose 4th year has been completed:

Sales from Semiconductor Design-related Business and System Service Business expanded. INNOTECH is pursing efficient sales activities even further.

In FY2022, the semiconductor market declined from the second half and as the Japanese domestic customers suppressed their investments, demands for memory testers weakened and probe card sales of our group company, STAr Technologies diminished, thus it turned out to be a tough year for our Test Solution Business.

On the other hand, sales of the Semiconductor Design-related business which includes the EDA software business and design services grew with our customers’ mid-term and long-term investments to seek for higher performance semiconductors. Also, sales of the System Service Business went well as the demands are increasing with expected recoveries of consumer spendings and facility investments with the Covid-19-related control measures being loosened. Especially for these businesses, INNOTECH is focusing on expanding its customer base by the so-called “hybrid sales activities”, which is the combination of face-to-face and online meetings, as trade shows are coming back with less Covind-19-related control measures, while web marketing and web meetings still remain common. By such combination, work efficiency is further improving and it contributed to the business results in spite of the weak semiconductor market.

As a result, INNOTECH consolidated sales surpassed the FY2021 figure. On the other hand, our operating profit of FY2022 declined as we focused on R&D and increased staff as we expanded our business for our future growth.

FY2023 seems to remain unclear, but it is expected that the semiconductor market will improve in the second half. Along with the recovery, we expect that the Test Solution Business will also recover and the Semiconductor Design-related Business and the System Service Business will continue to remain strong. Thus, we estimate that our revenue and profit of FY2023 will increase.

In FY2022, our ROE declined to 7.3%, but we are optimistic that we will achieve 8% in FY2023, which is the goal of our current mid-term management plan.

Regarding the areas of focus to achieve our future business growth:

We will focus on ensuring stronger linkage between the group companies and business segments as well as supply chain management:

INNOTECH has been working hard to build a stronger linkage between our group companies since FY2021 and we will continue to do so. As for the Semiconductor Design-related Business, we see clear achievements from the tighter linkage and collaboration between INNOTECH EDA Software Unit and MoDeCH, and their sales expanded. We expect to see such achievements from collaboration and co-creation among our business segments and group companies, which will be reflected to the financial results in FY2023.

As for our efforts for new business, we will seek for new areas of applications for products and services which have grown in the past few years, such as the cloud settlement system for vending machines provided by IT ACCESE and the new AI camera system of REGULUS. INNOTECH will also continue to look into M&As of companies which have technologies, human resources, and the market which will be required for INNOTECH to cultivate new business areas and to provide new solutions.

In addition, one of our immediate tasks is to build stronger supply chain management. As INNOTECH is enhancing its role as a manufacturer and the ratio of in-house products is increasing in its product portfolio, INNOTECH may lose major business opportunities if we fail to cope with supply shortage of parts and components. While there are some signs that the situation may improve, supplies of certain parts and components are expected to remain tight in FY2023. Therefore, INNOTECH will continue its efforts to secure necessary parts and components.

Regarding our ESG-related efforts:

INNOTECH will continue to improve its HR system and its working environment and enhance our employee engagement.

INNOTECH materiality includes “Human Capital Management” and based on the recognition that employees’ skills and job experience are our valuable capital, INNOTECH is actively investing on human resources.

In order to give more opportunities to female employees, INNOTECH had group interviews with all female employees and conducted hearings on their working environment and possible areas of improvement. Based on the results, INNOTECH is reviewing its human resource management system.

Also, separately from existing employee surveys, INNOTECH has newly conducted an employee engagement survey. The survey was made to see and analyze employees’ views and opinions on the company and help the company’s effort to develop a sustainable and trusting relationship with its employees, ensuring that the companies and employees face the same direction.

Furthermore, in FY2022, INNOTECH has provided an allowance to help employees cope with inflation, the Employee Stock Ownership Plan (J-ESOP), and the Restricted Stock Compensation (RS) Plan to offer incentives to employees. INNOTECH will aim for a sustainable growth by further enhancing linkage between the company’s share price and business performance and the employees’ compensation, increasing motivations of employees, and securing personnel with high expertise and competence.

While the semiconductor market outlook remains still unclear for the near future, the semiconductor and electronics industries are expected to grow for the medium to long term. INNOTECH Group, with its firm commitment to employee engagement, will continue to pursue collaboration and co-creation within the Group and to provide unique solutions and it will achieve the goals set by the mid-term management plan which concludes in FY2023, and will further grow thereafter.

We appreciate our shareholders’ continued support and cooperation. Thank you very much.

June, 2023

President and Representative DirectorNobuyuki Otsuka

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