Ⅲ. Strategies by Business and Function (PDF:908KB/18Pages)

S T R A T E G Y S E C T I O N

III. Strategies by Business and Function

Strategies by Business	60
Musical Instruments Business	60
Audio Equipment Business	64
Industrial Machinery
and Components Business	66
Strategies by Function	68
Research and Development	68
Production	72
Sales	74

Function and Business by Strategies

58		Yamaha Group Annual Report 2021	Yamaha Group Annual Report 2021		59

STRATEGIES BY BUSINESS

MUSICAL INSTRUMENTS BUSINESS

With development capabilities pertaining to both the tangible and intangible elements of products backed by extensive expertise, Yamaha is working to build lifelong relationships with customers and earn their highest evaluation. At the same time, we are strengthening our brand power to achieve overwhelmingly high levels of profit.

Business Strategies of Make Waves 1.0 Medium-Term Management Plan

Business Vision

Receive the highest possible evaluation from an even greater number of customers Realize overwhelmingly high levels of profitability by enhancing our brand power

Key Strategies

Takuya Nakata

Director, President and Representative Executive Officer Executive General Manager of Musical Instruments Business Unit

Business Overview

In the musical instruments business, which represents our core business, we possess numerous core technologies related to sound

Review of Fiscal 2021

In the musical instruments business, revenue and profit were down year on year as a result of the activity restrictions imposed in

	Develop global connections and ties		Realize high levels of profit by expanding our		Create value through the combination of essential
	with customers		business portfolio		value enhancement and elemental technologies
	Promote the Yamaha brand and contribute to		Enhance product lineup and launch products that		Promote the essence of musical instruments and
	society through our businesses		cater to local characteristics		integrate IT and digital technologies
	Promote efforts to form direct ties with		Strengthen response capabilities to address		Strive to create new value by forming broader,
	customers		diversifying product usage and the needs of		deeper, and longer ties with users
				customers in each age group
	Opportunities						Risks

and music that have been cultivated over our long history. In addition to developing acoustic instruments such as pianos, wind, string, and percussion instruments, and digital musical instruments that leverage electronic technologies, we are also rolling out other products such as hybrid instruments that meld both acoustic and digital technologies.

In recent years, we have been utilizing AI, kansei (sensibility) engi- neering, and simulation technologies to take on challenges in the digital network environment and other new domains. Through our diverse product lineups and global sales and service structures, which also include the music school and software content businesses, we

response to the COVID-19 pandemic as well as the procurement issues that arose from a fire at the factory of a parts supplier. We responded to these issues through measures including the swift development of designs using alternative parts and the review of expenses related to our business activities. Measures implemented in fiscal 2021 included strengthening our connections with customers and with society under the new normal by promoting digital market- ing, e-commerce, and live commerce initiatives. Meanwhile, we launched a number of distinctive products, including the CLP-700 series of digital pianos that offer a high level of expressiveness to

Improvement in the promotion of value that fits the life stage of each customer through digital marketing

Enhancement of product development capabilities for pursuing the essence of musical instruments due to the progression of digital technologies and AI

Incorporation of demand from the middle class in emerging markets through the expansion of sales networks and e-commerce; capturing of demand through the development of product models that cater to local music cultures; and incorporation of demand from new growth in the musical-instrument- playing population through music popularization activities

Rise in new ways of enjoying musical instruments online that incorporate remote technologies

Impacts of the COVID-19 pandemic

Entrance of manufacturers from IT and other industries, potential for saturation of e-commerce brands utilizing OEMs

Potential for the trend of growth in the sharing economy and secondhand market to accelerate

have secured a position as the world's leading comprehensive musical instruments manufacturer.

match the sensitivity of the player and the YDS-150 digital saxophone that couples the expressiveness of a standard saxophone with noise- reduction features. Another new product introduced was Charlie™, the world's first communication robot to communicate via singing.

Priority Themes for Fiscal 2022

1. Implement key strategies of the medium-term management plan and rebuild foundations for sales and profit growth

2. Enhance and accelerate sustainability initiatives

by Strategies

Revenue / Core Operating Profit / Core Operating Profit Ratio

(Billions of yen)

(Billions of yen)

Sales of Major Products

(Billions of yen)

3. Improve resilience

Business

400					80
300	14.0%	13.6%	14.1%	60
200					40
100					20
0	20/3	21/3		22/3	0
				(Forecast)
Revenue	Core operating profit (right)	Core operating profit ratio

120
100			+10%
80
60		+5%
			+10%
				+11%
40
20
0		Pianos	Digital musical	Wind, string,	Guitars
			instruments	and percussion
20/3	21/3	22/3	(Forecast)	instruments

Business Policies for Fiscal 2022

In the challenging operating environment projected, we will pursue improved brand power and high earnings with a focus on rebuilding foundations for sales and profit growth, enhancing and accelerating sustainability initiatives, and improving resilience through initiatives built on top of the foundations furnished by the key strategies of the medium-term management plan.

Major Initiatives Pertaining to Priority Themes for Fiscal 2022

Enhancement and Acceleration of Sustainability Initiatives

Efforts to ensure the sustainability of our corporate activities will include working to ensure that the maximum value is extracted from finite resources, incorporating an eco-friendly perspective into design and production activities, and reinforcing frameworks for after-sales recycling, reuse, and other functions. At the same time, we are engaged in a variety of social contribution activities as part of our business. These activities include the School Project underway in emerging countries, musical instrument donations and other education support

Function and

Overview of Markets by Mainstay Products and Yamaha's Operations / Yamaha's Strengths / Main Competitors

	Overview of Markets and Yamaha's Operations	Yamaha's Strengths	Main Competitors
	Continued growth in the piano market in China	Robust lineup that can accommodate customers of all levels developed	Steinway & Sons (Germany and
	Increasing focus on higher value in mature markets	through dedication to the fundamental essence of acoustic pianos	United States)
Pianos		Wide-ranging proposals for enjoying pianos that apply technologies	Guangzhou Pearl River Piano
	pertaining to Disklavier™, TransAcoustic™, and other products	Group Co., Ltd. (China)
			Kawai Musical Instruments
			Manufacturing Co., Ltd. (Japan)
	Strong performance of digital pianos amid rising demand as people	Strong brand image and high market share backed by quality	Casio Computer Co., Ltd. (Japan)
	increasingly stay home in response to the COVID-19 pandemic	Extensive product lineup matched to diverse user needs	Roland Corporation (Japan)
	Growth in portable keyboard sales volumes due to market	Development capabilities, production bases, and wide-ranging sales	Kawai Musical Instruments
Digital	exploration with miniature keyboards and launch of models	channels allowing for supply of models with functions and content	Manufacturing (Japan)
musical	designed specifically for the Indian market	tailored to the local music traditions of Western markets as well as	KORG Inc. (Japan)
instruments	Sluggish market for stage keyboards as a result of reduced	emerging markets
	opportunities for performances amid the COVID-19 pandemic, but
	highly positive response for new products equipped with newly
	developed organ sound source
	Lower global demand as school and community wind band	Production and sales of almost all instruments used in wind bands	Buffet Crampon SAS (France)
	activities were restricted as a result of the COVID-19 pandemic	and orchestras	Eastman Music Company
Wind,	Growth in demand for digital drums, digital wind instruments, and	Broad lineup of products for customers ranging from beginners to	(United States)
digital violins, which can be played easily at home	professional performers	Conn-Selmer, Inc. (United States)
string, and
Recovery in demand projected as restrictions on concerts are lifted	Product development capabilities capitalizing on digital instrument and	JINBAO (China)
percussion
instruments	in response to vaccine rollouts	other expertise as a comprehensive musical instruments
	manufacturer
		Expertise in stimulating demand for wind instruments through
		coordination with professional performers and music instructors
	Reduced demand for concert-related products due to the COVID-	Global leader in number of acoustic guitars sold*	Fender Musical Instruments
	19 pandemic, but ongoing moderate growth in guitar sales as a	Comprehensive solutions encompassing peripheral equipment offered	Corporation (United States)
	result of demand associated with people increasingly staying	through Yamaha Guitar Group, Inc. (Line 6, Ampeg)	Gibson Brands, Inc. (United
Guitars	home centered on Europe and the United States	TransAcoustic™, wireless, and other new technologies a step ahead	States)
	Advancement in new concept guitars, diversification in ways	of competitors	Taylor Guitars (United States)
	people enjoy playing		C.F. Martin & Co. (United States)
	Numerous competitors centered on U.S. brands
		* Yamaha estimation, as of March 31, 2021

Implementation of Key Strategies of the Medium-Term Management Plan and Rebuilding of Foundations for Sales and Profit Growth

In response to the temporary slowdown in sales and profit growth caused by the COVID-19 pandemic, we will take steps to rebuild growth foundations by ramping up product development and new value creation activities; strengthening management of production, sales, and inventories; and optimizing selling prices. Amid the new normal created by the pandemic, the need for ways to learn and enjoy musical instruments at home is rising. We will therefore seek to respond to this need through both products and services. Moreover, we will adapt to changes in production and distribution trends by heightening the precision of production, sales, and inventory management to take advantage of sales opportunities. Meanwhile, selling prices will be optimized based on the trends seen in specific markets to boost profits. Wind, string, and percussion instrument operations are facing a challenging environment due to factors such as the restrictions placed on group performances. These challenges will be met by an increased drive to recover sales through online sales promotions.

efforts, and scholarships for cultivating individuals capable of furthering the development of music culture in Japan and overseas.

Improvement of Resilience

The production activity restrictions and parts procurement market disruptions caused by the COVID-19 pandemic forced us to reacknowl- edge the importance of corporate resilience. Seeking to improve corporate resilience, we are providing products matched to customer lifestyles, strategically enhancing after-sales services and other aspects of quality assurance, reinforcing development frameworks for supporting robust SCM, and taking other steps to ensure we can continue supplying high-quality products and services.

60		Yamaha Group Annual Report 2021

Yamaha Group Annual Report 2021		61

STRATEGIES BY BUSINESS

MUSICAL INSTRUMENTS BUSINESS

STRATEGIES BY BUSINESS

PIANO BUSINESS

Global market share for	Pianos: 39%*
Yamaha's products
Revenue (Fiscal 2021):	¥51.9 billion

Business Overview

The piano business is a business we have cultivated for over a century and can be considered a core part of the Yamaha Group's operations. In this business, we create Yamaha pianos that meld acoustic and digital technologies to cater to the emotions of all customers who wish to play piano at all skill levels. Rather than remaining satisfied with the current conditions in the piano busi- ness, we will aim to propose products with diverse value so that Yamaha pianos will be the preferred choice of customers around the world.

Targets for Fiscal 2022

Growth in the Chinese market and strengthen brand power and added- value promotion in maturing markets

Key Strategies of	Priority Themes for Fiscal 2022
Make Waves 1.0
	Ramp up approach toward a variety of target
Strengthen brand power	demographics ranging from top-level professional
pianists to music colleges
through the high-end
strategy	Strengthen frameworks for communicating brand
	value (ranging from branding to sales measures)
	Grow share in Chinese market (expand and strengthen
Expand customer base	sales channels, plan and sell region-specific models)
and raise value	Increase ratio of sales of hybrid pianos in mature
	markets
Propose diverse product	Develop products and technologies unique to Yamaha
value and strengthen
customer engagement	Create and propose music education solutions and
prefaced on IT and digital
services for generating lifetime value
transformation
Reinforce business	Guarantee reliable supplies
platforms

Points of Emphasis in Achieving Targets

In the second year of the medium-term management plan, the COVID-19 pandemic caused store closures in countries around the world and supply difficulties. However, sales recovered to the pre-COVID-19 level in China, the largest market for the pianos. In addition, Yamaha succeed in growing its presence in the global market thanks to a rise in cross-border remote lessons using pianos with automatic performance functions and its ability to form relations with a broad range of stakeholders.

• In the final year of the medium-term management plan, priorities will include ongoing efforts to expand and strengthen sales channels centered on the Chinese market to grow our customer portfolio, to promote sales of high-value-added models, and to enhance experience-oriented stores and solicitation opportunities. We will also seek to grow sales by guaranteeing stable supplies even in the current uncertain operating environment.

62 Yamaha Group Annual Report 2021

DIGITAL MUSICAL INSTRUMENTS BUSINESS

Global market share for	Digital pianos: 47%*
Yamaha's products	Portable keyboards: 52%*
Revenue (Fiscal 2021):	¥84.7 billion

Business Overview

In the digital musical instruments business, our product lineup spans from digital pianos and portable keyboards, for which we boast a world-leading market share, to synthesizers, stage pianos, and Electone™ electronic organs. We also possess a strong competitive edge in terms of hybrid products that meld acoustic and digital technologies. With these strengths, we offer attractive products that leverage our superior technological capabilities. In this business, we are presented with significant opportunities primarily in emerging countries, including the growing market of India. Capitalizing on these opportunities, we will create emotional musical experiences that meet the needs of our customers.

Targets for Fiscal 2022

Achieve further growth in digital pianos and other existing fields and cultivate future customers by pursuing challenges in new domains

Key Strategies of	Priority Themes for Fiscal 2022
Make Waves 1.0
	Deepen our understanding of emotional and physical
Develop digital pianos	phenomena to further realize expressive power
leveraging Yamaha's	Propose diverse product value that meets a wide
strengths in acoustic
range of needs
products and solicit
their value	Leverage diverse digital technologies to further
	improve value
Expand range of	Provide solutions and content based on local needs
and expand customer base by developing and utilizing
keyboards and content
local models
suited to local musical
traditions	Accelerate keyboard sales in the Indian market
Expand customer base by	Introduce new products and ramp up branding
activities that accommodate the new ways of enjoying
developing new products
music popular among younger demographics
targeting young people
Expand customer base through approach toward
who want to express
working women as well as younger demographics
themselves through music
interested in dance music

Points of Emphasis in Achieving Targets

As we proceeded to expand our business portfolio with the announcement of new keyboard products and communication robots in the second year of the medium-term management plan, we saw a rise in demand related to people increasingly staying at home coupled with sales of easily affordable digital pianos and portable keyboards through e-commerce venues. Meanwhile, the COVID-19 pandemic restricted factory operation, impeding sales of mid-range and high-end products. We will seek to grow mid-range and high-end product operations, capitalize on the demand associated with people staying at home, and acquire new customers with affordable products in the final year of the plan. At the same time, we will advance sales strategies that accommodate the shift to e-commerce along with digital marketing as we endeavor to communicate Yamaha's brand value through a mix of physical and e-commerce sales values in order to maximize earnings.

WIND, STRING, AND PERCUSSION INSTRUMENTS BUSINESS (EXCLUDING GUITARS)

Global market share for	Wind instruments: 31%*
Yamaha's products	Drums: 11%*
Revenue (Fiscal 2021):	¥36.8 billion

Business Overview

The wind, string, and percussion instruments business spans a wide range of products, including wind instruments such as trum- pets, saxophones, and flutes; percussion instruments like timpani and marimbas; and acoustic and digital drums. With this wide range of products, the Yamaha brand is able to compete for the leading position in various musical genres. We are also involved in the creation of custom models that meet the needs of major artists and entry-level models that are played in educational settings around the world.

Targets for Fiscal 2022

Realize market expansion and increased sales by boosting the strengths of our products and creating environments for musical performances

Key Strategies of	Priority Themes for Fiscal 2022
Make Waves 1.0
Improve brand power and	Enhance joint product development through
collaboration with major artists
grow market share for	Improve brand power and grow market share by
mid-range and high-end
wind instruments	accurately communicating value of mid-range and
	high-end instruments
	Promote brass and wind instrument bands and create
Create markets in China	demand in China and emerging countries
and emerging countries	Accelerate sustainable wind instrument promotion
	activities and develop frameworks for sales to schools
Approach new customers	Approach new customers with musical instruments
with easier-to-play musical
with new value to broaden player horizons
instruments

Points of Emphasis in Achieving Targets

The market contraction seen in the second year of the medium-term management plan, a result of the restrictions placed on group performances (wind instrument band, marching band, orchestra, etc.) by the COVID-19 pandemic, caused for a challenging operating environment. Nevertheless, we proceeded to promote our brand value via the internet, produce content employing leading artists, and utilize social media on a global scale in relation to our new digital saxophone. These new and other measures proved successful. In the final year of the plan, we will continue to communicate Yamaha's brand value via the internet while launching appealing new products developed jointly with artists and promoting sales of mid-range and high-end products to ensure that our brand is chosen by as many customers as possible. At the same time, we will move ahead with wind instrument promotion activities in China and emerging countries and work to broaden player horizons with musical instruments that are easier to play in order to create new markets.

GUITAR BUSINESS

Global market share for	Guitars: 9%*
Yamaha's products
Revenue (Fiscal 2021):	¥29.8 billion

Business Overview

Since we commenced the manufacture and sale of domestic guitars in 1966, our guitars have been recognized for their crafts- manship and genuine quality, which has helped us expand global sales of our robust product lineup, including acoustic guitars, electric guitars and basses, amps, and other peripherals. In recent years, we have been developing attractive new products such as the TransAcoustic™ Guitar, which is equipped with unique Yamaha technologies. We have also been promoting R&D and marketing activities that leverage our relationships with major music artists.

Targets for Fiscal 2022

Improve selling prices and reinforce existing business foundation with a focus on strengthening mid-range and high-end products and creating new value

Key Strategies of	Priority Themes for Fiscal 2022
Make Waves 1.0
Promote sales of mid-	Plan and develop high-end guitars
range and high-end
products to achieve	Develop brand equity for Yamaha guitars
rapid growth
Create new value and	Promote distinctive brand identity of Yamaha through
inspiring experiences and value creation
deliver inspiration,
stimulation, opportunities,	Hold exhibitions and training sessions for
and encouragement
communicating value
Deploy comprehensive	Enhance lineup of peripheral items including Line 6
solutions capitalizing on	and Ampeg brand and other amps and effectors
appealing peripheral	Supply one-stop solutions for guitarists and bassists
equipment
	Advance marketing strategies and product
Reinforce business	development based on regional characteristics
platforms	Manage product manufacturing in a manner oriented
	toward increases in selling prices

Points of Emphasis in Achieving Targets

We moved ahead with the deployment of new products and the planning and development of high-end models in the second year of the medium- term management plan to expand our lineup of mid-range and high-end products. At the same time, we deployed comprehensive solutions that employed amps, effectors, and other appealing peripherals. We also succeeded in capitalizing on the demand from individuals newly picking up the guitar amid the COVID-19 pandemic, thereby achieving higher sales in all product categories, accented by double-digit growth in China and Japan.

• In the final year of the medium-term management plan, we will continue to move forward with the plan's key strategies while also striving to develop brand equity for Yamaha guitars. Focuses with this regard will include the enhancement of information provision through both physical and digital venues; planning and development of next-generation guitars that create new, appealing value; and region-specific growth strategies.
• • Fiscal 2021, monetary value basis, based on surveys by Yamaha

Yamaha Group Annual Report 2021		63

Function and Business by Strategies

STRATEGIES BY BUSINESS

AUDIO EQUIPMENT BUSINESS

We will grow the audio equipment business as a piece of social infrastructure by supplying a wide range of customers, including commercial and consumer users, with products built on our exceptional sound insight and superior technologies.

Shinobu Kawase

Managing Executive Officer

Executive General Manager of Musical Instruments & Audio Products Production Unit Executive General Manager of Audio Products Business Unit

Business Strategies of Make Waves 1.0 Medium-Term Management Plan

Business Vision

Transform our business framework and realize dramatic growth to become the second pillar next to the musical instruments business

Key Strategies

PA equipment		AV products		ICT equipment
Become supplier of choice for upstream clients		Expand business portfolio to include personal		Expand product categories and services
such as facility owners and consultants		audio fields centered on earphones		Achieve differentiation from competitors through
Strengthen product competitiveness through		Strengthen the appeal of the Yamaha brand
		the integration of technologies
automation technologies and immersive sound		among millennials
technology development		Create new value in the home entertainment field

Business Overview

The audio equipment business is one of the business pillars of Yamaha, which develops a business centered on sound and music. In this business, we offer PA equipment for commercial and facility use and AV products for consumers. In addition, we provide ICT equip- ment, such as network devices and voice communication equipment, and cloud services. By leveraging not only our strengths in terms of diverse sound technologies but also our network and ICT technolo- gies, we position the audio equipment business as a growth domain.

Review of Fiscal 2021

In fiscal 2021, the audio equipment business suffered year-on-year declines in revenue and profit as a result of the activity restrictions and production ramifications of the COVID-19 pandemic. In PA equipment operations, sales of concert-related products and equipment struggled due to a reduction in events. Conversely, substantial growth was seen in sales of music production equipment and other personal- use products due to the demand associated with people increasingly staying home. In AV products, sales were brisk for sound bars as well as for wireless headphones equipped with Yamaha's proprietary Listening Care technology. We also rolled out digital marketing campaigns based on the concept of TRUE SOUND for communicating the intent of creators while also endeavoring to solicit our value to millennials and a wide range of other customers. Meanwhile, in

ICT equipment operations, we enjoyed massive increases in sales of communication equipment accommodating diverse needs amid rapid growth in remote meeting demand stimulated by the pandemic.

Improve system performance through remote
monitoring and control
Opportunities	Risks
Increase in potential projects by strengthening proposals in upstream	Potential for the adverse impact of unstable international relations spreading
sales channels	to investment in installation projects in the BtoB domain
Growth of demand for audio equipment focused on remote solutions to	Continuously stagnant demand for equipment for events and concerts due to
respond to impacts of the COVID-19 pandemic	the COVID-19 pandemic

Priority Themes for Fiscal 2022

PA equipment		AV products		ICT equipment
Expand equipment business foundations		Achieve grow through full-fledged advancement		Promote sales of LAN products and develop
Launch new products in a timely manner		into the headphone field		network of customer contact points (network
			products)
Develop PA systems of the future with remote		Expand sound bar operations
			Explore new sales channels in Europe and the
support and automation features		Advance AV branding strategies (connect with
		United States, expand sales of existing products,
Create immersive sound systems		millennials and other generations)
		and launch new products (unified communication
				products)

by Strategies

Revenue / Core Operating Profit / Core Operating Profit Ratio

(Billions of yen)

(Billions of yen)

150			15
120			12
90	7.5%	7.4%	9
6.8%

Sales of Major Products

(Billions of yen)

80
60
+9%	+1%
40

Cloud services	Enhance compatibility of ICT software with cloud services
Expand new cloud services merging sound, telecommunications, and ICT technologies

Function and Business

60											6
30											3
0	20/3	21/3	22/3		0
									(Forecast)
	Revenue		Core operating profit (right)			Core operating profit ratio

+13%

20

0

PA equipment

AV products

ICT equipment

20/3

21/3

22/3 (Forecast)

Business Policies for Fiscal 2022

In PA equipment operations, we will move forward with initiatives for stimulating the recovery of the concert market while redoubling our approach toward non-entertainment-related markets and promoting sales of personal-use music production equipment. AV product initiatives will include efforts to grow headphone operations through sales

AV Products

Marketing activities will be tailored to customer preferences, pushing headphones for millennials and high-end products for hobbyists, to raise brand recognition in a more effective manner. In addition, we will advance sales promotion activities at physical stores while also using online venues to heighten our sales capabilities by raising our brand

Overview of Markets by Mainstay Products and Yamaha's Operations / Yamaha's Strengths / Main Competitors

	Overview of Markets and Yamaha's Operations	Yamaha's Strengths	Main Competitors
	Progression in the integrated management, remote operations,	Ability to propose comprehensive solutions in accordance with	Harman International
	and automation of networks and facilities	customer needs, covering everything from speakers to mixers and	Industries (United States)
PA equipment	Strong demand for high reliability and support structures	music production equipment	Music Tribe (Philippines)
Bearish live sound market due to the COVID-19 pandemic, but		Robert Bosch GmbH
	bullish music production and online broadcasting markets		(Germany)
	Updates to company and school facilities in response to the
	COVID-19 pandemic and in preparation for the period thereafter
	Continuous growth in the headphones, sound bar, and wireless	TRUE SOUND technology for communicating the intent of creators	Sonos (United States)
AV products	speaker markets	Combinations of network and audio technologies	Bose Corporation
Further advancement in personalization free of time and space	Earphones equipped with high-level signal processing capabilities	(United States)
	restrictions following popularization of streaming content	Sony Corporation (Japan)
	Continuous market growth following the further shift to IT,	Audio communication products compatible with a wide range of	Cisco Systems, Inc.
ICT equipment	progression in quality-based competition	usage cases	(United States)
Diversification of workstyles and growth in demand for network	Expanded mainstay commercial-use routers as well as LAN products	Allied Telesis (Japan)
	revisions amid rising need for remote solutions stimulated by the	Reinforcement of equipment proposal capabilities as well as service	Polycom Inc. (United States)
	COVID-19 pandemic
	capabilities

promotions advanced at physical stores and online and the expansion of our lineup. As for ICT equipment operations, we will look to link the rising remote demand to opportunities for business growth.

Major Initiatives Pertaining to Priority Themes for Fiscal 2022

PA Equipment

Faced with an opaque macroeconomic environment for PA equip- ment, we will expand our product and service offerings for addressing the high demand for personal music production and distribution in order to drive aggressive sales promotions. Equipment operation initiatives will include an accelerated approach toward companies, educational institutions, and other non-concert users as well as the ongoing proposal of products to upstream area customers, including facility owners and audio equipment consultants. At the same time, we will move ahead with the development of unique products such as immersive sound systems that offer even greater levels of immersion and feature remote support and automated control functions.

recognition, communicating our value, and directing customers toward e-commerce websites. In our continuously growing sound bar opera- tions, we will seek to expand opportunities for increasing recognition. Meanwhile, we will create new value through the proposals of authentic yet easy-to-use sound systems that can be enjoyed in the home.

ICT Equipment

Our communication equipment efforts will be geared toward growing sales of portable equipment that can be used in a variety of settings as well as installations that offer higher levels of quality. We will also ramp up our approach centered on equipment installation sales channels to increase the number of service providers who use Yamaha equipment. Network equipment initiatives, meanwhile, will be focused on proposals in response to teleworking demand, the bolstering of our product lineup, and the reinforcement of customer contact points.

Cloud Services

Yamaha is deploying a plethora of cloud services, including its multilanguage information provision services and touchless payment services, based on its SoundUD™ sound-powered telecommunications technology. Going forward, we will continue to create new services, such as the Remote Cheerer powered by SoundUD remote cheering system that can be used to communicate support from remote locations to sports and other events held without audiences amid the COVID-19 pandemic.

64		Yamaha Group Annual Report 2021	Yamaha Group Annual Report 2021		65

STRATEGIES BY BUSINESS

INDUSTRIAL MACHINERY AND

COMPONENTS BUSINESS

Through comprehensive solutions centered on sound, we will promote a shift in the domains of our business portfolio and expand our customer base.

Shigeki Fujii

Executive Officer

Executive General Manager of IMC Business Unit and Technology Unit

Business Strategies of Make Waves 1.0 Medium-Term Management Plan

Business Vision

Shift our focus to providing comprehensive solutions to in-vehicle audio domain

Expand product and support foundation to accelerate growth toward becoming the third business pillar

Key Strategies

	Electronic devices (in-vehicle audio)		Automobile interior wood components		FA equipment
	Expand adoption of in-vehicle sound modules and		Expand customer base for vehicle interior panels		Develop new detection solutions and expand
	in-vehicle audio systems					customer base
	Enhance level of market recognition and propose
	value that meets the needs of customers

Business Overview

The industrial machinery and components business covers a broad range of fields, such as electronic devices, which started with the development of LSI for digital musical instruments; FA equipment, which originated in our musical instruments manufacturing facilities; and automobile interior wood components for luxury automobiles, which started from the integration of our lumber processing and coating technologies.

• For electronic devices, we are promoting a shift toward component modules related to sound, an area in which the Company excels. We are also transitioning toward the total in-vehicle solutions domain.
  Furthermore, there has been an increase in the number of vehicles employing our in-vehicle communication module products (modules for in-vehiclehands-free telephone calls geared toward emergency alert systems), in-vehicle audio systems, and other products. For the future, we aim to expand the scale of the industrial machinery and components business as our third business pillar, alongside the musical instruments and audio equipment businesses.

Review of Fiscal 2021

Sales of major products were favorable in the industrial machinery and components business, and this business enjoyed improvements in efficiency and consequently profitability. Automotive field operations are a major focus in this business. In this area, Yamaha brand in-vehicle audio systems were adopted by multiple automobile manu- facturers. Mass production and shipments of these systems began in November 2020, and we expect to see an increasingly wide range of vehicles equipped with these systems in the future. Sales of in-vehicle communication module products were stagnant due to the COVID-19 pandemic, but the number of vehicles using these products is rising. Meanwhile, automobile interior wood components were up year on year due to the commencement of full-fledged shipments of components for use in new automobile models for the North American market. In FA equipment, sales of flexible printed circuit board testing machines were strong.

Opportunities	Risks
Business growth in the massive in-vehicle audio market by leveraging	Opaque market demand outlook due to the COVID-19 pandemic
Yamaha's core strengths	Difficult-to-predict fluctuations in customer plans due to global
Growing demand for flexible printed circuits following the shift toward IoT	semiconductor shortages
and automotive smart technologies

Priority Themes for Fiscal 2022

	Electronic devices (in-vehicle audio)		Automobile interior wood components		FA equipment
	Increase the number of vehicles using in-vehicle		Expand North American customer base		Bolster customer base by improving the
	audio systems and strengthen customer support		Strengthen earnings foundations through		functionality of and developing applications for
	and promotion base functions			flexible printed circuit board testing machines
		manufacturing cost reductions
	Grow domestic and overseas customer base for					Increase customers using vehicle battery
	in-vehicle communication module products					inspection equipment and develop lineup
							of ultrasound inspection equipment

by Strategies

Revenue / Core Operating Profit / Core Operating Profit Ratio

(Billions of yen)												(Billions of yen)
40													4
30													3
20							4.1%	7.4%	2
10				0.1%								1
						21/3	22/3
0		20/3		0
										(Forecast)
	Revenue		Core operating profit (right)		Core operating profit ratio

Notes: The above graph shows figures for the industrial machinery and components business and other businesses.

Revenue Projection in Fiscal 2022

(Billions of yen)

50		In-vehicle	Others
	components
40	34.8	+2.9	-3.7
	34.0
30
20
10
0	19/3		22/3
			(Forecast)

Note: The above graph shows figures for the industrial machinery and components business and other businesses.

Business Policies for Fiscal 2022

In the industrial machinery and components business, we are targeting growth in the in-vehicle solutions domain and the FA field. The focus for electronic devices will be to transform into a comprehensive in-vehicle solutions vendor that emphasizes automotive modules more than in previous semiconductor offerings. With this focus, we will expand our customer base for automobile interior wood components to solidify our foundations in the in-vehicle solutions domain. Meanwhile, business growth will be pursued in regard to FA equipment by further honing our strengths in terms of high-precision,high-speed inspection technologies to respond to market needs.

Major Initiatives Pertaining to Priority Themes for Fiscal 2022

Electronic Devices (In-vehicle audio)

Automobile Interior Wood Components

We aim to expand the scale of our automobile interior wood components operations by growing our overseas customer base. Since 2018, we have been increasing the range of automobiles employing Yamaha products by building a track record through the acquisition of major customers in the North American market. In this area, our strength can be seen in our superior decoration technologies and the heights of our made-in-Japan quality. These strengths have enabled us to earn the trust of customers by transforming their desires for novel designs into industrial products. Going forward, we will strengthen customer support functions and develop manufacturing technologies in our quest to deliver products that exceed customer expectations.

FA Equipment

In the FA equipment field, we will strive to maintain our leading

Function and Business

Major Products / Overview of Markets / Yamaha's Strengths

Major Products		Overview of Markets	Yamaha's Strengths
	In-vehicle audio systems, in-vehicle sound modules,	Contraction in the market for amusement equipment	Product proposals amalgamating core sound-related
Electronic devices	in-vehicle image and digital sound field processor	Rising expectations for in-vehicle audio systems	technologies and sound production expertise
semiconductors, graphics LSIs and sound generators
stemming from trends toward electrified vehicles and
	for amusement equipment, thermoelectric devices, etc.
	automated driving
Automobile	Interior wood components for luxury cars of both	Strong sales of high-end sport utility vehicles in which	Lumber processing, coating, and decorating
Japanese and overseas automotive manufacturers	Yamaha products are installed	technologies cultivated through traditional piano
interior wood
that leverage the lumber processing and coating		manufacturing practices
components
technologies used for pianos
	Precision machines for flexible printed circuit board	Growth in demand for testing machines due to rise in	Superior levels of quality and reliability and cutting-
	testing machines, leak detectors, robots, etc.	number of devices using flexible printed circuit boards	edge technologies that realize high-speed, high-
		in conjunction with increases in smartphone	precision FA equipment
FA equipment		functionality
		Robust demand for investment in storage battery
		manufacturing equipment due to rapid popularization
		of EVs

We will accelerate proposals that leverage our core sound technologies in electronic devices operations. In regard to in-vehicle audio systems, we will pursue our passion for sound in the unique sound environment inside automobiles to achieve differentiation via high sound quality and thereby increase the number of vehicles using our systems along with our brand recognition. By advertising the number of vehicles using Yamaha products, proposing sound systems matched to specific vehicle concepts, and bolstering our lineup, we aim to capture a share in the massive in-vehicle audio market. As for in-vehicle communication module products, we will take advantage of the opportunity created by the rise in regions requiring vehicles to be equipped with emergency notification systems to increase the number of vehicles using Yamaha products in Japan and overseas.

market share for flexible printed circuit board testing machines on a Groupwide basis. The technical and quality requirements for smart- phones are growing increasingly more rigorous amid trends such as the spread of 5G and AI technologies and the adoption of multi-lens cameras and other sophisticated features. Through swift responses to these requirements, we aim to have our products used by a wider range of customers. At the same time, we look to expand the scope of application of high-value-added testing machines for communication and automotive circuit boards and modules. Meanwhile, the rise in EVs is stimulating demand for vehicle battery inspection equipment and subsequently leak detectors. We aim to capitalize on this trend to have these products adopted by even more customers going forward. We also offer nondestructive inspection equipment that leverages ultrasound technologies, and are actively creating new applications and exploring new markets for these products.

66		Yamaha Group Annual Report 2021	Yamaha Group Annual Report 2021		67