Business Risk Factors

Described below are some of the risk factors that could affect the DISCO Group, including its business activities and financial situation, or influence decisions by investors.

Fluctuations in the Semiconductor Market

The DISCO Group manufactures and sells products to semiconductor and electronic component manufacturers throughout the world and is therefore affected by trends in the capital investment and production activities of its customers.
The semiconductor market in particular is subject to changes in the supply-demand balance, and the business performance of semiconductor manufacturers is affected by the pattern known as the silicon cycle. The performance of the DISCO Group may be adversely affected if customers freeze capital investment or reduce production during a downward turn in this cycle or when other unforeseen market fluctuations occur.
Ongoing efforts in the form of the Will Accounting (DISCO’s unique managerial accounting system) and PIM (Performance Innovation Management) business improvement activities contribute to improved profit through reductions in cost and human error, acting as preparation for a downward turn. However, these efforts more importantly connect to the development of human resources able to think for themselves, leading to the implementation of better solutions, and to the cultivation of a company culture that is able to flexibly adapt to change.

Emergence of New Technologies

The DISCO Group concentrates primarily on the manufacture and sale of semiconductor cutting and grinding equipment and precision tooling such as precision diamond blades and grinding wheels for use in silicon wafer processing. If a processing technology emerges to challenge precision diamond tooling in the future, the DISCO Group's business performance may be adversely affected. To handle materials that are difficult to process with precision diamond tooling, the DISCO Group is pursuing the development of processing technologies that use laser, plasma, etc.


The DISCO Group Head Office and R&D Center are located in Ota Ward, Tokyo, and its production facilities are located in Hiroshima and Nagano Prefectures. Corporate systems and production operations could be affected by a major disaster, outbreak of a new strain of influenza or other contingencies.
To implement countermeasures that persist on an organizational level, DISCO Group has established a department that specializes in BCM (Business Continuity Management) in addition to establishing and operating a BCM Committee, made up of officers and with the President as chairman, that discusses important matters related to the BCMS (Business Continuity Management System) during normal times.
DISCO considers the main point of BCM to be “each employee being able to protect themselves.” Thus, we strive to understand the risks, such as natural disaster and infectious disease, and educate employees so that they are able to take action to protect themselves. For example, with regard to infectious disease, we place importance first on not becoming infected rather than on treatment after the fact. Thus, as part of our pandemic preparedness and educational activities, we have established unique pandemic level definitions and require employees to follow separate standards of conduct for each level. As preparation for earthquakes, we have adopted a seismically isolated structure for the Head Office / R&D Center and for each production site and have put into place a system that allows for the production of all precision processing tools and precision processing equipment in seismically isolated buildings.

Raw Material and Component Procurement

There is the possibility that raw material and component procurement difficulties, resulting from disaster or tight supply in the face of strong demand, could affect production. In response to this, the DISCO Group has implemented measures such as a policy of strategically securing stock, with a focus on important raw materials and components, and the strengthening of relationships with suppliers.

Exchange Rate Fluctuations

The DISCO Group manufactures products in Japan and exports them to manufacturers of semiconductor and electronic parts in various parts of the world. Transactions in some regions and with some customers need to be settled in U.S. dollars or other foreign currencies. This means that the business performance of the DISCO Group could be affected by exchange rate fluctuations.
In response to this, we have analyzed foreign exchange sensitivity to understand its effects on performance and established a system that enables swift decision-making should a risk arise.

Environmental Regulations

The DISCO Group is affected by environmental laws and regulations established in response to climate change and various environmental issues related to water quality, chemical substances, and waste. In addition, these regulations are becoming more stringent by the year.
In response to these increasingly strict environmental laws and given the risk of increased costs along with additional obligations, which could affect the DISCO Group’s financial position, we are putting effort not only into becoming legally compliant but also into mitigating environmental risks.
As the DISCO Group’s mid-term environmental goals, we are developing “Environmental VISION 2030,” which will cover climate change, chemical substances / pollution prevention, water resources, other resources (purchases/waste), and biodiversity. This policy will be released upon completion.

Other Risks

In addition to the risk factors listed above, the business performance of the DISCO Group could also be adversely affected by global and local economic conditions, natural disasters, war or terrorism, trends in financial and capital markets, laws and government regulations, product defects, issues relating to suppliers, and problems with intellectual property rights.