Summary of Q&A session of Conference call

JSR Corporation

Summary of Q&A session of Conference call on Nov. 8th, 2021 to explain Business

Results for FY21Q2 Summary of Explanations

Q1)Overall Digital Solutions Business

1. Excluding the impact of the Inpria acquisition, what are the outlooks for Semiconductor materials and Display materials?

1. The Semiconductor materials is expected to continue to be favorable in FY21H2. We initially expected sales growth of +8% YoY, but achieved +13% YoY in FY21H1 and expect +15% YoY for the full year. Core OP is also expected to grow at +25% YoY for the full year, excluding the impact of Inpria acuqisition.
   On the other hand, panel prices declined after peaking in the summer, and we factored in the possibility of adjustments of customer operation due to seasonal factors such as the Chinese New Year, although the business environment for Display materials was favorable in both quantity and price in FY21H1.

1. Excluding the valuation profit for Inpria, it appears to have increased sales and decreased profit HoH in FY21H2. Are there any factors that depress business performance, such as an increase in expenses?

1. The main reason for the decline in profit HoH is that we conservatively forecast a slight decline in profit for Display materials, reflecting a decline in customer operation rates and a decline in panel prices. As mentioned above, Semiconductor materials performed very well in FY21H1, and further growth is expected in FY21H2. So it is expected to post a slight increase in profit HoH for Semiconductor materials.

Q) What is the impact of the Inpria acquisition?

1. The 6 billion yen valuation profit on the acquisition of Inpria as a wholly-owned subsidiary is included in FY21H2 of the revised projection. It has two main components: (1) evaluation profit on existing equity; and (2) incoporation of P/L of Inpria itself and amortization loss of goodwill (PPA is in progress and the amount is being reviewed). As for the latter, the remaining five months of the current fiscal year will be counted from November, the impact is not expected to be significant.

Q2) Semiconductor materials

1. EUV photoresist's sales were up more than double of gowth in FY21H1 YoY, but what is the latest full-year outlook? Also, I think sales for 3nm will start in the future, so please elaborate more on how you feel about the next term.

1. EUV photoresist was initially expected to grow strongly in the current fiscal year as well, but we forecasted its growth ratio relatively conservative since the sales volume is still small and it is diffuclut to forecast the timing of shipment for the initial projection. In fact, strong sales growth has continued since the later FY2020, and sales growth in FY21H1 was more than double of growth at YoY. We expect stronger growth in FY21H2. Overall, we expect YoY growth to be nearly double in FY2021, despite the strong growth in FY20H2. In addition, we expect sales for 3nm product starting in FY21Q4, and increase in market share is reflected in the revised full-year projection. In FY2022, we believe that in addition to mass production for existing 5nm product, the start-up of 3nm product will proceed strongly. Also, customers are now evaluating for EUV adopotion in the DRAM process, and it is possible that the part of it will be launched in FY2022.

1. Does the increase of market share for the 3nm product come from existing chemically amplified resists, not from Inpria's metal resists?

1. We expect the market share of chemically amplified resists to increase and it is almost certain. Metal resists are being evaluated separately.

Q3)Life Science Business

1. In FY21H1, core OP increased only 300 million yen despite the sales increase. We recognize that this is due to an increase in fixed costs, but we would like to know the future fixed costs.

1. In the CDMO business, sales growth in FY21H1 was weaker than initially expected. This was mainly due to material supply shortages that have occurred since the end of 2020. However, we expect it to be back to normal production in FY21H2, and expect sales growth in the CDMO business in FY21H2. Meanwhile, the North Carolina capacity expansion, a joint project with customers, will start the operation in FY21H2. As a result, personnel expenses have increased. Although costs will increase toward the end of this fiscal year, sales growth is expected to be higher in and after FY21Q4. Both sales and profits are expected to increase significantly from FY2022.

1. The increase in fixed costs is the largest in FY2021, and is it fair to assume that incremental costs

in FY2022 will not be as much as this fiscal year?

Also, is it correct to think that the main reason for this is that personnel expenses account for a large portion of fixed costs, and you have been able to make a significant progress in recruting people in FY21H1?

1. Although it is still early in the process of formulating the budget for FY2022, we believe that this is the correct understanding. We increased our staff in FY21H1 and will continue to increase in FY21H2, but we believe this increase will cover the staff required for operations beyond FY21Q4 to some extent. Therefore, the increase in fixed costs will be smaller in FY2022 than FY2021. On the other hand, as mentioned above, sales are expected to increase more in and after 21Q4, so that the core OP margin ratio is expected to increase.

Q) What is the background of the upward revision to the full-year projection?

1. Sales growth in FY21H1 was very strong, except for KBI, where growth was limited. In FY21H2, we expect its core OP margin ratio to reach double digits due to the recovery in production at KBI. In the Life Sciences business as a whole, we raised its full-year sales forecast to 5 billion yen and expect YoY growth of 30%.

Q )Is there any delay in capital investment and in securing human resources in the progress of the CDMO business expansion plan?

1. The capacity expansion in North Carolina is progressing smoothly as planned, and the recruitment of human resources is proceeding accordingly. In addtion, capacity expansion is planned in Geneva, but they are expected to start in the summer of 2022. SELEXIS (cell line developments) and KBI (CDMO) are working together to develop business, and orders are going well.

1. Regarding the impact of the material supply shortage in the CDMO business, if a large-scale project is launched in FY21H2, I assume that more materials will be needed. Is it possible that material procurement will become a bottleneck?

1. CDMO operations have been back to normal since October, 2021. We are taking measures based on the capacity expansion in the future, and we think that there is no concerns at the current situation.

1. I think that no major capacity expansions are planned except the ones in North Carolina and

Geneva, but it is also believed that these capacities have already been booked at a ceratain level. What do you think about the further capacity expansion?

1. Capacity expansions in North Carolina and Geneva doubles existing manufacturing capacity. We have invested to have sufficient capacity, but the one in North Carolina is a joint project with customers. Therefore, customer demand is somewhat visible, and North Carolina's capacity could be filled relatively early. In this case, further investment will be necessary under favorable circumstances.

1. Bioprocess materials performed well in FY21Q2 following FY21Q1. I would like to know the sales situation.

1. We expect Bioprocess materials to show strong growth in FY2021. The number of projects grew by more than +30% YoY as of the end of September 2021, and we expect steady growth in the future.

Q4) About Cash Management

1. In FY2021, there were various events, such as the sale of the Elastomers business, the expansion of Yokkaichi Plant, and the acquisition of Inpria. Is there any possibility of another M & A worth 200 to 300 billion yen during the current mid-term plan period? In this case, is there any change in the idea that the target field is Semiconductors rather than Life sciences?

1. As for the financial situation, it became net cash at the end of September 2021, and became net debt position by acquiring Inpria in October 2021. When the cash income from transferring the Elastomers business comes in April 2022, it is assumed to become net cash again. We believe that even if we conduct M&A of 200 to 300 billion yen during the mid-term plan, it is within the range where we can fully manage it. In addition, if large-scale M&A is to be conducted, the field is more likely to be Semiconductor materials than Life sciences.

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