To Shareholders

Please allow us to express our sincere gratitude for our shareholders' continuous support and patronage.

This is our Group's performance report for the 62nd fiscal year (April 1, 2022 to March 31, 2023).

During the current consolidated fiscal year, the future of the Japanese economy continued to be uncertain due to factors such as the prolongation of the dire situation in Ukraine and sharp rises in prices; however, there were signs of a slow recovery, partly because of the effects of various measures taken to coexist with COVID-19.

In the semiconductor and semiconductor production equipment markets in which the Naigai TEC Group operates, there were signs of improvement in the disrupted supply chains and the supply shortages of raw materials, components and the like. However, inventories, mainly for memory chips, were adjusted as demand for smartphones, PCs, and other devices fell, and in addition, there were moves to postpone capital investments for semiconductors out of concern over the effects of America's tighter regulations on exports to China. On the other hand, demand for power semiconductors remained strong, backed primarily by the global shift to 5G high-speed communication standards and electric vehicles. There were also moves to underpin investments in semiconductor production for the future as typified by governments planning subsidies for semiconductors in various parts of the world.

Meanwhile, the FPD production equipment market continued to shrink as stay-at-home demand under COVID-19 conditions ran its course and the economy slowed down.

In this business environment, in an effort to supply its customers with products and services in a stable manner, the Naigai TEC Group took active measures such as securing inventories and offering suggestions for switching to alternative components. In addition, on March 31, Naigai Electronics Inc.'s Esashi Office and Naigai TEC's Esashi Technical Development Center were completed as the Group strove to strengthen the production system to meet the semiconductor market as its demand was expected to further grow in the years to come. These facilities are also intended to enhance development abilities to meet the requirements for vacuum/control technology as customers demanded higher level functionality and performance.

As a result, although orders decreased in the second half of the year, the Naigai TEC Group posted increased sales and increased income for the current consolidated fiscal year, registering the highest-ever financial results since its listing.

Demand for semiconductors in this data society, including with regard to digital transformation (DX) and green transformation (GX), is expected to grow further. In Japan as well, the construction of new plants and other capital investments for semiconductors is being planned. With further market expansion in mind, the Naigai TEC will expand its business and enhance its corporate value by upgrading technology development capabilities as it works on vacuum/control technology, which will support its future growth.

We look forward to receiving the continued support and guidance of our shareholders.