[Corporate Information Meeting] Presentation Material for Information Meeting 2020 (PDF: 4.00MB)

Information Meeting 2020

Copyright © Murata Manufacturing Co., Ltd. All rights reserved.

Facts & Figures

Our Business

We are worldwide leaders in the design, manufacture and supply of electronic components and solutions.

We are Innovators in Electronics.

Our Strengths

• Advanced materials technology and expertise
• Broad product portfolio
• Extensive global manufacturing and sales network

Our Figures

• Established in 1944
• Net sales 1,534,045 million JPY*
• Number of subsidiaries 90* (28 in Japan, 62 overseas)
• Employees 74,109*

*as of March 31, 2020

*Murata Manufacturing Co., Ltd. is not included in the number of subsidiaries

Copyright © Murata Manufacturing Co., Ltd. All rights reserved.

2

Murata Philosophy

Founder Akira Murata

We contribute to the advancement of society

by

Enhancing technologies and skills

Applying scientific approach

Creating innovative products and

solutions

Being trustworthy and,

together with all our stakeholders, thankful for the increase in prosperity.

Copyright © Murata Manufacturing Co., Ltd. All rights reserved.

3

Murata's Value Creation Process

We continue to value Murata Philosophy, even in a changing business environment. Employees around the world sharing Murata Philosophy will create innovation and new value by trusting and cooperating with each other to demonstrate collective strength.

				Electronics in Innovator
		Society to Proposed Value
Products Murata

Copyright © Murata Manufacturing Co., Ltd. All rights reserved.

4

Core Competences

MATERIALS TECHNOLOGY

We create new value by using our knowhow of ceramic, electrode and organic materials.

LAYERING TECHNOLOGY

We are continuously refining layering processes to meet market demand for ever-thinner and smaller components.

PRODUCTION TECHNOLOGY

Our production expertise has accumulated through in-house design and building of equipment and facilities to take full advantage of our materials technology.

RADIO FREQUENCY TECHNOLOGY

Murata's high-frequency filters and modules are part of many of today's and tomorrow's communication innovations. They contribute not only to data transfer but also to wireless charging.

Copyright © Murata Manufacturing Co., Ltd. All rights reserved.

5

Murata Technologies

	Materials
	technology
Materials	Materials
		design	processing
	Front-end
	process
	technology
Laminating &	Printing	Sintering	Nano & thin film	Surface	Precision
		stacking			fabrication	finishing	mechanical
							processing
	Product
	design
	technology
High frequency	Device design	Embedded	High reliability	Circuit design	Simulation
		design			design
	Back-end
	process
	technology
	Packaging	Measurement	Automation	Industrial
					engineering
	Analytical
	technology
	Materials	Failure analysis
		characterization			Copyright © Murata Manufacturing Co., Ltd. All rights reserved.	6

Highlights of our history

company

Murata	Murata	Yokaichi	Singapore	Enlarging	Established	New HQ in	Birth of
established	Philosophy	plant	and U.S.	operations	Wuxi plant	Nagaokakyo. Murata
in 1944	Created.	established.	plants	in Japan	in China.		Cheerleaders.
in Kyoto by			established.	and		Birth of
Akira Murata. Research	Murata		expanding		Sales of 1
		MURATA
	Laboratory	listed on		globally.		trillion yen
			BOY and
	established.	stock				achieved.
				MURATA
		exchange.
					GIRL.
1940s	1950s	1960s	1970s	1980s	1990s	2000s	2010s
Tempera-	Ceramic	POSISTOR®	GIGAFIL®	Chip	SAW filters	Connectivity	Combined
ture	filters	for color TVs	for car	multilayer		modules	gyroscopes/
compen-			phone	ceramic			accelerometers
sating			systems	capacitors
capacitors				(MLCCs)			Power
							amplifier
							modules

innovations

Copyright © Murata Manufacturing Co., Ltd. All rights reserved.

7

Murata locations

EMEA (16)
The Netherlands
Finland	●	Spain
France	●	Switzerland
Germany ●	United Kingdom	●
Hungary	●
Italy

Americas (21)

United States

Brazil

Canada

Mexico

Japan (54) ●●

Greater

China(36) ●●

Korea (3)

Southeast and

South Asia(17)

Singapore

India●

Malaysia ●

Philippines ●

Thailand ●

Vietnam●

(No. of companies) Regional Head Offices

• R&D Centers
• Production plants

Copyright © Murata Manufacturing Co., Ltd. All rights reserved.

8

Markets & Applications

Innovative electronics solutions

Increasing safety, quality of life and efficiency

• from core electronics for smart phones, computers, audiovisual, and home appliances,
• to applications in
  automotive, energy, healthcare.

COMMUNICATIONS

• Smart phones
• Smart watch
• Base station

TV & VISUAL / HOME

• Flat-screenTVs
• Digital Still Cameras
• Refrigerators
• Air-conditioners

HEALTHCARE

• Medical devices
• Biological Sensing

COMPUTERS

• Laptop PCs
• Tablet PCs
• Printers

AUTOMOTIVE

• Safety systems
• Electric cars
• Infotainment

ENERGY

• HEMS
• BEMS

Copyright © Murata Manufacturing Co., Ltd. All rights reserved.

9

Global Market Shares*

40%	35%	50%	40%
Chip multilayer	EMI suppression	Surface acoustic	Multilayer LC filters
ceramic	(filters, couplers,
filters (EMIFIL®)	wave filters
capacitors	baluns, etc.)

40%	95%	75%	30%
Micro Batteries	Shock		High frequency
"Silver Oxide	Ceramic resonators
sensors	inductors
Batteries"

*Global market shares based on Murata's presumption. Share changes according to market or application.

Copyright © Murata Manufacturing Co., Ltd. All rights reserved.

10

Typical Number of Components in Applications

		Typical number of components in
Product	Smart Phone	Laptop	Tablet	Automotive	TV	Smart watch
category
Chip multilayer ceramic	1000	800	600	3000-8000	600	200
capacitors
EMI suppression filters	100	60	90	200	50	30
(EMIFIL®)
Surface acoustic	4-70		4-70
wave filters
Connectivity modules	1	1	1	1	1	1
Shock sensors		1-3		4
Ceramic resonators				15-20
Chip inductors	300	30	200	300	30	30
Multilayer devices	2-14		2-7	2-8		2-3
(Filter, Coupler, Balun, etc.)

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11

Product Line-Up

		Noise Suppression Products
Capacitor	Inductors	/ EMI Suppression Filters /	SAW Filters
		ESD Protection Devices
Thermistors	Sensors	Timing Devices	Quartz Devices
(MEMS Resonator / Crystal Unit /
(Temperature Sensors)
	Ceramic Resonator / Oscillator)
Connectors	Power Products	Batteries	RFID Products
Front End Module	Connectivity Modules	Balun	Coupler

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12

Focus areas

13 Copyright © Murata Manufacturing Co., Ltd. All rights reserved.

Market Environment

Politics

Economy

Society

Technology

Opportunities / Risk

COVID-19

Restrictions on economic activities. Implementation of government stimulus measures.

ESG

Strengthening of environmental regulations

Trade friction

Tensions between the US and China

Rise of protectionism

Change in earnings environment by fluctuations in exchange rates

Recovery period of the economy (Earlier than expected or Delayed)

Realization of a sustainable society (SDGs)

Progress of digital transformation

Change in lifestyles

Restrictions on activities by a new lockdown

Digital technology innovation (5G/AI)

Automobiles become more electrification and autonomous driving

Delay in technological innovation by geopolitical risk

• 5G and automotive technological innovation remain unchanged. COVID-19 has changed society significantly.
• Business management from a long-term perspective through a big-picture approach to an evolving society.

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14

Market Environment

Social Change caused by COVID-19

• Adoption of AI, robots, and the like
• Expansion of digital consumption
• Drone transportation and Autonomous

driving etc..

• Mounting health consciousness
• Information security

Digital Shift

Non-touchOnline

Automation Communication

Safety Sustainability Security

• Teleworking and online education
• xR technology and hologram technology

etc..

• Measures against climate change
• Sustainable use of resources

etc..	Changes in the
	sense of values

etc..

• Demand for electronic equipment grows as COVID-19 accelerates a digital shift.
• Innovation brought by social change is a business opportunity.

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15

Communication Market (1/4)

Expanding boundaries of electoronics

LPWA modules
Smart city

Wireless sensing solution

Smart grid

Oil & Gas

	Plant
AI module with Coral
	Hospital
intelligence

Consumer	Industry	Social
infrastruc
appliances

			ture
		Connected
Structure
	port
monitoring
		Wideband Ultrasonic
			Transducer

3DHaptics™

				Connected
				aviation
		Connected
		railways			Secure IoT Platform
Connected
				Wi-Fi® modules
roadways

• Diverse needs created by 5G technology.
• Provide value to the expanding electronics market as an "Innovator".

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16

Communication Market (2/4) Market Forecast

Smartphone quantity forecast

The ratio of 5G smartphones will rise, whereas growth in the total number of smartphones will slow down.

(M Units)	(Based on estimate)
1,500			60.0%

1,000

30.0%

500

-										0.0%
2018	2019	2020e	2021f	2022f	2023f
				Total				5G Ratio

	Base station quantity forecast
	5G-compatible base stations keep increasing.
(M Units)	(Source: Estimated by the Company
15	based on Mobile Experts）

10

small cell

5		​​Macro ​cell(5G
		Macro cell(4G)

Other

0
2018	2019	2020e 2021f	2022f	2023f	2024f	2025f

*In macrocells, the number of RRUs is totaled.

Global demand forecast by category in the CPS/IoT market

(T Units)		*CPS: Cyber Physical System
	(Source: JEITA)
600	2018-2030

CAGR 6.8%

400

200

0

2018	2020	2025	2030
Infrastructure			IoT devices			Solution services

Global demand in the CPS/IoT market will grow year after year.

5G-compatible IoT devices and solution services will drive the demand.

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17

Communication Market (3/4)

Technological Trends (for mobile devices)

Technological issues with 5G-compatible mobile devices
Downsizing of	Increase in energy	Thermal
devices	consumption	problems

Demands for high-	Increase in energy	Increase in heat
generation because of
density mounting	consumption because
higher amounts of
Demands for smaller	of higher frequency and
information
components	higher functionality
processed

	Requirements of components and modules
		Low loss		Low electricity		Guarantee
Small size				against high
	characteristics		consumption
				temperatures

• Technological issues need to be solved on the level of components for the wide spread of 5G-compatible mobile devices.
• Beat the competition with responsiveness to customers, technological clout, and product appeal.

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18

Communication Market (4/4)

Technological Trends (IoT Business)

Technologies necessary for IoT business

Murata's Strengths

"Collect and connect data"

Sensing	Wireless
communication
technology
technology
Detect information accurately	Transmit information to the cloud

Lineups of high performing and

high-quality products

D

evice desig

n

Sensors

Wireless

Network DB

Applications,

Your Ideas

communication

Interfaces

Power/

modules

Analysis

Batteries

Edge-side technology

IoT Solutions

Knowledge of wireless

communication technology

Total solutions by fusing components and module, software

Create a business that can be made possible only by Murata, based on knowhow of technology development of electronic components.

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19

Automotive Market (1/4)

Future vision of automobiles

• High penetration of eco-friendly vehicles including EV and HV.
• Emergence of fully autonomous vehicles with a variety of sensors monitoring the situation seamlessly and AI making decisions.
• Emergence of diverse content and services through an automotive shift to IoT.

Infotainment

MLCC	V2X modules	Common Mode
		Choke Coil
EMI suppression	Wi-Fi® modules	etc..
filters

Powertrain		ADAS・Safety
MLCC		MLCC
Film capacitors		Silicon capacitors
Power inductors		MEMS sensors
Thermistors		Ultrasonic sensors
Ceramic Resonators		Timing devices
etc..		etc..

• Demand for electronic components will increase as automobiles become more electrification and autonomous driving.
• New demand is expected for communication modules, sensors, and other components.

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20

Automotive Market (2/4) Market Forecast

Expected quantity by powertrain

Expected quantity by autonomous driving level

Electrification will be accelerated by stricter environmental regulations in countries around the world.

Autonomous driving will become popular toward the realization of safe and comfortable transportation.

(M Units)

100

80

60

40

20

0

(Source: Estimated by the Company	(M Units)
based on IHS Markit）	100
			80
		FCEV	60
		EV	40
		HEV
		PHEV	20
		Mild HEV

Conventional

0

(Source: IHS Markit)

Level 4

Level 3

Level 2

Level 1

Level 0

2018

2019

2020e

2021f

2022f

2023f

2024f

2025f

2018

2019

2020e

2021f

2022f

2023f

2024f

2025f

Understanding market and technology trends

Vehicle disassembly: Component demand, design concept
Driving evaluation: Required technology and level
	(By our research)	Conventional
	vehicles	HEV	EV
	(pcs)	Autonomous driving
	Lv2	Lv3
		Lv0
- Feedback to R&D	Capacitors	3,000	Min. 6,000	Min.10,000
- Improved demand forecast accuracy
Inductors	300	Min. 600	Min. 600
- Enhanced proposal ability for customers

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21

Automotive Market (3/4) Technological Trend

Technologies required of automotive components	Murata's Strengths
	Quality and reliability that	Technological capability to create
can withstand tough environments!
			highly reliable and high
High	High heat	High	performing products
temperature	dissipation	humidity
guaranteed		guaranteed

<>

High temperature and high humidity

Use of higher-power

electronic circuits

Broad range of product lineups

High	Measures	Long-term
voltage
against risk	reliability
compatible
of short
	circuit

Supply capacity to mass-produce

products with uniform quality

• Demonstrate competitive superiority in fields that demand high quality and reliability.
• Make advance development and anticipatory investment, step by step, with an eye on future growth markets.

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22

Automotive Market (4/4)

Advance of Autonomous Driving Technology and Sensor Technology

Autonomous

driving system

Necessary positioning

error tolerance

• Accelerometer/ Gyroscope sensor

Level 1	Level 2			Level 3	Level 4	Level 5
Driver	Partial			Conditional	High	Full
assistance	automation			automation	automation	Automation
		Parking assist				Valet parking
Lane departure warning system	Autonomous driving in highways	Autonomous driving in city roads
～1m		～0.3m			～0.2m			< 0.2m (constantly)
(within 10 seconds)		(within 15 seconds)			(within a few minutes)
SCC3000

4 or 5 DoF inertia sensor

SCHA600 (Mass-production start	HPC1 (Under development)
scheduled for 2021)
6DoF inertia sensors
6DoF inertia sensor

Core technologies

Noise reduction, improved anti-vibration characteristics and improved temperature characteristics realized with Murata's unique 3D-MEMS design/processing technology and gyro driving/sensing principle.

Required distance			20cm～4m				15cm～5.5m			10cm～7m
performance
• Ultrasonic			AF-VE
sensor		Drip-proof transducer
							(Mass-production start scheduled for 2021)
					SRT15
		Improvement of reverberation
					Drip-proof transducer
		characteristics by structural	S/N improvement by		Ultrasonic module (under development)
		design technology
		piezoelectric material technology	Improvement of reverberation characteristics

by lamination technology and circuit technology Reduction of characteristics variation

by assembling technology

The more advanced autonomous driving technology becomes, the higher sensor technology are required.

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23

Product Strategy Three Portfolios

Keys to Business Success

• Building of a business model that complies with cooperation with customers

• Creation of definite value and establishment of a monetization model

• Technology that differentiates Murata from competitors

• Realization of demands from customers to become the market leader

• Mass-customization by standardization of processes and materials

• Evolution of core technology

• Continuous technological innovation

• Supply capacity that realizes high cost competitiveness

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24

Product Strategy - Capacitors

Communication Market

Automotive Market

0402M size		0603M size

Small size	High
and high	reliability
capacitance

Automotive Market

Market	Market	Market
Shares	Shares	Shares
60%	50%	50%

0402M size / 1.0μF

Technological

capability

Supply power

Quality

High capacitance products

for automotive use

Realized large-capacitance

products about 2.1 times higher than Murata's conventional ones of the same size

Industry's highest level of capacitance for

automotive use

3216M size / 47μF

3225M size / 100μF

Further grow in the communication market and automotive market by leveraging competitive superiority.

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25

Product Strategy - Capacitors

Communication Market

Automotive Market

Expected number of Consumer MLCCs demanded

Demanded quantities will increase year after year as 5G becomes popular.

In-vehicle MLCC market forecast (quantity basis)

Trend of automotive electrification remains unchanged. Large-capacity components are increasing especially rapidly.

				(Based on our estimate)
	PC, Server & Strage
1.8
	Smartphone & New edge
	device
	Base station
1.4
1.0
0.6
2019	2020e	2021f	2022f	2023f	2024f	2025f

					(Based on our estimate)
1.8	Number of large-capacity In-
	Vehicle MLCCs
	Total number of in-vehicle
	MLCCs
	Automobile production
1.4
						Advance in
						automobile
						electrification
1.0
0.6
	CY2019	CY2020	CY2021	CY2022	CY2023	CY2024	CY2025

Usage quantity of MLCC for smartphones

Usage quantity will grow by 10 to 20% by making products compatible with 5G.

(pcs)

(By our research)	Low-end	Middle-range	High-end
Smartphone	400	700	900
~500	~800	~1100

Number of in-vehicle MLCCs used

(pcs)

(By our research)	GAS	HV	PHEV	BEV
Powertrain	300~500	1,000~1,600	1,500~2,000	2,000~2,500
ADAS		2,000~3,000
Safety		300~1,000
Infotainment		500~2,500
Other		500~2,500

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26

Product Strategy - RF modules

Technological trends for modules

Key parts of modules

mmW

Filter

Module

Substrate

SAW・I.H.P. SAW

LTCC

MIMO

LC・XBAR®

MetroCirc

Module

MIMO

Main-Module

Module

w/ CA

w/Sub-6GHz

Passive

Main-Module

components

w/ CA

Diversity

Capacitors

Main-Module

Inductors

Module

Diversity

w/ CA

Diversity

Module

w/Sub-6GHz

Module

w/ CA

LTE

LTE

5G

Power amplifier

Advanced

Antenna switch

Low noise amplifier

Modulization will advance in mid-class terminals as well along with the addition of 5G-compatible modules

• Increase in 5G smartphones will accelerate modulization.
• Component lineups, which were strengthened by M&A, will be optimized for modules.

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27

Product Strategy - Filters

Market forecast of front-end modules

High Frequency and Size Trends

(Source: NAVIAN)

Size

LC

Market forecast of filters	XBAR®
		I.H.P. SAW
	(Source: NAVIAN)

SAW

BAW

Frequency

• 5G will expand demand for modules and filters.
• Line-upsand characteristics (high frequency/broadband/steepness/low attenuation/ small size, etc.) will become important.

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28

Product Strategy - MetroCirc™

Features of MetroCirc™

MetroCircTM sales expansion strategy

High frequency	Highly
characteristics	multilayered

Features of

MetroCirc™

Low water	Flexibility
absorbency

High frequency characteristics of MetroCirc™

(Based on our estimate)

Transmission loss[dB/100mm]	MetroCirc	Superior
	characteristics in the
	MPI	millimeter wave band
	differentiates

MetroCircTM from competing products.

Frequency[GHz]

Market	- Develop new customers
based on existing
expansion	applications
- Develop new applications

with 5G as a keyword

Strengthen	Develop modules using
collaboration
MetroCircTM as the
with other
substrate
businesses

• Utilize high frequency characteristics and flexibility in millimeter-wave modules and transmission lines.
• Capable of making proposals that can reduce the number of modules and that can enhance design freedom.

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29

Product Strategy - Battery

(M cell)

10,000

5,000

0

Market Forecast for Consumer Lithium Ion Batteries

(Source:B3 corp)

Power Tool

IoT・Wearable

E-Bike

Celphone

Tablet PC

Note PC

2018

2019

2020e

2021f

2022f

2023f

2024f

2025f

• The battery market will keep growing as power sources are replaced, and the use of 5G and IoT become popular.
• Diminish business for smartphones and apply selection and concentration to power tools and small batteries that are expected to grow.

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30

Product Strategy - Battery

Competitive Superiority for Sales Growth

Power tools

• High output technology with product quality
• Shock-absorbingpackaging technology

Small batteries

• All-solid-statebatteries with high capacitance
• Small packaging technology

Reform of Cost Structure

• Enhancement of indirect productivity through optimization of logistics and production, and systemization of supply chains
• Portfolio management and companywide reallocation of resources
• • Consolidation of production bases
  • Diminish business of batteries for smartphones with low profitability
  • Make continuous efforts to optimize production and overhaul fixed costs
  • • Reform is underway in order to turn profitable in FY2021.
    • Utilize and establish competitive superiority in growth markets.

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31

Product Strategy - IoT solution

	Worker safety	Safe and
Valuable	comfortable
monitoring
data	working
system
	environment

Software

Network

Sensor

Temperature,

Daily life humidity,

heartrate and

activity amount

Improvement of operational rates

Effective and efficient medicine

Revitalization of meetings, etc.

Unique algorism

5G, LPWA Wi-Fi®, RFID Bluetooth®, etc.

Ceramic, Wireless,

MEMS, etc.

Vibration, equipment operation, electric current, conversation, respiratory rate, etc.

Create valuable data from everyday life through unique sensors, networks and software.

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32

Progress in Midterm Direction 2021

	Assumed foreign exchange:
	110 YEN / USD
	FY2019	FY2021
Sales target (JPY)	1,534 billion	2 trillion
Operating income	16.5％	Min.17%
ratio
ROIC(pre-tax basis)	16.1%	Min.20%

Implementation of Portfolio Management

Adoption of a business evaluation model

Establishment of Advanced Supply System & Exponential Productivity Enhancement

Efficiency improvement in manufacturing capability (monozukuri) by methods such as active utilization of IoT.

Harmony among people, organization and society

• Setting target values for key issues(materiality)
• Implementation of global surveys of employees

• Economic slowdown is a risk to achieving sales target on time.
• Make continuous efforts to enhance the operating income ratio and ROIC.
• Three company-wide issues for maintaining healthy growth have been addressed without fail.

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33

Mid-termDirection 2021 Strengthening Monozukuri capabilities

Efforts for Smart Factories

1. Response to diverse human resources

• Robots and AGV
• Processing instruction system

1. Improvement in manufacturing quality

• Abnormal sign management
• AI utilization
• Processing condition automatic control

1. Improvement in equipment efficiency

• Predictive maintenance
• Equipment operation monitoring
• Maintenance work support system

RFID

Developments

Sensor

Tablet

Other bases

Sellers

1. Improvement in design quality

• Strengthening of information coordination between development and manufacturing

1. Response to more complicated production

• Production planning system
• Work arrangement system

1. One virtual base

• Information centralization
• Remote support

1. Energy-saving

• Energy management

Aim at improving direct labor productivity and equipment productivity through "Connectivity and Automation"!

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34

Mid-termDirection 2021 Key issues (Materialities)

Resolution of social issues through business (opportunities)

●Highly efficient components that contribute to

Key strengthening climate change measures

issues ●Miniaturized components that promote resource circulation

○To explore business opportunities based on

target social issues.

○To quantify the non-financial value of light, compact and high efficient products.

Initiatives for social issues in business processes (risks)

Identify key issues (Materialities) and reflect them in business management.

Environmental

Social

Governance

	●Strengthening climate change		●Safe and secure workplace and health
Key	measures	Key	and productivity management	Key
issues ●Resource circulation	issues●Respect for human rights and	issues
	●Prevention of pollution and		diversity
	management of chemical substances		●Coexistence with local communities

●Fair business transactions ●Information security ●Business continuity

management (BCM)

					○Not to cause serious industrial			○To spread the concept of
target ○To reduce greenhouse gas emissions						information security
target		accidents	target
	○To achieve a situation where
	○To improve waste emissions				○To operate human rights and labor			the PDCA cycles for risk
					management systems
							management

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35

ESG Initiatives

Environment

Response to TCFD	Adoption of renewable energy	Promotion of utilization of
		storage battery systems

• Announced support on February 7, 2020
• Disclose information in "Murata value report 2020"

• Installed one of Japan's largest parking- lot-based mega solar systems
• Plan to reduce 1,698 tons of CO2 per annum

• Hybrid power conditioner with built-in storage batteries
• One unit is capable of handling "Selling of surplus electricity from solar power generation," "Saving of purchased electricity using storage batteries," and "Electricity supply in an emergency."

Response to COVID-19

Murata has put in place the following initiatives in order to safeguard the health and safety of	Co2 measuring instrument
employees as its top priority. Furthermore, Murata is running operations responsibly and
continuously to avoid delays in supplies of components used for equipment that a great number of
people need in society at the moment, such as ventilators and other medical equipment, PC-
related devices necessary for teleworking, and essential appliances for comfortable home life.

• Examples of Efforts

Hard measures	Soft measures
• Encouragement of teleworking	• Published a knowhow booklet that facilitates
• Change in office layout to avoid the 3Cs	teleworking in healthy manners
(Closed spaces, Crowded places, and Close	• Support new employees
contact)	• Published a booklet that collects practical tips
• Behavior tracing in the company cafeteria	for communication, labor management, etc., to
• Make comfortable meeting rooms with the	be made under emergency conditions (For
Murata product "Co2 measuring instrument."	managers)

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36

Financial Strategy

Risks

COVID-19 and US-China friction

Strong financial foundation

• Secure credit lines from financial institutions
• Diversify funding methods by issuing bonds
• Cash reserves on an appropriate level
• • Operate with a cash reserves turnover of 2.5 to 3.5 months as the guideline

Growth Opportunities

Communication market and Automotive market

Business operation with risk taken

• Allocate resources from the perspectives of ROIC and growth
• • Priority investment in the communication and automotive markets
  • Diminution of business of batteries for smartphones and low-end modules
• Investment decision that reflects capital costs, and business evaluation
• • Collection period and investment profit ratio

Growth and profit distribution
• Midterm Direction 2021
- Net sales of JPY 2 trillion, operating income ratio of 17% or more
and ROIC of 20% or more (before tax)
• Stable increase in dividends
- DOE of 4% or more with a medium-term payout ratio of about 30%
as the guideline
• Share buyback at appropriate time
Copyright © Murata Manufacturing Co., Ltd. All rights reserved.	37

Return to Shareholders

• Dividend In order to further implement our basic policy of striving for a stable increase in dividends, we have adopted DOE (Dividend on equity ratio) as our shareholder return indicator. From FY2020, we aim to achieve DOE of 4% or higher over the medium term with reference to dividend payout ratio of approximately 30%.
• Share buyback As a means of returning profits to shareholders, we have been buybacking shares in a timely manner to improve capital efficiency.

(B JPY)																	Payout	DOE
																ratio
80.0						Annual dividends			Share buyback				80%	8%
						Payout ratio				Dividend on equity(DOE)
70.0																		70%	7%
																		70
60.0																60	62	60%	6%
50.0															55			50%	5%
	32												44	47				40%	4%
40.0
		27			15	15			15			38						30% 3%
30.0
		16
											28							20%	2%
20.0					22	22		21	21
			20		21
10.0	12	11	16				15											10%	1%
0.0																		0%	0%
FY03	FY04	FY05	FY06	FY07	FY08	FY09	FY10	FY11	FY12	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20
																		(estimate)
													Copyright © Murata Manufacturing Co., Ltd. All rights reserved.	38

Cash Flows

• In FY2019, we issued corporate bonds to raise funds and invested in capital expenditures in anticipation of higher demand for electronic components in the automotive and communication market.
• In FY2020, we will decrease capital expenditures; operating cash inflow is expected to start exceeding cash outflow from capital expenditures and dividends.
  (B JPY)

40.0

Total dividends Capital ependitures

35.0 M&A

Purchases of treasury stock

30.0

25.0

Operating Cash Flow

20.0

15.0

10.0

5.0

0.0

FY07

FY08

FY09

FY10

FY11	FY12	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20
									(estimate)

			39
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ESG index and Evaluations from External Organizations

Status of adoption in ESG index

Evaluations from/activities with external organizations

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40

This report contains forward-looking statements concerning Murata Manufacturing Co., Ltd. and its group companies' projections, plans, policies, strategies, schedules, and decisions. These forward-looking statements are not historical facts; rather, they represent the assumptions of the Murata Group (the "Group") based on information currently available and certain assumptions we deem as reasonable. Actual results may differ materially from expectations due to various risks and uncertainties. Readers are therefore requested not to rely on these forward-looking statements as the sole basis for evaluating the Group. The Company has no obligation to revise any of the forward-looking statements as a result of new information, future events or otherwise.

Risks and uncertainties that may affect actual results include, but are not limited to, the following:

1. economic conditions of the Company's business environment, and trends, supply-demand balance, and price fluctuations in the markets for electronic devices and components; (2) price fluctuations and insufficient supply of raw materials; (3) exchange rate fluctuations; (4) the Group's ability to provide a stable supply of new products that are compatible with the rapid technical innovation of the electronic components market and to continue to design and develop products and services that satisfy customers; (5) changes in the market value of the Group's financial assets; (6) drastic legal, political, and social changes in the Group's business environment; and (7) other uncertainties and contingencies.

The Company undertakes no obligation to publicly update any forward-looking statements included in this report.

Copyright © Murata Manufacturing Co., Ltd. All rights reserved.

41

Thank you

Copyright © Murata Manufacturing Co., Ltd. All rights reserved.