Message from the President
This interview was originally published in the ROHM Group Integrated Report 2025.
We will carry out structural reforms toward a corporate culture that generates reasonable profit by returning to ROHM’s strengths.
ROHM started work on reforms that would leave no stone unturned,reflects on our past and the harsh performance results of FY2024.
We will uphold the principle of returning to ROHM’s strengths, as well as emphasize the 3Ss, “Speed,” “Specialty,” and “Severity,” and aim to recover trust and sustainable growth to rebuild our management structure.
Correctly apprehending market conditions, we will further enhance ROHM’s strengths, “manufacturing technology” and “customer service capabilities,” to convert to a corporate culture that can steadily generate profit.
Renewing our determination for reforms that will leave no stone unturned
In FY2024, ROHM faced harsh results such as falling into an operating deficit for the first time in 12 years, and our price book-value ratio (PBR) remained below one. The current circumstances also weigh heavily on me personally, as I have been involved in management as a director since 2013. I took over management responsibilities amid many challenges in a very difficult environment, but I am determined to work on reforms that will leave no stone unturned in order to regain ROHM’s strengths.
It is no exaggeration to say that this poor performance, unlike the deficit of FY2012 that was caused by natural disasters such as flooding in Thailand, is a human-made disaster due to delays in management decisions. Looking back on the period of the Medium-Term Management Plan, demand for semiconductors increased rapidly beginning in the second half of 2021, and we achieved sales of over 500 billion yen for the first time in FY2022. As orders were still robust, we forged ahead with equipment orders and production expansion, but the market had already reached a turning point in November of the following year. Although we understood from previous experience that demand tends to fall when capacity expands, our decisions were overly optimistic, and we were late to adjust our production.
A backdrop to this was a fixation on the goals of the Medium-Term Management Plan formulated in 2021. Because we achieved our highest-ever sales in the first fiscal year of the Medium-Term Management Plan, we raised our goal straight to 600 billion yen and actively implemented capital expenditures focused on SiC power devices. There was disorder in the supply chain, including longer lead time for equipment orders, and we extremely regret that we did not respond appropriately to market conditions and fell behind on canceling facilities.
As a result, in addition to anxiety regarding future prospects for SiC power devices, ROE was low in contrast with the high equity ratio, leading to a low reputation due to matters such as ineffective use of capital, and our PBR remains below one. Furthermore, although dividend payouts are stable, we recognize that some people feel we are reluctant towards share buybacks and that shareholder returns are insufficient. We take it to heart that we must work to recover the trust of our stakeholders at all costs going forward.
Striving for new growth based on management philosophies centered on our Company Mission
As top management, I would like to emphasize the implementation of our Company Mission, a management philosophy with an unbroken legacy at ROHM. In addition to our Company Mission, our three Basic Policies consisting of our Basic Management Policy, Basic Quality Assurance Policy, and Basic Policy for Education and Training, and our Basic Goals for Education and Training, were created by our founder Ken Sato immediately after our founding over 60 years ago, and not a single word has been changed since. I believe these writings are the compass for ROHM to continue along the right path, and ROHM’s management will not be led astray as long as we follow them.
I would like to particularly emphasize the mentality to “overcome any adversity and strive towards achieving targets” in our Basic Goals for Education and Training. The current circumstances are precisely this “adversity,” but I think that we must always apply this way of thinking, even in ordinary times.
Another concept I value is to “proactively utilize methods of statistical control for all areas of company activities”in the Basic Quality Assurance Policy. By once again enforcing this thoroughly, ingraining it as part of the overall culture of the company, and actively adopting statistics and data analysis, we will eliminate waste in our business and strive for an elite structure. Statistics will be an asset in increasing precision in quality assurance and management decisions, and data analysis, including leveraging the quantum technologies on which we are currently collaborating with Quanmatic, will form the basis of optimizing our manufacturing processes.
Rebuilding a new organizational culture by implementing the 3Ss
When I assumed office as President, I endorsed a “return to ROHM’s strengths” as our management goal. I believe that the establishment of an organizational structure centered on the 3Ss, “Speed,” “Speciality,” and “Severity” is essential in driving reforms.
Unfortunately, ROHM today lacks a sense of speed in a variety of its decisions and actions. For example, there are multi-stage checks even in development, and productization has taken too long. We will work to revise decision-making processes and make development more efficient with simulations using digital technology to increase development speed in order to improve on this point. It is also necessary to enhance speciality in every division. We will clarify roles to refine expertise and enhance skills so that we can provide suggestions that anticipate our customers’ technological advancement. The establishment of our Marketing Headquarters is a part of this measure, and we are building a market-oriented structure incorporating fresh perspectives and market sense. We will introduce a strictly results-oriented approach and build a structure to properly evaluate outcomes. I will take the lead myself to implement these 3Ss.
On the other hand, judging that we must start by recovering our performance, we will temporarily drop the goal of becoming a major global player and position a return to our profit-generating culture as the top priority goal during my presidency. We will therefore carry out reforms such as reviewing our business portfolio, reorganizing our plants, and optimizing our personnel.
Linking ROHM’s strengths to customer trust
I believe ROHM’s strengths lie in our technical manufacturing capabilities and customer service capabilities.
The mass-production system via hoop lines* ntroduced right after I joined the company is a symbolic example of our manufacturing technology. This system was distinct from the traditional magazine-to-magazine system, highly productive, and so groundbreaking that it was even said that we could not show any customers our lines. I remember even now how the products manufactured on these lines sold with incredible momentum. This overwhelming productivity and improved traceability achieved both cost competitiveness and high quality, establishing a manufacturing system suited to the needs of the mass-production age. We had a late start, but we achieved the top share in the small signal transistors and the diodes market thanks to this technology.
A symbol of our customer service capabilities is our response to the two large natural disasters that happened in 2011, the Great East Japan Earthquake and flooding in Thailand. The Miyagi Plant of LAPIS Semiconductor Co., Ltd. damaged in the Great East Japan Earthquake, resumed operations in around three months thanks to employees’ wisdom and ability to take action. In addition, ROHM Integrated Systems (Thailand) Co., Ltd., which suffered damage in the heavy flooding, brought its high-voltage lines to its second floor, which remained unsubmerged in spite of inundation that was 1.8m deep, and resumed manufacturing in one month. In this way, ROHM demonstrated capabilities that other companies could not easily imitate, grounded in our strong conviction to fulfill our supply responsibilities. That has also led to gaining deep trust from customers such as automobile manufacturers.
Our digital transistors combining a transistor and resistor on one chip, which ROHM was the first in the world to develop, are another product born from dialogue with customers and another example of our solid customer orientation leading to the creation of new value. However, since the COVID-19 pandemic, chances to visit customers directly have decreased, and it seems like that fierce motivation is slackening. We tend to suggest items that we can make in our current sales activities, but we need to take the approach of proposing ways that ROHM can contribute to technological advancement. I would like our employees in charge of sales to increase their speciality to polish their ability to make proposals that actively create new needs.
Hoop line:A production line for mass production.
Strengthening marketing and revising our development structure
In order to reform into a corporate culture that stably generates profit, it is necessary to create original products that other companies do not have or to continue releasing new products. The sales and product development divisions were responsible for the marketing functions for that purpose in the past, but that would not keep up with the speed of the current market. We therefore established the Marketing Headquarters as a specialized unit. The Marketing Headquarters is introducing perspectives from outside ROHM and market sense into our organization, quickly picking up on market trends, and creating a system to promote product development in line with competition and customers’ latent needs.
We are also pouring efforts into using simulation technology to shorten production periods. For IC development, we have set the goal of shortening the period from development to introduction in the market by 30%, and we are strengthening our technology. Improving the precision of our initial samples will make it possible to reduce modification labor and time, and to launch products efficiently and quickly.
Our founder Ken Sato once asked, “Were prototypes of Tokyo Tower and the Seto Ohashi Bridge made in full size? Everything is verified by simulation. Why can’t we do that?” We will once again bear those words in mind and work to accelerate our development.
We must also take a strict approach to the timing of our product launches. It is crucial to deliver fresh technology to the market while it is still fresh. Trailing behind our rivals will only prevent us from differentiating ourselves and cause us to fall into price competition. Going forward, we will switch to a development structure that emphasizes a sense of speed and build product lines that directly connect with improving our performance.
A flexible response to the external environment and the creation of new opportunities
One factor that impacted our performance in FY2024 was the continuously precarious state of world affairs. This led to soaring electricity prices in Europe and also slowed down sales of electric vehicles (EVs). Furthermore, decreased interest in ESG resulted in yet another deceleration of investments in environmentally conscious products, and extremely harsh outside circumstances have continued for ROHM.
However, server demand has expanded rapidly due to the additional establishment of data centers caused by the progress of AI, presenting new growth opportunities for ROHM. We were selected by NVIDIA as one of their partners in 800V architecture for servers. Reliably responding to growth areas, in addition to the fields of industrial and automotive applications, is extremely important for ROHM’s future.
As for geopolitical risks, regarding the tariff policy by the U.S. government, there is relatively little direct impact as the amount of ROHM products exported to the U.S. is limited. Nevertheless, we are working to maintain a sustainable profit structure, securing profit by passing on costs to prices. On the other hand, a sense of uncertainty continues regarding indirect impact through foreign exchange rates and market conditions.
What needs closer attention is the rise in geopolitical tensions. If this is prolonged, it may become necessary to consider local-production-for-local-consumption models in each country where we sell our products.
Regarding EV-related demand, there is still room for expansion, such as autonomous driving which is highly compatible with EVs. Household power supplies in Japan and the U.S. is 100V, meaning the charging environment is limited, so infrastructure development is expected in the future.
We continue to seek collaboration with companies in Japan. We reached a basic agreement to establish a strategic partnership in the semiconductor field with DENSO in May 2025, and we will continue to strengthen collaboration going forward, particularly in development of analog ICs for vehicle electrification and intelligence. Meanwhile, the manufacturing collaboration for power semiconductors with Toshiba Electronic Devices & Storage is proceeding smoothly, with prototyping beginning in factories on both sides to fulfill the responsibility to supply to the global market. We are also currently continuing discussions on a business partnership with Toshiba’s semiconductor business. We would like to continue careful discussions to choose what is best for ROHM amid significantly changing conditions in the semiconductor market.
Recovering trust and improving corporate value by rebuilding our financial foundation and enhancing dialogue capabilities
To recover trust on the stock market and improve corporate value, it is essential to strengthen our financial foundation and enforce accountability. ROHM’s EBITDA fell to its lowest ever in FY2024, and getting back on track is one of the greatest challenges for management to recover trust.
Under these circumstances, feedback from outside the company called for installing an appropriate CFO, and ROHM also felt that was necessary. Therefore, we welcomed Peter Kenevan, who formerly participated in ROHM’s management as an outside director, as the Chief Financial Officer. He not only has excellent knowledge in the field of finance, but also a proven track record nurtured through consulting for semiconductor-related companies during his time at McKinsey & Company. Furthermore, he is a valuable human resource with viewpoints from both inside and outside the company, who is well versed in global business as well as the situation in Japan.
I also believe that dialogue is important for regaining the trust of the stock market. We will further increase the quality and frequency of our IR activities to realize our accountability to investors. In addition to Peter Kenevan, who is in charge of finance, I myself also plan to increase opportunities for dialogue with everyone. We will work to improve capital efficiency and enhance dialogues with shareholders to improve our PBR.
At present, we are also revising our officer remuneration system. Our Director Remuneration Council is objectively and transparently discussing the appropriate balance of fixed remuneration and performance-linked remuneration from various perspectives, including the situation at other companies and the environment surrounding other companies. Going forward, we will further improve our commitment to attaining performance and sharing value with our shareholders by increasing the ratio of stock compensation. Among other measures, we are considering a 1:1 ratio of cash remuneration to stock remuneration for the President’s remuneration, demonstrating my determination to take responsibility for management results.
The human resource strategy to create ROHM’s future
Strengthening human resources is essential to a company’s sustainable growth. First, I would like to revise the remuneration structure to raise pay levels in order to secure excellent human resources. Then, it is important for individual employees to experience their own growth in order to show their abilities. By appropriately providing opportunities for job rotation, promotions, and education, we will arrange a system where employees not only grow but also feel that they are useful in society.
I would also like to create an environment that supports independence and taking on challenges for young employees, such as establishing sections for young employees only, so that these employees can work on topics freely. Furthermore, we will delegate authority to young employees and place them in management positions, and I hope that their new ideas and points of view will be adopted in management.
As for education, I would like to enrich our system for studying statistics, accounting, and foreign languages. This started when I called out to employees to “be the most outstanding in the ROHM Group” when I was President of ROHM Apollo Co., Ltd. I hope through these efforts that our employees will become human resources who can succeed inside and outside the company, with confidence and competency. Furthermore, the use of IT, in particular AI, will be indispensable in the future. We will increase individual productivity and improve corporate competitiveness by providing opportunities for training and practice to cultivate the ability to use high technology, including AI, and having all employees acquire this knowledge and apply it to business.
Finally, we will develop a structure to accurately evaluate results. While we will properly reward employees who produce good results, we will not negatively evaluate employees who fail because they take on challenges, thereby building an environment where employees can take on challenges without fear of failure.
Outlook toward the next MediumTerm Management Plan
We are now discussing our next Medium-Term Management Plan within the company. The plan aims to be able to convert to a culture that can respond to any kind of change in market conditions and can generate profit sustainably. We must therefore proceed with radical structural reforms, including rebuilding our business portfolio, reorganizing our plants, and appropriately stationing employees. This can be likened to crouching before jumping: our top priority is to pursue an improvement in profit margin, even if that means scaling down temporarily. The timing and scale of capital expenditures are extremely important in the semiconductor field, which is part of the facilities industry, and this is not viable without a culture that generates profit.
The semiconductor market in 2025 is expected to be on par with that of the last fiscal year. Against this backdrop, ROHM will focus on optical devices used in sensing, such as laser diodes used in LiDAR that are essential to autonomous driving, in addition to analog semiconductors and power semiconductors. We will establish value unique to ROHM in this field in the future. As development speed will be the key to growth in these areas, collaboration with other companies and M&As will also be considered as options.
In addition, regarding R&D, we will not extend existing products but set the development ratio of new product lineups at 70%, linking this to the creation of a new business that will become our next sales pillar.
To further solidify relationships of trust with our stakeholders
In our Basic Management Policy, it is written to “Secure reasonable profit through a concerted company-wide effort for a comprehensive quality assurance program.” First of all, I believe implementing this is my greatest mission, and I would like to return quickly to a corporate culture with a 20% profit margin. To do this, I think my term of office is a maximum of six years, and ideally, I would like to pass the role of President to my successor at the end of the next Medium-Term Management Plan.
Securing reasonable profit is a starting point since our founding, and it can be said to be a guidepost toward the future. To achieve this, we will carry out structural reforms and forge a company that can continue generating profit no matter how market conditions change. Furthermore, I intend to increase our product appeal with a focus on power, analog, and optical devices, and to transform into a company that is an indispensable presence on the global market.
I believe that the steps to achieving that presence will be the cornerstone of building trust with everyone. I thank you all sincerely for your unwavering understanding and support.
September 2025
President
(Representative Director),
Chief Executive Officer
Katsumi Azuma
