Outside Directors’ Roundtable Discussion
This interview was originally published in the ROHM Group Integrated Report 2025.
The responsibility of Outside Directors
in supporting transformation
Walking alongside leaders toward ROHM’s future
Please share your insights on the factors behind the extremely challenging business performance and the management challenges ROHM faces,reflecting on your activities as Outside Directors.
Nakagawa
While we have pursued aggressive investment aim-ing for 1 trillion yen in net sales, I do not believe the direction itself was misguided. However, despite our best efforts internally to address changes in the external environment, we were unable to make a strict judgment about the future and failed to accurately identify the right timing to take action. I also believe we were not sufficiently prepared for risks. However, it is true that at that time, it was extremely difficult to accurately assess changes in the external environment.
Kenevan
In 2021, as the entire industry was in a growth phase, ROHM proactively initiated aggressive investments to seize busi-ness opportunities. However, despite subsequent changes in market conditions, the industry's overall response was sluggish, and ROHM found itself swept along by that trend. People find it difficult to abandon policies they have committed to, or to plants and products they have invested in. I believe ROHM was no exception.
Nagumo
Shifting the blame for poor performance to external factors like market conditions was also problematic. What was lacking was the sense of responsibility and determination within myself to see the mission through no matter what. Furthermore, management should have made the decision to implement new measures the moment they sensed, in response to changing mar-ket conditions, that the situation would be dangerous if left unad-dressed. Although we assigned directors responsible for each business unit, the transition was not completed in time, leaving us constantly playing catch-up and falling into a negative spiral-a regrettable outcome.
Nakagawa
As an Audit and Supervisory Committee Member, I have voiced opinions on compliance with internal processes and strengthening defensive systems. However, I must reflect on my failure to press harder on certain points. Drawing on my experi-ence in internal auditing at financial institutions, I questioned preparations for worsening conditions. Yet I cannot say that was sufficient.
Kenevan
I myself served as an Outside Director until FY2024, but looking back, I reflect on whether I adequately fulfilled that role. When market conditions changed, I believe I also had a responsibility to make more restrictive judgments. In such situa-tions, sound governance and objective perspectives from institu-tional investors are crucial. Starting in FY2025, I will assume the role of Chief Financial Officer within the company. I intend to accu-rately provide institutional investors and Outside Directors with the necessary financial information to enable them to make appropri-ate decisions, and I also plan to establish a system to thoroughly gather their opinions. I have already received many valuable opin-ions from institutional investors and intend to appropriately share this information to aid management's decision-making.
Please tell us about the presidential selection process and what you expect from President Azuma.
Nakagawa
At ROHM, the Board of Directors receives recom-mendations from the Officer Nomination Council regarding the appointment and dismissal of the President and Representative Director, as well as the nomination of other director candidates. In this instance, former President Matsumoto submitted his resigna-tion, and, in response, we commenced deliberations on selecting his successor. Following the change in president, the impact extended broadly to other executive appointments and organiza-tional positions. Consequently, the Officer Nomination Council convened multiple extraordinary meetings. Through repeated, can-did discussions, free from constraints of position, the announce-ment of the president's succession was made in January 2025.
Nagumo
We naturally gave careful consideration to how former President Matsumoto wished to hand over the reins to the next president. Furthermore, we believe that the successor was selected in a manner acceptable to all members of the Officer Nomination Council.
Nakagawa
We have high hopes for President Azuma's deci-siveness and leadership. It has been two years since I joined ROHM as an Outside Director. Throughout various internal discus-sions, I have observed that President Azuma is someone who can make clear decisions in a top-down fashion. This experience has reaffirmed my belief that he is the right person to lead the com-pany going forward.
Kenevan
I also have high expectations for President Azuma's decisiveness. What's even more important is that he himself deeply understands this company's DNA. He had close ties to the founder, has thoroughly inherited the company's history and val-ues, and understands what must be preserved and what must be changed. It is precisely because he loves this company so much that he is the person who can accurately discern the areas where transformation is necessary.
Nagumo
The key points I valued in selecting President Azuma were not only the decisiveness and drive mentioned by everyone else, but above all, the strong passion I sensed in him. In chal-lenging times like these, strong leadership is essential. It must be someone like him.
Kenevan
Immediately after assuming the presidency, he imple-mented bold measures such as sending division heads overseas in order to restructure operations. I feel he is a president who pos-sesses a deep understanding of the company's history combined with bold, forward-looking initiative, enabling him to drive bal-anced reform.
Nagumo
What is most expected of President Azuma now is to achieve results within the next three years or so and overcome this critical situation. Leadership is essential for this, but it is not just about pulling people along; it is crucial to maintain an attitude of openness to diverse opinions. Otherwise, he risks becoming an emperor with no clothes. To prevent the President from becoming isolated, we believe the role required of us Outside Directors is to consistently offer firm opinions, ensuring he maintains an objective perspective.
Kenevan
To that end, I believe my role as the Chief Financial Officer is to assess the numbers objectively. Even for beloved products, if they are not generating profit, it is my responsibility to present the facts candidly while providing solid figures to back that up.
Nakagawa
Observing President Azuma's efforts over the past few months since the management change, what strikes me is the intensity of his sense of crisis. Such individuals tend to develop a heightened awareness of the need for change and they take bold action. In times like these, when management reform is essential, I feel we truly needed a leader with a strong sense of urgency.
Nagumo
I agree. President Azuma is now strongly urging all directors to actively go out into the field. This stems from his belief that without going out to the front lines and gathering information directly, it is impossible to accurately assess what crises lie ahead in the future business environment.
What do you consider to be your role in advancing ROHM’s management reforms, and what mindset should each individual involved in the reforms have?
Kenevan
The immediate challenges to address include correct-ing excessive investment through reduced capital expenditures and eliminating stagnant inventory. In response to the poor perfor-mance, we are first implementing bold measures akin to "draining the wound." In the medium to long term, improving development efficiency is crucial. ROHM's strength lies in its close relationships with customers. Currently, the U.S. Al data center market is rapidly gain-ing attention, and we see this as a significant business opportunity for ROHM. Working closely with local customers, we must first steadily address the low-hanging fruit (i.e., immediate challenges) while also nurturing areas that will become ROHM's core strengths in the future.
Nagumo
As we move forward with formulating the new Medium-Term Management Plan, I expect various initiatives to emerge. Alongside cost reduction initiatives, reforms such as newly establishing the Marketing Headquarters as part of struc-tural reforms have already begun. I believe our role is to thor-oughly evaluate whether the proposed measures are adequate.
Nakagawa
To achieve business recovery and strengthen profit-ability, improving governance alone is insufficient. All organizations and employees must proactively review their own work and engage in reform. In particular, we must adopt an attitude of mutual cooperation across divisions, boldly overcoming the barri-ers between organizations. As industry conditions grow increas-ingly challenging, rapidly restoring sales and enhancing profitability requires that each individual involved in reform resolves to start by changing themselves without being confined to their own domain or role.
Nagumo
Motivating each and every employee is also key to improving performance. This is because both the quality and quantity of work change significantly depending on whether moti-vation is present. To achieve this, it is essential that President Azuma first becomes a figure trusted and respected by the employees. If the leader inspires employees to think "I want to work hard for this President," productivity should increase without adding staff, and improved perfor-mance can be expected. The same applies to managers on the front lines. They must become figures respected by their subordinates and seriously consider how to motivate their team members. Such efforts enhance the efficiency and collabora-tion of the entire organization, ulti-mately leading to positive impacts on performance.
Nakagawa
As a full-time Audit and Supervisory Committee Member directly engaged with frontline voices, I have come to realize that ROHM employs a great many talented individuals. To translate that strength into corporate profit-ability and growth, creating an environment where employees feel a sense of fulfillment is essential. It is my firm belief that when individ-uals approach their work with a sense of conviction, the organiza-tion's pace naturally accelerates-even without micromanagement. It is crucial that top management communicates that change is happening now, so that everyone embraces this mindset.
Kenevan
Furthermore, I believe that above all else, it is crucial for a company to project an image of being oriented toward the future, in order to make the company better. Strong leadership makes employees believe that the company's future will definitely improve. Especially now, when many employees are feeling anx-ious, that trust becomes the driving force that boosts their motiva-tion. We should aim to build momentum among employees based on the belief that if the company improves, individual employees can also grow, and we should take it a step further by fostering a corporate culture where employees support the company with the same perspective as shareholders.
Nakagawa
President Azuma advocates return to ROHM's strengths, but this surely doesn't mean reverting to past times and sticking to the established course. It means to reaffirm the spirit of ROHM as our Corporate Philosophy. Should this principle falter, we risk losing the very foundation of our manufacturing nucleus. That is precisely why I believe all employees must embrace this spirit, uphold our core values, and simultaneously challenge ourselves company-wide to transform where necessary.
After implementing management reforms, what should ROHM aim to become in the medium to long term?
Nagumo
ROHM has pioneered the development of SiC power devices and strived for success. Looking toward 2030, China’s actions represent the greatest concern. Moving forward, we must carefully assess China’s technological progress and market movements while developing our technological capabilities and competitive products with the resolve to never lose. To achieve this, technological development is essential as a prerequisite for progress. ROHM believes it possesses latent technological capabilities of great significance, and the key to its future growth lies in how effectively it can present these capabilities as value to society.
Kenevan
ROHM is a company that can continue to grow inno-vatively and with great flexibility, based on its technological caра-bilities. We possess both agility and the ability to maximize resource utilization. Under this framework, we believe the ideal is to achieve continuous growth while discovering new added value together with our customers. If ROHM continues to be that kind of company going forward, it should be able to chart a growth tra-jectory that leads to increased shareholder value and maximized corporate value. I believe that is precisely the style of a company that can make all stakeholders happy.
Nakagawa
I believe we should aim for ROHM's long-term growth and the building of trust from the perspective of achieving corporate objectives. Generally speaking, ROHM is recognized as a company that combines strong technical capabilities with a high degree of customer orientation, offering user-friendly solutions and possessing the technology to accurately meet customer needs. I feel that further enhancing this appeal and evolving into a presence that commands respect from our customers is the ideal state we should strive for.
Kenevan
To realize our ideal state, the President and all employees are exploring reform proposals that fully embrace the multifaceted expectations and perspectives of our stakeholders. I myself strongly feel that we should all unite to make this company better going forward.
Nakagawa
As an Audit and Supervisory Committee Member, I will support the organization from a process perspective to enhance the effectiveness of the Board of Directors and ensure sound and stable performance through the execution of duties. The soundness of operations-whether duties are being per-formed appropriately and whether there are any issues with accounting or finances-is naturally something all directors should over-see. However, in practice, it can be difficult to delve into every single detail. From a specialized position such as working in the Internal Audit Division or serving on the Audit and Supervisory Committee, I aim to per-form my duties by thoroughly moni-toring processes and ensuring I accurately verify the key points I must oversee.
Nagumo
ROHM is a manufacturing company, so it should be a technology-driven company. It is crucial to steadily advance reli-able manufacturing centered on technological strength, including cost considerations. This return to technology is precisely what defines ROHM's ideal state. Achieving this vision will enable our stakeholders to genuinely feel that this company is moving in the right direction. I firmly believe that ROHM possesses the capability to reliably meet stakeholder expectations. Therefore, I am commit-ted to contributing to building a company that never fails to meet those expectations.
Nagumo
First off, from FY2021 to FY2022, market conditions were exceptionally favorable. ROHM also recorded strong results, and, at the time, everyone believed in steady upward growth. However, precisely because of that strong performance, we mis-judged the changing trends of the times. The poor performance in FY2024 stems from delayed responses to these changes. From my years of experience managing manufacturing operations, I have learned that during smooth sailing, our ability to sense change dulls, and we sometimes push forward solely on momen-tum. When frontline awareness fades, minor rules become neglected. If ROHM had not been swept up in the momentum of strong performance and had instead adhered to its fundamental processes and proceeded cautiously, the situation would not have deteriorated to this extent.