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5. Sumitomo Electric Industries, Ltd. Business Report FY ended Mar. 2019

Sumitomo Electric Industries, Ltd. Business Report FY ended Mar. 2019

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income, etc.)

Recent Business Developments

ｰannounced that it will integrate its System & Electronics Division in the Infocommunications business segment into the Automotive Business Unit and establish a new Software Business & Technology Planning Division in the unit effective April 1. The Automotive Business Unit has been developing and producing in-vehicle components like wire harnesses. The System & Electronics Division has been working on the development of traffic control systems for infrastructure using Intelligent Transport Systems (ITS). In the near future, connected cars, which connect to the outside via the Internet and other IoT technology, are expected to spread. In light of this situation, Sumitomo Electric will consolidate the management resources related to the area of connectivity products in the mobility business in order to promote the collaboration between in-vehicle components and ITS and strengthen its product development capacity. (From an article in the Nikkan Jidosha Shimbun on April 2, 2018)

Collaboration

ｰannounced that it will collaborate with Aquantia Corporation for the development of multi-gigabit Ethernet systems in anticipation of autonomous driving. Sumitomo Electric aims to offer in-vehicle communication networks for autonomous driving, which requires high-volume data transfer, by utilizing Aquantia’s multi-gigabit technology for its automotive connectors and wire harnesses. Aquantia is a U.S. developer of Ethernet chips for data centers, corporate IT infrastructures, and the automotive market. Through the collaboration with Aquantia, Sumitomo Electric aims to increase its presence in the autonomous driving and connected car fields. (From an article in the Nikkan Jidosha Shimbun on March 15, 2019)

ｰannounced on January 16 that it will jointly develop a mobile application with U.S. based EV Safe Charge Inc. The two companies aim to start services utilizing Sumitomo Electric Industries’ Intelligent Transport Systems, and to contribute to the popularization of electric vehicles (EVs). The new mobile application will be called “EV Safe Charge App powered by Sumitomo Electric”. Sumitomo Electric Industries intends to incorporate telematics services such as weather, road conditions, and traffic information services, into the application by utilizing cloud. The application will also notify drivers of the best time to charge, taking into consideration various circumstances. Development of the new application will be completed around summer or autumn this year. Once the product has been completed, the two companies plan to cooperate with automakers to employ it in vehicles. (From an article in the Nikkan Jidosha Shimbun on January 18, 2019)
 

Mid-term Management Plan

ｰannounced that it has formulated the Vision 2022 mid-term management plan, under which it aims to increase net sales by JPY 600 billion to JPY 3.6 trillion and operating margin ratio by 0.4 percentage point to 6.4% in fiscal year 2022 (ending in March 2023) from the FY 2017 levels. It will seek to expand its operations by developing new products compatible with connected vehicles, autonomous vehicles, and electrified vehicles. The plan has the concept of "contributing to a better society by leveraging Sumitomo Electric's expertise in connectivity and transmission technologies through concerted efforts of the entire group." Sumitomo Electric is engaged in five business segments, and the automotive segment is projected to account for the largest 45% of its operating income portfolio in FY 2022. The company aims to achieve a balanced portfolio while encouraging the growth of overall operating income. The company will concentrate on enhancing its manufacturing capabilities, creating new business models that anticipate global market changes, and developing a culture of innovation that anticipates change in the automotive and energy fields, and exploits commercialization opportunities with agility. (From an article in the Nikkan Jidosha Shimbun on May 29, 2018)

R&D Activities

Wire harnesses / In-vehicle electronic equipments
-R&D activities are mainly conducted at AutoNetworks Technologies, Ltd., which is jointly owned by the Company and Sumitomo Wiring Systems, Ltd. R&D activities are mainly focused on developing new products meeting safety, comfort and environmental needs.

-Wire harnesses:

• The Company is building harness architectures that can be mounted in next-generation vehicles' onboard systems, conducting R&D activities on elemental technologies needed to meet this need.
• Also, in order to reduce vehicle weight and be environmental friendly, the Company is developing lighter weight harnesses. It has succeeded in this area, developing and starting mass-production of harnesses using aluminum, which is lighter in weight than copper.
• Moreover, the Company is continuing its R&D activities on high-voltage harnesses, connectors, battery wiring modules and so on for the growing EV/HEV sector.

-In-vehicle electronics devices:

• The Company is now developing electronics devices such as PDs (power distributors) and next-generation in-vehicle LAN (Local Area Network) units in order to respond to the rapid advances taking place in IT. The Company is also launching systems with advanced features and/or networking capabilities.

-Sumitomo Riko:

• The Company is developing a smart-rubber (SR) sensor to place in automotive seats, which can detect the body pressure of drivers when the drivers are seated. By detecting changes in the driver’s vital conditions such as respiration and heartbeat, the sensor is designed to stop dangerous situations from happening. In addition, it is developing environmentally friendly products and technology designed for electric vehicles and fuel-cell vehicles.
  

ｰannounced that it has released its newly developed SEVD-11U high-power charger connector. The company improved power output by 1.9 times from conventional products to cope with the charging of high-capacity battery electric vehicles. The rated power is a direct current of 200 amperes and 600 volts. The new power connector follows the design of the existing SEVD Series, ensures operability and safety, and conforms to the CHAdeMO 1.2 standard. It has a UL certification for North America, and will have a CE safety certification for the EU. (From an article in the Nikkan Jidosha Shimbun on July 5, 2018)

-Capital investment in the automotive business to increase and streamline production of wire-harnesses and anti-vibration rubber.

Planned capital investment (FY ending March 2020)

-JPY 193,000 million companywide
-JPY 106,000 million for automotive business

Investments outside Japan

<Ukraine>
ｰSumitomo Electric Bordnetze, a member of Sumitomo Electric Industries Group, announced that it will open a factory in Khmelnytsiy, Ukraine, to produce electric wiring for Volkswagen. Factory managers plan to hire 500 workers in 2018 plus 1,500 more within 2 years. (From Ukraine Invest press release on July 30, 2018)

<Mexico>
ｰSistemas de Arneses K&S Mexicana, a subsidiary of Japan-based Sumitomo Electric, inaugurated a USD 4.7 million plant in San Felipe, Guanajuato, Mexico. The 7,000-square-meter plant began operations with 220 workers, with plans to expand the workforce to more than 900 employees. With three production lines, the new plant will eventually become the largest production site of the six that K&S operates in the country. Among its customers is Nissan, to whom it will supply harnesses for its plants in Aguascalientes, Mexico, as well as Smyrna, Tennessee and Canton, Mississippi in the U.S. for the March, Versa, Sentra and Altima models, among others. (From a Mexico-Now article on June 20, 2018)