Q&A on the Audio Equipment Business Briefing (Held on September 30, 2025)

A1: Two major changes have occurred under the new structure. The previous organization featured horizontal division of functions—development, production, and sales—which, while efficient from a functional perspective, made it difficult to move swiftly and consistently from development to sales from a business perspective. One change is that the new organization enables faster strategic planning and execution from a business perspective.
The second change stems from my (Toba’s) extensive experience in the fabless automotive audio business. This experience has provided valuable insights—specifically, the know-how to rapidly align with customer schedules while maintaining high-quality product development. We can now horizontally deploy this expertise across both the professional and consumer businesses. Through measures like outsourcing production and utilizing ODM development, we've shortened development cycles by about two-thirds in some cases. We've also expanded our development portfolio, and we're already seeing tangible results within just the past six months.

A2: As you are aware, digital mixers have high profitability.
We achieve cost control by standardizing design platforms and compressing development effort while maintaining quality, without applying the same development process across all price points from high-end to entry class models.
Furthermore, increasing top-line revenue while controlling development costs is crucial. With a growing market and significant room for market share expansion, Yamaha needs a robust product lineup. Efficiently increasing the number of product models is therefore vital. To achieve this, we will leverage not only in-house development and production but also ODM development and production outsourcing, particularly to strengthen our mainstream price range lineup. Furthermore, beyond developing compelling products, we will establish a cycle where we build strong relationships with key industry figures to gain insights for product planning, which we will then leverage for subsequent product development.

A3: NEXO's strength lies in its innovative products and development capabilities; the NEXO brand attracts audio system designers worldwide. Yamaha's strength, meanwhile, is in technology and production. As a new initiative distinct from past approaches, we are building a system where NEXO develops and Yamaha produces. By establishing this new development and production structure and advancing global talent deployment, we will accelerate the expansion of our product lineup with competitive pricing and functionality.

A4: The growth potential in this field stems from the robust performance of emerging markets in the so-called Global South, including Latin America, the Middle East, Africa, India, and Southeast Asian countries.
Furthermore, for example, religious festivals in India require applications that are entirely different from music events in stadiums in Europe and the U.S. They do not require complex mixing systems but instead involve controlling a very large number of speakers simply with a single digital mixer. Thus, the key to growth in emerging markets lies not only in digital mixers but also in capturing demand for speakers. We have positioned this area as central to our efforts.

A5: We have built a strong sales foundation through our musical instrument sales channels, giving us unique sales bases in the Global South, particularly in India, Indonesia, and Brazil, that our competitors lack.
Furthermore, our ability to provide added value by facilitating system adjustments between digital mixers and speakers and enhancing sound quality represents a significant technological advantage. We will establish a unique positioning by deploying such high-end technology into the volume-driven, affordable price segment market.

A6: True Sound is the core sound philosophy we strive to achieve, based on technology that accurately reproduces the sound of musical instruments. It is a concept that aims to deliver sound that faithfully conveys the artist's intentions and expression. The automotive sound systems bearing the Yamaha brand are tuned to align with each vehicle's concept without deviating from True Sound. We also focus on optimization for specific usage scenarios. For example, we collaborate with automakers to design the sound, considering how the music you want to listen and the desired sound character may differ depending on the listening situation—such as before a trip or upon returning home.

A7: While we cannot disclose specific adoption figures, we are seeing positive momentum through numerous ongoing discussions. Furthermore, horizontal expansion within our current customer base is progressing smoothly. When deploying across multiple models for the same automaker, significant additional development burden is generally avoided. Since entering this business, we have focused on platformizing our technology to reduce development costs, enabling us to achieve profitability.

A8: Given the automotive industry's rapid evolution and intense competition, we believe the key to future growth lies in the value we provide. Automakers are constantly considering what new experiences they can offer customers, making our ability to deliver compelling proposals crucial. The various cutting-edge features Yamaha proposes are all being well-received by automakers, and we see this as a growth engine.

A9: Having recently entered the automotive sound system market, our current share is still only a few percent. Going forward, we will expand our adoptions, primarily in the Asian and ASEAN markets, to increase sales volume and market share.

A10: We see potential for M&A in professional audio equipment, encompassing not only sound but also peripheral areas like lighting and video. We are also exploring options beyond M&A, including capital participation and deepening collaborative partnerships.

A11: In home audio, we have not been able to launch our core AV receivers in a timely manner. This has led to a decline in the competitiveness of current models, resulting in lower profitability due to price reductions. Our strategy is to first launch new products and focus on hobbyists interested in Yamaha's sound and added value. We are developing a new mid-to-high-end lineup. We will improve profitability by shortening development cycles to launch products timely and by firmly proposing features customers expect from Yamaha.
Furthermore, the installation audio market, centered in Europe and the U.S., is steadily growing. This market involves building high-end home theater amplifiers and speakers into homes. We are strengthening relationships with installation contractors. This market demands not price competition, but reliability and the ability to fulfill customer requests. Combining the appeal of Yamaha's core acoustic space technologies with ODM development and production outsourcing, we will increase product offerings through lower-cost, shorter-cycle development. This will enable us to achieve a return to profitability within the current medium-term plan period.

A12: The key for the audio equipment business lies in strategically using both in-house factories and ODM/OEM partners. To rapidly expand our product lineup and reap the fruits of growth, we will advance outsourcing not only for production but also for development resources. A key benefit of ODM/OEM production is the ability to supply products in regions specified by the customer. Unlike the musical instrument business, which produces in-house and distributes globally, we believe the mobility audio business requires flexible operations tailored to the customer's desired delivery location.
Manufacturing NEXO speakers at Yamaha's own factories is also crucial to prevent inadvertent leakage of proprietary technology. We will rapidly expand our product lineup through optimal allocation: producing items requiring manufacturing know-how in-house, while utilizing ODM/OEM for models targeting the affordable price range where we want to accelerate the product cycle.

A13: For network equipment, we plan to expand our business by participating in the overseas operations of our domestic business partners while maintaining our existing relationships.
Furthermore, as audio and video equipment increasingly become networked, we will leverage Yamaha's strength in possessing both audio and network equipment to expand our overseas network and switch business. While we have already introduced a lineup for the live market in the professional audio sector, we will also work to expand introduction of our lineup for the commercial installed sound market and strengthen our sales structure.