During the financial year under review, the Japanese economy showed a gradual recovery as economic activities were restricted and eased following expansion and contraction of the coronavirus infection (COVID-19). In the global economy, although there were signs of recovery in the U.S. and European countries as vaccination rates increased, the outlook remains uncertain due to rising raw material and energy prices, concerns of an economic slowdown in China due to the lockdown following the re-expansion of COVID-19, and the impact of the invasion of Ukraine by the Russian Federation.

In the electronics industry to which we belong, demand for semiconductors remained high throughout the year, backed by the shift to DX (digital transformation) in the manufacturing industry and increased digital-related demand. In the industrial equipment market, capital investment in semiconductors accelerated and demand for various types of semiconductor production equipment expanded, while the market grew in a wide range of fields such as factory automation equipment and machine tools for the automation and upgrading of manufacturing industries. In the telecommunications infrastructure and computer markets, demand for memory and other products expanded due to an increase in smartphones, data centers and related products against the backdrop of 5th generation mobile communication (5G) and the shift to cloud computing for artificial intelligence (AI) systems. In the automotive market, production adjustments have occurred due to semiconductor shortages, but there has been an acceleration in the shift to electrical equipment and EVs (electric vehicles) for higher levels of automation and decarbonization.
In the IT industry, IT investment continued to recover on the back of corporate digitalization efforts. With the expansion of cloud services, comprehensive security measures become increasingly important due to information leaks and other issues. And while remote work becomes more common, demand has increased for security measures that no longer rely on perimeter defense between internal systems and the outside world and for highly operational security services, against a shortage of highly skilled security personnel. Yet as companies expand their security measures, Attack Surface Management (ASM) is starting to attract attention with attacks targeting vulnerable internet-facing systems increasing.

Despite ongoing supply chain disruptions such as semiconductor shortages, material shortages and soaring raw material prices, the business saw significant growth in all markets on the back of rising global demand for semiconductors. In the industrial equipment market, demand for analog products and other ICs increased significantly in a wide range of fields, including factory automation and the upgrade of production, semiconductor manufacturing equipment, measuring equipment and medical equipment. In the automotive market, despite production adjustments due to a shortage of semiconductors, analog products, standard ICs and ASSPs and other products performed well against the backdrop of vehicle electrification. In the telecommunication infrastructure and computer markets, demand for memory for data centers grew on the back of 5G and cloud computing, while in the consumer electronics market, sales of analog products for entertainment equipment advanced. In the OA and peripheral equipment market, demand for ASSPs and other products for multifunction printers for office use, which had fallen due to the coronavirus, recovered.

In the software business, demand for endpoint security-related products and cloud gateway security-related products grew, as demand continued in security measures not relying on perimeter defense, particularly from large companies and government agencies. In addition, demand for cloud service-related products aimed at improving operational efficiency continued strong, resulting in a significant increase in sales.
However, sales of hardware decreased due mainly to a reactionary decline following special demand for gateway security-related product for remote access due to COVID-19 in the year before last, despite growth in security management-related and other hardware products aimed at improving the efficiency of security operations and combating internal fraud.