Business and Other Risks - Suppliers, Alliances, etc.

5. Suppliers, Alliances, etc.

5-1. Procurement

The Fujitsu Group utilizes sophisticated technologies to provide a range of products and services. There is therefore a risk that we may encounter difficulties in procuring a stable supply of certain key components or raw materials, or in cases where regular supply channels are unavailable, that we may be unable to secure alternative procurement sources. There is also the risk that the Group may be unable to sufficiently procure certain parts or raw materials in the large volumes required.

Moreover, business partners could face the risk of being unable to provide the Group with a stable supply of required components or raw materials if any troubles (i.e. natural disasters, epidemics of infectious diseases, accidents, and/or any deterioration in business conditions at suppliers) happen.

The Fujitsu Group has taken a variety of measures to strengthen the resilience of its supply chain, including moving to multiple sources for procurement, working on or strengthening support for business continuity management (BCM) initiatives of suppliers, and holding a sufficient supply of inventories. Despite these efforts, inadequate supplies of parts and raw materials could cause delays in the provision of products and services, resulting in postponement of deliveries to customers and opportunity losses. In respect to procurement of components and other materials, foreign exchange rate fluctuations, tight supply and demand conditions, and other pressures 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. Additionally, 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 discovery of such issues could result delays in delivery, as well as products’ defects, opportunity losses, repair costs, and disposal costs for defective goods, plus the potential obligation to indemnify to customers.

5-2.Collaborations, Alliances and Technology Licensing

To enhance competitiveness within a global ICT business environment, the Fujitsu Group works with a large number of companies through business alliances, technology collaborations, joint ventures and other means, a practice that we intend to actively continue in the future. If, however, regardless of prior assessment of risks associated with these alliances and mergers, as a result of managerial, financial, and/or other causes, it becomes difficult to establish or maintain such collaborative ties or to gain sufficient results from them, the Group’s business could be adversely affected. Moreover, many of our products and services employ other companies’ patents, technologies, software, and trademarks with the consent of their owners. However, there is no guarantee that other companies will continue to grant or license the right to use their property under terms acceptable to the Group.

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