■Business Overview

1. Business Description and Segment Overview

The main business of Hagiwara Electric Holdings ＜7467＞ functions as a semiconductor trading company that purchases and sells SoCs, microcomputers (microcomputers), various semiconductors, etc. from semiconductor manufacturers, and in addition to that, it also purchases, sells, and integrates IT devices, and develops, manufactures, and sells industrial electronic devices. Approximately 89% of sales are for automobile-related companies, and in addition to simply selling parts and components, they also participate from the product planning/design stage, providing microcomputers and peripheral devices with specifications in line with customer companies' requests, and developing systems. The spread of hybrid vehicles and EVs, and the rise in electrification associated with the progress of ADAS are supporting the company's growth, but we see that further automation of automobiles (autonomous driving, automatic braking, etc.) and the wave of IT at manufacturing sites will also be a tailwind for the company in the future.

The company transitioned to a holding company system from 2018/4, and along with this, the names of the segments were also changed to “device business” and “solution business.” Also, the “Development and Production Division” is involved as an important internal organization. The summary is as follows.

(1) Device business (sales ratio 87.1% for the fiscal year ending 2024/3)

We mainly sell semiconductors and electronic components such as SoCs, microcomputers, custom LSI, analog power semiconductors, capacitors, relays, connectors, and color LCD panels to automobile-related companies. In addition, technical support such as custom LSI design and embedded software/hardware development support will also be developed.

Specifically, when planning a next-generation model, functional requests from customer manufacturers are heard, and peripheral devices including optimal microcomputers to realize them are proposed. Also, when developing a device, we provide a one-stop solution that provides technical support for microcomputer performance and various development tools, and verifies and evaluates the operation of the device, and supplies the device in a timely manner during mass production.

(2) Solution business (12.9% same period)

With sales of IT equipment, embedded equipment, and measurement/FA equipment as the core, and construction of IT platform infrastructure/IoT systems, we are also involved in the development and manufacture of industrial computers, which are our products, and the design/manufacture of various FA/special measurement systems, and we are engaged in a proposal-type business that provides various solutions combining these. In recent years, we have been focusing on network reconstruction services from cybersecurity measures, data utilization, automation of business operations, infrastructure development and system development for edge, IoT systems, production management systems, etc.

(3) Development and Production Division

It is included in the solution business and is divided as one business division under the same business. It is a manufacturer division working on the development and manufacture of electronic and information products.

In the same division, timescales corresponding to each industrial field are the most important issues, and reliable electronic devices and embedded solutions that pursue efficiency and the environment are proposed. The company's experience in developing industrial equipment and measurement and control devices, which it has been involved in for many years, is fused with new technology and applied to a wide range of fields.

2. Characteristics and strengths

The company's main business is a “trading company function” that purchases semiconductors from Renesas Electronics ＜6723＞ and mainly sells them to the Toyota Group, but in the case of the company, it not only simply has a trading company function that flows products from right to left, but it also has the following characteristics and strengths.

(1) Proposal and development capabilities

Since the company has an in-house development and technical support department (engineer), it has excellent proposal and development capabilities. Since it is particularly close to the Toyota Group, it is possible to provide an optimal device by accurately grasping the needs of the same group and feeding back the details to semiconductor manufacturers.

Furthermore, in addition to bringing together unique knowledge and technology and proposing products, modules, etc. that are optimal for user needs, development support is also provided in response to customer requests. The company can be said to be a trading company that “can make proposals” to customers, and can also “develop” products required by customers.

(2) Thick pipes with the Toyota Group

The company's close relationship with the Toyota Group is also one of the company's strengths. In addition to simply the benefits in terms of production (increase in production by the Toyota Group → increase in sales by the company), the company's own technical capabilities, proposal capabilities, and development capabilities will be further refined due to business with the Toyota Group, which has high technology in next-generation automobiles such as hybrid cars and EVs.

In the future, it will be possible to expand the business by applying this technical, proposal, and development capabilities not only to automobile-related companies, but also to various industrial equipment, FA equipment, production systems, inspection systems, etc. The fact that it has a relationship with the Toyota Group, which is said to be the most demanding in the world, itself can be said to be the company's asset.

On the other hand, there is also a view that there is a high risk that most of sales are dependent on the Toyota Group, but this is not necessarily the case. Currently, Toyota Motor Corporation is said to be one of the winners in the global market, and its high sales volume for the Toyota Group is thought to be positive for the company.

(3) Technical capabilities for non-automobile-related companies

Approximately 11% of the company's sales are for non-automobile-related companies, but most of this is not simply a trading company function, but rather due to system construction etc. as an IT company. It is particularly strong in system construction at production sites. The sales volume (29,023 million yen for the fiscal year ending 2024/3) and operating profit (2,040 million yen) of the solution business are comparable to the sales and profit scale of general listed system integrator (SI) companies, and having such SI functions is also a characteristic of the company, and it is also an advantage of the company.

(Written by FISCO Visiting Analyst Noboru Terashima)