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Core 3-Year Strategic Priorities

• Semiconductor Sector Expansion: Zuken originated as a PCB CAD provider, with a core role connecting semiconductor design to downstream PCB electrical design. The company is prioritizing expansion from PCB into semiconductor packaging, leveraging its existing 3D PCB design database capabilities. As semiconductor design shifts from traditional silicon wafers to organic panel substrates, which have very similar design requirements to PCBs, demand for Zuken's existing capabilities is expected to grow. Zuken is already working on a joint design flow collaboration with Synopsys, and management views NVIDIA's 300 billion yen investment in Synopsys as a positive tailwind for its semiconductor packaging growth opportunities. Zuken has joined the Resonac-led JOINT3 consortium for next-generation semiconductor development, its second major semiconductor R&D initiative following a prior partnership with IBM. The JOINT3 project focuses on mass production-focused R&D for panel-level organic interposers (to replace silicon interposers) to improve manufacturing yield and lower unit costs, in collaboration with material and equipment manufacturers.
• AI Integration for Design: Zuken has not yet launched full AI-powered design environments, and is prioritizing development of autonomous, efficient design capabilities (focused on Autonomous Intelligence rather than generic Artificial Intelligence) to integrate into existing PCB and packaging design tools. The company is already exploring AI-enabled design efficiency improvements using existing DS-2 PDM product data.
• Model-Based Design (MBSE): Zuken is working to build a unified end-to-end design environment that integrates MBSE methodology from conceptual design through manufacturing, to deliver complete digital design solutions to customers.

Key Growth Segment Progress: Model-Based & Solution Consulting

• MBSE (Model-Based Systems Engineering) digitalizes the previously undigitized conceptual design phase, and Zuken has received strong proof-of-concept (PoC) inquiries from customers across a wide range of industries, with several leading customers already applying MBSE to live product development.
• The company's strategy has evolved: MBSE-driven process reform is now a core component of solution consulting, and the two previously separate strategic initiatives have converged. MBSE is also a growing driver of upsell to existing major customers.
• Zuken is actively expanding solution consulting and model-based business to international markets, with a focus on Europe (where customer industry structure is similar to Japan, making Japanese best practices easier to apply). The company has localized marketing content to English and is publishing regular expert blogs on LinkedIn for international outreach.
• Management noted that PDM sales, previously used as a proxy KPI for solution consulting growth, no longer capture the full scope of the business, as many new solution consulting engagements leverage existing PDM data for other products (e.g., design efficiency improvements for CAD products) and do not generate new PDM sales. The company will re-evaluate its benchmark KPI and report new metrics in the future.

Capital Return Strategy

• Zuken maintains a core policy of achieving 5% or higher return on equity. Given its strong financial position that supports flexible growth investment and potential M&A, the company combines dividends and share buybacks for capital return. It has implemented a new share buyback program and plans to pay a special 50th anniversary dividend.

• The full year 2026/3 fiscal year targets (43.0 billion yen full year revenue, 5.6 billion yen full year operating profit) are maintained. First half revenue came in at 19.454 billion yen (+2% YoY), and first half operating profit came in at 2.371 billion yen (+2% YoY), in line with plan, and management confirms the full year target is fully achievable.
• PCB CAD sales are expected to recover in the second half of the fiscal year, supported by the strong 10% YoY first half order growth for board design solutions.
• PDM sales are expected to recover in the second half, as order volume remains healthy and the segment has a natural seasonal revenue skew to the second half.
• European sales are expected to move into positive growth territory in the second half, following a Q1 slowdown and recovery to prior year levels by the end of Q2 with strong orders.

1. Printed Circuit Board (PCB) CAD Business (within EDA/CAD product segment): Reported a slight negative sales performance year-over-year, as steady migration to the CR-8000 platform was offset by low circuit segment sales. Board design solution orders grew 10% YoY in the first half, and a full sales recovery is expected in the second half.
2. Wire Harness Design Business: Combined solution sales with partner products delivered strong expansion results in Japan, with sales to power transmission and distribution companies moving to full commercialization, positioning the segment for future growth.
3. Data Management (PDM/PLM): PDM/PLM orders remained consistently strong. First half sales declined slightly YoY, but order volume is healthy and a second half recovery is expected. Strong first half overall segment growth was driven by robust security product sales.
4. Model-Based Related Business: First half sales grew 17.5% YoY, with strong progress despite a natural seasonal skew toward second half revenue.

Geographic segment performance (first half):

• Japan: Led overall sales growth, supported by core CAD products (CR-8000, E3.series) and steady security product sales. The top 10 domestic customers (excluding client services) account for approximately 20% of total domestic sales, reflecting a broad long-tail customer base.
• Europe: Sales were slightly down YoY after a weak Q1, but recovered to near prior year levels by the end of Q2 with strong orders; positive full-year growth is expected in the second half. The top 5 customers account for 36% of regional sales (excluding client services).
• Americas: Sales recovered strongly from a prior year downturn caused by the end of two large automotive projects. Growth is driven by strong sales to semiconductor manufacturing equipment, aerospace and defense customers. The top 5 customers are dominated by aerospace/defense and semiconductor manufacturing equipment firms.
• Asia excluding Japan: Sales to South Korea and India remain strong; sales to local Chinese firms have not yet recovered, though sales to local Japanese firms are steady. The top 5 customers account for 59% of regional sales (excluding client services), meaning revenue is more concentrated on large customers and more vulnerable to order fluctuation than other regions.

• Overall macroeconomic environment remains unstable, though corporate IT investment has held up strongly so far.
• Asia (excluding Japan) revenue is concentrated in the top 5 customers (59% of regional sales), making regional revenue more vulnerable to fluctuations in large customer order volumes compared to other regions with more diversified long-tail customer bases.
• Local Chinese customer orders have not yet recovered, even as sales to local Japanese firms in China remain steady.

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