II. Risks in Fujitsu Group Business Activities

5. Suppliers, Alliances, etc.

5-1. Procurement

[ Overview and impact of risks ]
The Fujitsu Group uses leading-edge technology in our products and services and may use parts that are not versatile or rare materials. Due to this, there is a risk that we may encounter difficulties in procuring a stable supply of certain parts or raw materials, or be unable to secure alternative suppliers, and be unable to sufficiently procure certain parts or raw materials in the large volumes required. In addition, in the event of the occurrence of natural disasters, epidemics of infectious diseases, accidents, or any deterioration in business conditions, it will be difficult for our business partners to provide the Fujitsu Group with a stable supply of components or raw materials. Furthermore, there is an increasing amount of events that affect the stable procurement of parts and raw materials, such as abnormal weather conditions occurring around the word and the disasters that accompany them, as well as growing instability in international affairs. As such, if we are unable to secure a sufficient supply of certain parts or raw materials, it could cause delays in the provision of products and services, resulting in postponement of deliveries to our customers and opportunity losses.

With respect to the procurement of components and other materials, foreign exchange rate fluctuations or tight supply and demand conditions could drive procurement costs higher than initial estimates, leading to diminished returns on products and services, as well as lower sales due to the higher prices.

In addition, while we make every effort to ensure the quality of procured components, we cannot guarantee that all components purchased will be free of defects. The occurrence of such issues could result delays in deliveries, as well as products’ defects, opportunity losses, repair costs, and costs associated with the disposal of defective goods, as well as indemnities to customers.

[ Measures against the risks ]
The Fujitsu Group is working to maintain our supply chain and reduce risk through researching the status of countermeasures being taken at the manufacturing facilities and business partners for each component, shifting to multi-sourcing procurement, encouraging our business partners to adopt business continuity management (BCM), increasing our support, and ensuring adequate inventory.

5-2. Collaborations, Alliances and Technology Licensing

[ Overview and impact of risks ]
To enhance competitiveness within a global ICT business environment, the Fujitsu Group works with a large number of companies through business alliances, technology collaborations, and joint ventures. However, we may not be able to establish or maintain alliances due to managerial, financial, or other causes, or be able to gain sufficient results from them. Many of our products and services employ other companies’ patents, technologies, software, and trademarks with the consent of their owners. However, if we are unable to retain these grants of licenses under terms acceptable in the Group, it may impact the Fujitsu Group’s business.

[ Measures against the risks ]
The Fujitsu Group, when establishing relationships with other companies through business alliances, technology collaborations, joint ventures and other means, strives to minimize the impact these relationships could have on the Group. We do this through recognizing and evaluating risks and then reflecting these risks in the terms of the contract, as well as regular risk monitoring.