東芝（6502） – Notice on Toshiba Group Management Policy

June 2, 2022 Toshiba Corporation FOR IMMEDIATE RELEASE Notice on Toshiba Group Management Policy TOKYO—Taro Shimada was appointed Representative Executive Officer, President and CEO of Toshiba Corporation (TOKYO: 6502) at the Board of Directors meeting held on March 1, 2022. Following on from this change of management, Toshiba has released the attached Management Policy for today’s press briefing # # # Toshiba GroupManagement PolicyJune 2, 2022Toshiba CorporationRepresentative Executive Officer, President and CEOTaro Shimada© 2022 Toshiba Corporation1Forward-looking Statements and Other Cautionary This document has been translated from the Japanese-language original document for reference purposes only. In the event of any conflict or discrepancy between this document and the Japanese-language original, the Japanese-language original shall prevail in all respects. This document contains forward-looking statements, prospects and targets concerning the future plans, strategies, and performance of Toshiba group. These statements are not historical facts; rather, they are based on assumptions and judgments formed by the management of Toshiba group in light of currently available information. They include items which have not been finalized at this point andfuture plans which have yet to be confirmed or require further consideration. Toshiba therefore cautions readers that actual results may differ from such statements. Since Toshiba group promotes business in various market environments in many countries and regions, its activities are subject to a number of risks and uncertainties which include, but are not limited to, those related to economic conditions, worldwidecompetition in the electronics business, customer demand, foreign currency exchange rates, tax and other regulations, geopolitical risk, and natural disasters. Toshiba therefore cautions readers that actual results may differ from those expressed or implied by any forward-looking statements. Please refer to the annual securities report (yuukashoken houkokusho) and the quarterly securities report (shihanki houkokusho) (both issued in Japanese only) for detailed information on Toshiba group’s business risks. Unless otherwise noted, all figures are 12-month totals on a consolidated basis. Results in segments have been reclassified to reflect the current organizational structure, unless stated otherwise. Since Toshiba is not involved in the management of Kioxia Holdings Corporation (formerly Toshiba Memory Holdings; hereinafter “Kioxia”) and is not provided with any forecasted business results for Kioxia, Toshiba group’s forward-looking statements concerning financial conditions, results of operations, and cash flows do not include the impact of Kioxia.© 2022 Toshiba Corporation2Today’s Agenda01020304Toshiba Group’s VisionCurrent Status of Toshiba GroupResolving Corporate ChallengesToshiba Group’s Vision for Evolution: DE→DX→QX© 2022 Toshiba Corporation3The Essence of ToshibaCommitted to People,Committed to the Future.At Toshiba, we commit to raisingthe quality of life for people aroundthe world, ensuring progress that isin harmony with our planet.© 2022 Toshiba Corporation© 2022 Toshiba Corporation44Our PurposeWe are Toshiba. We have an unwavering driveto make and do things that lead to a better world.A planet that’s safer and cleaner.A society that’s both sustainable and dynamic.A life as comfortable as it is exciting.That’s the future we believe in.We see its possibilities, and work every day todeliver answers that will bring on a brilliant new day.By combining the power of invention withour expertise and desire for a better world,we imagine things that have never been –and make them a reality.That is our potential. Working together,we inspire a belief in each other andour customers that no challenge is too great, andthere’s no promise we can’t fulfill.We turn on the promise of a new day.© 2022 Toshiba Corporation© 2022 Toshiba Corporation5501Toshiba Group’s Vision© 2022 Toshiba Corporation6Toshiba Group’s VisionFutureFor our childrenSocial ChallengesAchieving sustainability of people and the planetToshibaInitiativesAchieving carbon neutralityand a circular economyPeoplePlanetSafe, secure lifestyles for everyoneSocial and environmental stabilityPoverty, human rights,disasters, disputesBuilding an infrastructure that everyone can enjoyEducation, equality &fairness, climate change, resource depletionBuilding a societyconnected by dataContribute to the achievement of carbon neutrality & circular economy through digitization© 2022 Toshiba Corporation7Evolution of the Digital Economy and Changes in the Business EnvironmentEvolution of the digital economyCreating the quantum industryQuantumQuantum TransformationQXDXDigital TransformationData businessMatching businessPlatform developmentDataCompany ACompany BConsumersConnected marketsCreating new social valuesDEDigital EvolutionShift to services andrecurring businessesCompany CCompany DTelecomLogisticsPowerCPS1.0FinanceWaterGovernmentCompany ETransportationGasManufacturingMaterialsCommercialServicesCompany FPublic Sectors© 2022 Toshiba Corporation© 2022 Toshiba Corporation888Toshiba Group Mid-to-Long Term TargetFY 30 Target: Net sales 5.0 T yen, ROS 12.0%, Operating Income 600 B yenFY 21Results*1FY 22 Forecast*1FY 25 TargetFY 30TargetNet sales3.34 T yen3.30 T yen4.00 T yen5.00 T yenOperating income(ROS%)159 B yen(4.8%)170 B yen(5.2%)360 B yen(9.0%)600 B yen(12.0%)EBITDA*2244 B yen270 B yen500 B yenROIC*3FCF*415.8 %13.8 %17.0 %125 B yen100 B yen250 B yen*1 FY21 results and FY22 forecast includes the results and forecast of Toshiba Carrier Corporation, *2 EBITDA = Operating income + Depreciation*3 ROIC = (Net income – Non-controlling interest – Interest expense × (1 – tax rate) )/ (Net interest – bearing debt + Net assets) *4 Free Cash Flow© 2022 Toshiba Corporation9Plan by Functional ClassificationForecasting growth in the highly profitable data service business toward FY30Net sales(Unit: 100 million yen)Operating income(Unit: 100 million yen)50,00040,0009%12%6,000Data servicesROS% of group total26%20%33,37133,0005%5%3,6001,5901,700FY21FY22FY25FY30FY21FY22FY25FY30Infrastructure systemsData servicesInfrastructure systemsDevice productsInfrastructure servicesDevice productsData servicesInfrastructure servicesGrouptotalROS* Bar graph total include other businesses, and shared accounts, corporate elimination, etc© 2022 Toshiba Corporation10Toshiba Group’s ChallengesInternal rigidityOrganization-related issuesExternal rigidityMethodology-related issuesStrong dual silo mentality（Group companies, BU*)Group companyGroup companyBUBUBUBUSilos within the organization each pursuing its own interestsIssues in market selection (focus on domestic market)•Small size and slow growth•Limited R&D networkNot-invented-here syndrome•Commitment to in-house, proprietary technologies• No business foundation(Lack of industry connections and business know-how)Obsession with full or majority ownershipChallenges* BU: Business UnitsImprovement achieved by one company or BU not shared with others due to the silo mentality under the current frameworkChallengesInability to leverage R&D diversity and convert achievements into business value© 2022 Toshiba Corporation1102Current Status of Toshiba Group© 2022 Toshiba Corporation12Businesses that Support Daily Lives and Social infrastructuresMany businesses contribute to economic security by supplying core infrastructure and key products that support industries 192019701900Power Generation and transmissionsystemsWater Supply & Sewerage Electric SystemsWater supply & sewerageBroadcasting Broadcasting systemsAirportSurveillance radar system2022128 years57 years103 years59 years122 years126 years96 years56 years132 years66 yearsEnergyBroadcastingElevatorsRailwaysAirportsFactoryInfrastructureStoresDevicesLighting© 2022 Toshiba Corporation13Railway Electrical equipment for domestic vehiclesFactory Industrial motorsStore Cash registers(predecessor of POS)ElevatorsLighting*Based on internal researchSemiconductors and StorageDevice Business (Power Semiconductors)New 300mm Wafer Plant at Kaga Toshiba (CG illustration)Compound semiconductor waferTechnologies and products that support competitivenessToshiba’s power semiconductorsHigh efficiency, high quality, and high reliabilitySiC-equipped modulefor electric railwaysHigh-voltage multichip packagefor power converters(under development)Future investment and development strategy•••Create a 300mm wafer manufacturing line in Kaga Toshiba (mass production will start in the second half of FY22) and build a 300mm manufacturing wing (scheduled to start operations in 2024)Accelerate the development and commercialization of compound semiconductors (SiC and GaN) that can achieve high power, high efficiency, and miniaturizationExpand product lineup including control ICs and promote R&D investments in high-efficiency package developmentIndustrial/FAEV/AutomotivesMobile/PC/Consumer goodsData centerSupporting the economy with semiconductors that ray the foundation of the digital industry© 2022 Toshiba Corporation14Energy Business (Nuclear Power)UraniumFuel manufacturingPlantconstructionITER©ITER Organizationhttp://www.iter.org/Rotating gantry room(Yamagata University Hospital, School of Medicine)Nuclear fusionAcceleratorSuperconductivityHigh-temperaturegas-cooled reactorNext-gene. reactorsMaintenanceservices/restartingFukushimadecontamination& decommissioning FuelCycleHigh-temperaturegas-cooled reactor(bird’s-eye view)Kashiwazaki-Kariwa Nuclear Power Station Unit 6/7(Tokyo Electric Power Company Holdings, Inc.)Generator rewindingworkRemotely operated underwater vehicle (ROV) to investigate inside of PCV at Fukushima Dai-ichi NPSRokkasho ReprocessingPlant(Japan Nuclear Fuel Limited.)Technologies and products that support competitivenessDigital I&C:monitors and controls plant systemsSuperconducting rotating gantry: contributing to precision medicineFuture investment and development strategy•••Create reactors with excellent safety features, etc.Develop accident tolerant fuelInnovative light water reactors and high-temperature gas-cooled reactorsContribute to stable storage of radioactive wasteProvide support to resolve the situation at the Fukushima Dai-ichi Nuclear Power StationFocus on supporting completion of reprocessing plantSecure baseload power supply and adjust supply and demand with next-generation reactorsUse high temperature for heat storage and hydrogen productionContributing to stable supply of energy that supports economic activities and lifestyles© 2022 Toshiba Corporation15Infrastructure Business (Defense & Electronic Systems)Air defence radar systemAir traffic controland navigationsystemTechnologies and products that support competitiveness: Toshiba Group’s cutting-edge consumer technologyHigh-outputsemiconductor technologyRadarHigh-speedcomputingtechnologyRadiodetectionSecurityHigh-accuracysensing technologyInformation processingCommand& controlHigh-efficiencyenergy technologyMultiparameter phased arrayweather radar (MP-PAWR)Counter-dronesecurity systemsFuture investment and development strategy•••Continue to focus on the development and production of defense equipment that protects the safety and security of society by leveraging the comprehensive strengths of the Toshiba GroupStrengthen technological advantages by applying potentially game-changing cutting-edge consumer technologies such as artificial intelligence technologies, simulated bifurcation machines (SQBM+™), and quantum cryptography communications technologiesContribute to achieving infrastructure resilience by expanding new businesses, such as MP-PAWR and counter-drone security systems, utilizing the technologies cultivated in defense equipment developmentLeveraging our comprehensive strengths to promote social safety and security© 2022 Toshiba Corporation16Steady improvement in core profitability at each segmentImpact of the Toshiba Next PlanOperating Income Margin by SegmentBeginning of Toshiba Next Plan12%10%8%6%4%2%0%-2%Energy systemsInfrastructure systemsBuildingRetail & PrintingDevices & StorageDigitalDigital solutions• Standardized the software development process• Active use of overseas softwaredevelopment resourcesSuccessful example of earnings improvement which can be applied to the entire Toshiba groupCOVID-19pandemicSemiconductor shortageIncrease in material costsFY18ActualFY19ActualFY20ActualFY21ActualFY22Forecast© 2022 Toshiba Corporation17Efforts toward Further Enhancement of Core ProfitabilityExpanding from CFT activities and restructuring efforts to value chain transformationFY25 TargetCumulative total approx. 250 B yenRestructuring• Mitigate future risks through thorough portfolio management••Streamline fixed costs by optimizing personnelStrengthen governance through reorganization of subsidiariesKey:RestructuringCFT activitiesCumulative total 180 B yenFY18FY19FY20FY21~FY25CFT activities•Reduce the cost of sales ratio through engineering, procurement, and manufacturing transformationStrengthen overhead cost control through spend managementImprove operating returns through sales transformation••Continuous improvement of core profitability through two reforms in value chain transformationTwo reforms in value chain transformationOperational process reform・Design & product modularization・Smart factory・Strengthen sales and procurement capabilitiesIT system reform・ERP reform・Strengthen PLM/MES・Centralized managementof Integrated DB© 2022 Toshiba Corporation18Update on Activities Aimed at Further Enhancing of Core ProfitabilityAchieving steady progress in KPIs set for each initiativeSubsidiary consolidationValue chain transformationAchieved 30% reduction from the 388 targeted subsidiaries announced in November 2020.Aiming to achieve 40% reduction by FY25.388subsidiariesReduced 118 subsidiaries（▲30%）Target 40%reduction270subsidiariesNov. 2020AnnouncementAs of Apr. 30, 2022FY25 TargetDesign & product modularization67 productsKPI: # of products modularizedAnticipating approx. 70% completion during FY22 for the 67 targeted products.Completed for16 products46 productsFY21FY22 PlanFY25 TargetSmart factoryKPI: % deployment to major sites（Level 3）Definition of smart factory levelsLevel 5: OptimizationLevel 4: Prediction & forecastingLevel 3: Cause AnalysisLevel 2: Data visualizationLevel 1: Data collection12%FY2135%65%FY22 PlanFY25 Target*Target to reach 100% in FY28© 2022 Toshiba Corporation1903Resolving Corporate Challenges© 2022 Toshiba Corporation20Approach to Resolving Corporate ChallengesInternalRigidityOrganization-related issuesExternalRigidityMethodology-related issuesSoftware Defined TransformationTransform businesses through “DE → DX → QX” evolution and discover new business potential from a data-oriented perspectiveIntegration and optimization of software development• Aggregate software personnel dispersed throughout Toshiba group•Improve efficiency through standardized processesRealizing the value of potential technologiesConsider working with external partners in order to realize value from high potential technologies with large expected target markets© 2022 Toshiba Corporation21Software Defined TransformationCreate a platform after separating apps, software and hardwareCurrent statusDE: Digital EvolutionDXExternal RigidityHWSWHWSWInternalRigidityHWSWHWSWAppAppSWHWThe key to change is“Software Defined”AppApp Other Co.AppAppOther Co.AppSWHWHWOther Co.HWCreate a platform© 2022 Toshiba Corporation22The Future Created by Quantum Technologies (2030-)QXA world optimized by quantum technologiesAppApp Other Co.AppAppOther Co.AppSWHWHWOther Co.AppAppApp Other Co.AppAppOther Co.AppSWHWHWOther Co.HWAppApp Other Co.AppAppOther Co.AppSWHWOther Co.HWOther Co.HW© 2022 Toshiba Corporation23SHIBUYA Approach: Evolving Process from DE to DXReviving the company (city) without stopping the business (train)Step ０Step 1Step 2Step ３Step ４EnergySolutionsInfrastructureSystemsSolutionsBuildingSolutionsRetail & PrintingSolutionsDevices &StoragesDigital SolutionsBatteryData BusinessHWSWSeparation of applications, software and hardware(and related services)Become “software defined”: updating functions with a separated SW layer Align processes and organizations with the SHIBUYA approachCreate new service businesses on the new platformTo DXVisualization, analysis, organizational changes, system reforms, and feedbackCategorize HW with high market value and commodity used within the systemIncorporate HW (technology) with high market value and restructure HW with low market valueSignificantly reduce fixed costs and digitalize development, design, manufacturing and procurement, and maintenance processesTo CPS© 2022 Toshiba Corporation24Integration and Optimization of Software DevelopmentToshiba Group’s software development personnelSteps to optimize software development that leads to evolution from DE to DXNumber of SW development personnel Approx. 7,400(excluding internal IS personnel)Digital segment(Approx. 2900)Number of SWengneersi Toshiba Group companies (approx. 30 companies)Challenges•Software development personnel are dispersed within the groupDevelopment processes and management metrics are not standardized across the organization, as each company engages in development separatelyDuplication of development efforts••12Visualization of development maturity using the same metricsCompany-wide application of methodologies of the leading digital solutions segmentPotential benefits :1. Reduction of development and operation costs2. Reduction of quality lossesFramesTIRAToshiba IoTReference ArchitectureComponentsHow to make componentsSystem construction and installationManaged servicesHow to set upOperation and maintenance methodsDesign and development standardsCommonStyle™ MethodologyProcess standardPROSQUARED™Standardized work definitionsCataloging products and solution services3Consolidation of divisionsPotential benefits : 1. Strengthening governance of software development2. Flexible resource allocation3. Sharing development and maintenance environments© 2022 Toshiba Corporation25Double Diamond Model: Approach to Data BusinessB-to-B diamondIndustry dataToshiba approaches both diamondsB-to-C diamondHuman dataNumber of companies and usersAnalyzedby AIData sales tofinancial industryAnalyzedby AIData sales todifferent industriesSupplyChainUpstreamMaterialsManufacturingTend to monopolize dataSmall to Medium-sizedEnterprisesWilling to provide dataLarge EnterprisesTend to monopolize dataUsers(target: global population)Willing to provide dataDisposalVendorsTend to monopolize dataSupplyChainDownstreamLiposomeGeneralist™Automating platformNFTAdministrationshellMeister SRM™WMS/WESVPPPOSSystemLightingSmartReceipt™ElevatorFocus businesses that possesshuman dataSecurity, image analysis and AI technologyCO2 visualization and energy management© 2022 Toshiba Corporation26ToshibaTechnologies and Services that support these operationsConsidering New Businesses based on People Flow DataPeople Flow DataEstimated market size*20 T yenOperation management servicesEnvironmental control services(Buildings, public transportation)Operation management servicesLightingElevators/EscalatorsRetailPassenger railwaysFreight trainsRoadsRouting servicesETC servicesBuildings and Retail Facilities PlatformDynamic Pricing PlatformDynamicScheduling PlatformSWHWZEB systemSharepo™Lighting equipmentViewLED™SMART EYE SENSORDataDestination floor systemElevator escalatorElevator signageTraffic control systemSmart Receipt™Traffic platformTrueLine™ Smart Receipt™-SHIBUYA Approach-Step 0: Separate HW and SWRemote monitoring of electrical appliancesToll collection system/ETCPOS systemAutomatic ticket gatesLocomotiveTraffic control systemTESSOperation control room systemCreating a platform from SWseparated in step 0DataKey:Existing HW or HW under considerationExisting SW (apps) or SW (apps) under consideration* Our estimate made based on the Facility Management Software market size and share (Faptos Global), etc.© 2022 Toshiba Corporation© 2022 Toshiba Corporation2727Considering New Businesses Starting with Energy and CO2 DataEnergy and CO2 DataEstimated market size*20 T yenServices for power producerspower retail data servicesRenewable energy and energy conservation consultingInter-individual power transaction servicesCorporate activity analytical servicesCO2 emission budget controlProvision evidence relating to CO2 emissionData services targetingfinancial institutionsDemand-side trust servicesProduct carbon footprint Electric Power retailPower generationBusinessoperatorFinanceInsuranceManufacturingLogistics RetailRegion・LocalgovernmentsEnergy Market Data PlatformCO2 Visualization Data PlatformDataDataCreating a platform from SWseparated in step 0Business risk controlDemand responseRenewable energy balancingEtaPRO™Optimization of Insurance and other costsHigh-precision prediction of renewables demandRenewable energy output forecastsEnergy matchingConcierge for improvementEnergy assessmentEnergy matching (RE100)Smart Receipt™Model services for quantitative evaluation of energy reseiliencePersonnel matchingCO2 emission assessmentQuotation and assessment based on CO2 emissionsCO2 emission monitoring-SHIBUYA Approach-Step 0: Separate HW and SWPower generation systemTransmission & distribution systemPower meterBattery storageCCU/CCSSQBM+™(SBM)SWHWKey:Existing HW or HW under considerationExisting SW (apps) or SW (apps) under consideration* Our estimate made based on JEITA’s “Survey on Trends in Focus Areas 2021” and others© 2022 Toshiba Corporation© 2022 Toshiba Corporation2828Approach to Resolving Corporate ChallengesInternalRigidityOrganization-related issuesExternalRigidityMethodology-related issuesSoftware Defined TransformationTransform businesses through “DE → DX → QX” evolution and discover new business potential from a data-oriented perspectiveIntegration and optimization of software development• Aggregate software personnel dispersed throughout Toshiba group•Improve efficiency through standardized processesRealizing the value of potential technologiesConsider working with external partners in order to realize value from high potential technologies with large expected target markets© 2022 Toshiba Corporation29Materializing the Value of Potential TechnologiesLeveraging diverse technology development efforts to create valuable productsCu2O Tandem-type PV*1Estimated market size*2 : 2.5T yen (2030)-Tandem cell estimatedEfficiency : 27.4%*Target : 30% or moreApplication imageAchieved EVs recharged without plugsCore Techs : Cu2O(material) x Semiconductor ProcessHigh efficiencyx LightweightLiDAR（Light Detection And Ranging）Estimated market size*6 : 1.5T yen (2030)- 300m detection rangewith palm-sized device with world-class image resolution Film-Based Perovskite PVEstimated market size*3 : 0.5T yen (2030)・ Minister of Economy, Trade and Industry Award・ Carbon Neutral category Grand PrixNTO*4 Anode BatteriesEstimated market size*5 : 0.7T yen (2030)- High energy, power density, and safety- Lightweight and flexible: can be installed where current products can not be installed- Prototype cell achieves more than 1.5 times capacity for 20Ah SCiBTMCore Techs : Coating x NanomaterialsCore Techs : SCiBTM × Nb(material)Millimeter-wave ImagingEstimated market size*7 : 1.3T yen (2027)- Identifies object shapes precisely with 2mm resolution-Detects dangerous objects hidden under clothes in walk-through inspections at public areas, buildings etc.MEMS SensorsEstimated market size*8 : 2.1T yen (2030)Hydrogen gas sensors-High-speed detection of gas leakage, contributing to a safe hydrogen-based societyGyro sensors- Small size, accurate sensing, contributing to autonomous mobility Sensor chipCore Techs : Sensor x Packaging x Signal Processing Core Techs : Radar x Signal ProcessingCore Techs : Semiconductor x MEMS*1 Photovoltaics, *2 Estimated global market of PV panels for EV based on the expected number of EVs in 2030 (https://www.nedo.go.jp/content/100873452.pdf), *3 Fuji-Keizai: Trends in advanced PV development and market outlook in future(FY2020 version), *4 Niobium Titanium Oxide , *5 Estimated by Fuji-Keizai Outlook of energy, large size rechargeable batteries and materials(2020) , *6 LiDAR module global market estimated by 3D LiDAR marketing analysis(TSR) etc., *7 Global market of security screening systems,*8 MEMS sensor global market in global forecast in 2030(SDKI Inc.)© 2022 Toshiba Corporation30Case Study: Materialized ValueRapid-changing business environment where significant enterprise value can be created through disruptive innovation and by demonstrating future potential in growth areasBiotechnology Sector Averages*2Biodegradable liposomesEstimated market size*1 : 12T yen (2030)BiodegradableliposomesGene(DNA)Lipid• The lipid composition design allows genes to be delivered to specific target cells, such as cancer cellsFocus on gene delivery providing a material platform that meets individualized customer needs•AlliancesShinshuUniversityOther univ.& companiesTumor-tropic gene therapyGene therapy, regenerative medicine, drug delivery applications etc.Selective uptake by specific cellSales growth rate51.7%Lipid compositiondesign utilizing MI-DBRespond quickly to customer requirements byMI-DB developmentManufacture of LiposomesMI: Materials InformaticsOperating profitmargin-402.0%Enterprise Value/ Salesx 16.9Core Technologies : New designed materials x MI*(AI)*1 Global market for regenerative medicine products etc. (METI estimate) *2 SPEEDA (as of May 25, 2022)© 2022 Toshiba Corporation31Breaking through External RigidityConsidering partnerships to realize the value of technologies with high potential Framework for deciding betweeninternalization or externalizationBusiness assets and experienceEasy to utilizeInternalization or Externalization (Partner-strategy or JV)InternalizationExternalization (withdrawal)Externalization(Partner-Strategy or JV)Difficult to utilizeNot alignedManagement and business policiesAlignedPartner ACompanies aiming to expand in their areas of expertiseToshibaPartnerOngoing provision of cutting-edge technologiesManagementand business know-howIndustry reachJointVenturePartner BIndustry affiliates,existing players In the relevant areas of expertisePartner CVC / InvestorsValue obtained: Financial returns from equity, data utilization, etc.© 2022 Toshiba Corporation3204Toshiba Group’s Vision for Evolution: DE→DX→QX© 2022 Toshiba Corporation33QXCreating the quantum industryQuantum TransformationDXData businessMatching businessPlatform develpmentDigital TransformationDEDigital EvolutionShift to services and recurring business© 2022 Toshiba Corporation© 2022 Toshiba Corporation3434DE Case Study #1: Elevator as a Service (EaaS)Initiatives toward DEInitiatives to dateElevatorPeople flow analysis AI2019～BIM cloud2019Smart doors2020Viskonti2™Digital signage2021Digitalization of building informationBIM* CloudForecast intent to board and prevent getting caughtSmart doorsCustomized base onuser attributesDigital signageShift toward DXPeople flow and advertisingPeople flow analysis/supportTargeted advertisingSafety and securityPredictive diagnosisZero service disruptionSecurityTransportation and logisticsProvision of optimal routesUnmanned deliveryEnvironment andenergyOptimization with digital twinRecycling loopLink with external appsToward data businessesSWElevator control SWPeople flow analysis AIHWElevatorProvides new value to users and owners through analysis of people flow data and optimized controlConnects cameras to elevators to obtainimage dataGenerate various types of dataElevator cloudPeople flow dataUser attribute dataOperation dataOperation request dataEquipment operation dataQuality statisticsAdvertising dataBIM data© 2022 Toshiba Corporation35*Building Information ModelingDE Case Study #2: ViewLED™Initiatives to dateViewLED™ 2019.62020.12Person recognition AIInitiatives toward DEVisualization and intrusion detection service2020.12People flow analysis service 2021.11Work analysis service2022.1QIntrusion detectionServiceSWPeople flow analysisServiceWork analysisServiceProprietary person recognition AIProvides new value through visualization of facilities using image dataSpecified areaDetect peopleHWAcquires digital data by connecting LED lighting to cameras and networks™Shift toward DXPlants and warehousesSafety managementProduction managementHygiene control (sanitization)Air-conditioning equipment (space sanitization)Building management (cleaning management)Buildings, facilities, and storesBuilding management(facility operation)Work management (absence)Energy management (power consumption)SportsCompetition analysisLink with external appsToward data businessesGenerate various types of dataPeople flow dataWork dataLighting (on/off)dataLocation dataDatabaseSafety (absence) dataEnergy consumption dataCompetition dataEtc.© 2022 Toshiba Corporation36DE Case Study #3: Software Defined and Cloud-based ControllerInitiatives toward DEInitiatives to dateControl by HW PLCControl with SW PLC ＆ industrial computer2017Control with cloud PLC ＆ remote I/O2023.3Q Shift toward DXPlants and infrastructureLinkage with cloud MES*2Optimization and facility management with super real-time CPSFood, textile and building materialLine automation with AI product flaw analysisSafety and securityPredictive diagnosis for malfunctionsRemote maintenance/ CBM*3ResilienceEnvironment and energyCircular economy with super real-time CPSLink with external appsToward data businessesCloud controllerMaterial handlingAutomated production lineEnergymonitoring systemFor steel plantsEnergy saving control systemSoftware definedFlexible SW installation regardless of HW to achieve optimized data acquisition and process configurationTransition from PC controllers(SW PLC ＆ industrial computer)to control with cloud PLC ＆ remote I/OReal-time uploading of various on-site data to the cloudSWSW PLC*1HWController*1 PLC (Programmatic Logic Controller): device which automatically control manufacturing equipment*2 MES (Manufacturing Execution System): manufacturing execution systemOn-site I/O data・Data from sensors（temperature, pressure, flow rate, current, voltage, vibration etc.）Facility operation data・Operational status data・RAS*4 data （interior temperature of facilities, fan rotation speed, power voltage etc.）*3 CBM (Condition Based Maintenance): Predictive diagnosis based on the status of manufacturing equipment and facility*4 RAS (Reliability, Availability and Serviceability)・Control and operation data© 2022 Toshiba Corporation37QXQuantum TransformationCreating the quantum industryDXData businessMatching businessPlatform developmentDigital TransformationDEDigital EvolutionShift to services and recurring business© 2022 Toshiba Corporation© 2022 Toshiba Corporation3838DX Case Study #1: Energy Solution PlatformProviding a platform that organically combines various energy solutionsVPP(Virtual Power Plant)Distributed renewable energy sourceaggregation platformSupports the operation of the renewable energy balancing groupOptimal control of charge/discharge, and forecasting of power generation and demandProvides required functions torenewable energy providers and aggregators in the form of SaaSPower generationDemandEnergyBalancingRenewable energyBundle distributed power sourcesRenewable energy aggregationConsumersPower storageBundle demandEnergy management/Demand responsePower storageConsumersRE100SBTLocal governmentsOthersMain power systemConsumersCentralized power source・Nuclear power・High-efficient thermal power +CCU/CCSPower utilityElectric power exchange marketO&M solutionspackageEtaPROTMPlant monitoring softwareProvides plant performance evaluation and rapidly detects abnormalitiesExpansion to power generators and transmission utilities through sharing and utilization of Toshiba’s global network & customer channelsTBM(Time Based Maintenance)CBM(Condition Based Maintenance)Provides solutions to improve customer’s asset performance through data analysis© 2022 Toshiba Corporation39DX Case Study #2: Purchase Data PlatformData acquisitionCollects and manages data of “individuals” Data utilizationProvide data-controlled environment based on “individual consent”Smart Receipt™ MembersRobust data securityData analysis and utilization technologyNumber of Smart Receipt™member stores*2End of FY2130k stores＋32%Year-on-yearLarge to medium-sized storesDomestic market share No.1TOSHIBA TECPOS registersEnd of FY21840k＋135%Year-on-yearReceipt Management AppSmart Receipt™ *1Small storesAPI supportedOther companies’POS registersAPI supportedCloud POS＋Link between apps Store Member app Reward point app Regional walletEtc.＋Paper Receipt OCR AppReceipt scanNumber of ReceiptScan membersNov. 20216 months from release 40kPaper receiptsService linkage of personal purchase dataPersonal use of dataApp service providersProof ofpurchaseUser ownershipProviding personalized servicesPurchase dataProductdetailed informationShared across distribution channels/payment methodsFive Characteristics of DataPartner companies and organizationsGood value Improve convenience Safety and comfortReal timeacquisitionLinkage of statistical dataUse of data by the entiresocietyMedia and advertising agenciesAdvertising promotion/researchManufacturers and service companiesMarketing/product developmentGovernment and municipalitiesRevitalization of the regional economy*1 Smart Receipt™ is registered trademarks of TOSHIBA TEC CORPORATION. *2 Includes stores which provided notifications on their installation of Smart Receipt™© 2022 Toshiba Corporation40Goal for Purchase Data CollectionExpand Smart Receipt™ by 2025 to establish a foundation for collecting purchase dataNumber of affiliated storesNumber of membersTotal transaction value130k storesExpand affiliated stores based on leading market share of POS registers Strengthen advertising and sales promotions10mil. peopleFY21 Retail Sales* 150 T yenSmall storesMedium-sized storesLarge stores(national chain)FY20FY21FY22FY23FY24FY25FY20FY21FY22FY23FY24FY25Distributing data for purchases totaling 4 T yen among brick-and-mortar retail sales* Source: Ministry of Economy, Trade and Industry, Vital Statistics of Commerce.41© 2022 Toshiba CorporationDX Case Study #3: Supply Chain PlatformExpand an open ecosystem from a supply chain network connecting with Meister SRM™ *ServicesSRM usersBuyerPrimary suppliersSRM indirect usersSecondary suppliersOther users…Supplier portalSupply chain platformMeister SRM TMCompanydataQuotationdataProductiondataCO2dataAPICloudExternal servicesCompanymatchingCO2 emissions calculationSupply chain financingSupply chain insuranceSupply chainBCPDigital ledgerData usersFinancial institutionsSupply chain financingESG financingInsurance companiesRisk financingRecall managementCorporate research companiesData provision serviceCredit checks…* MeisterSRMTM is cloud service provided by Toshiba Digital Solutions which provides a supplier communication platform© 2022 Toshiba Corporation42QXQuantum TransformationCreating the quantum industryDXData businessMatching businessPlatform developmentDigital TransformationDEDigital EvolutionShift to services and recurring business© 2022 Toshiba Corporation© 2022 Toshiba Corporation4343Quantum Technology to Create a New Digital WorldAccelerating R&D and commercialization of quantum technology for the quantum society to comePresent2025-20352035~Quantum key distributionQuantum cryptographic networkNISQCommercialuse ofquantum technologyQuantum hybrid cloudQuantum applicationsQuantum annealerQuantum simulatorQuantum repeaterVirtuous cycle ofindustryIndustry expansionInfrastructure developmentTechnological innovationInflow of human resourcesQuantum satellite communicationGeneral purpose Quantum computer(Quantum Gate Machine)Quantum internetHybrid of quantum + conventional technologiesAll photonics networkSupercomputerIoTBeyond5GTolerated quantumcomputercryptographyQuantumcomputerQuantummeasurement and sensingQuantum securitynetworkCloudQuantum memoryPhotoelectric fusion device(Silicon Photonics)Quantum deviceInnovative calculationservicesSecure and advancedcommunicationUltra-high precisionsensing© 2022 Toshiba Corporation44Validation of, and Collaborations in, Quantum Cryptographic CommunicationsImplemented PoC for financial blockchain with US-based J.P. Morgan Chase & Co.Implemented trials in industrial networks with UK-based BT(October 2020)Participating in trials in six countries for the pan-European projectOpen QKD Succeeded in validating the large-capacity, low-delay IOWN Secure Optical Transport Network with NTT(November 2021)(February 2022)Continuingtrial with US-based VerizonJointly constructed a quantum test bed withthe US Quantum Technology Community CQE(April 2022)Launched trial services for the world‘s first commercial quantum-secured metro networkin London with UK-based BT(April 2022)Implemented the world’s first quality-of-service assessment measurements based on ITU standards in a long-range hybridquantum cryptographic communication network with Korea-based KT(March 2022)Launched collaboration in the quantum cryptographiccommunications businessin Southeast Asia withSingapore-based SpeQtral(August 2021)© 2022 Toshiba Corporation45Practical Application of Advanced Quantum Technology:Quantum-inspired Optimization SolutionToshiba’s original algorithms derived from its research in quantum computing can solve combinatorial optimization issues at the world-leading speed/scale and contribute to the resolution of various social issuesVarious social challengesThe world’s first challenge to various combinatorial optimization issuesFinanceManufacturingMarket systemCollocation areaCommence validation of the effectiveness of high-speed,high-frequency trading strategy jointly with Dharma Capital, the only Japan-based high-speed traderTokyo Stock ExchangeTOSHIBAQuasi-quantum computerDharma Capital’s trading systemQuasi-quantum computerProvided by TOSHIBATransportation / logisticsManagementDrug discoveryChemistryProvide platforms for new drug discovery and developmentthrough collaborations with computational drug discovery startupsBioinformaticsDrug discovery startupsHigh speed and low delayAvailableimmediatelyProvided byTOSHIBAProvides cloud services to AWS, Azure QuantumQuasi-quantum computer© 2022 Toshiba Corporation46New Industry Creation through Quantum TechnologyStrengthen coordination with local organizations through active Q-STAR efforts and R&DAssociation for Creating New Industries by Quantum TechnologiesQuantum STrategic industry Alliance for RevolutionQ-STARObjective: To create quantum-related industries and businessesAuditorAdvisorExecutive CommitteeDeliberations and reportsAppointmentand ResolutionPolicy recommendation WGStandardization collaboration/proposal WGTest bed collaboration WGR&D collaboration WGOverseas industrial partnership WGLong-term roadmap development WGUse case, etc.Information FBDiscuss topics forsubcommitteesReport on activities by subcommittee chairsSet up Sub-committeeSubcommitteeQuantum wave and quantum probability theory applications subcommitteeQuantum superposition applications subcommitteeSubcommittee on optimization and combination issuesQuantum cryptography and quantum communications subcommitteeBoard of DirectorsRepresentative DirectorTaro Shimada, President and CEO, Toshiba CorporationVice PresidentVice PresidentVice PresidentVice PresidentExecutive DirectorsExecutive DirectorsExecutive DirectorsExecutive DirectorsNobuhiro Endo, Chairman of the Board, NEC CorporationHiromichi Shinohara, Chairman of the Board,Nihon Telegraph and Telephone CorporationToshiaki Higashihara, Representative Executive Officer, Hitachi, Ltd.Takahito Tokita, Representative Director, Fujitsu Ltd.Yasuji Nagaya, Chairman, Chodai CorporationHideharu Maro, President & Representative Director, Toppan Inc.Takeshi Uchiyamada Chairman of the Board of Directors,Toyota Motor CorporationSatoshi Miki, Representative President and CEO,Fixstars CorporationHeld workshops with overseas industrial associations to discuss on the possibility of future collaborationQUTAC(Germany)Quantum Technology & Application ConsortiumQED-C(US)The Quantum Economic Development ConsortiumQuIC(Europe)European Quantum Industry ConsortiumFuture QuantumConvergence Forum (Korea)UKQuantum(UK)Conducted leader meetings particularly between QED-C, QuIC, QIC, and Q-STARto discuss 4-way collaboration・ Create a global supply chain map・ Initiatives relating to laws, standardization, etc.・ Host international symposiumsSecretariat〇〇〇 (to be established in line with quantum technology trends, etc.)QED-CQ-STARQICQuIC© 2022 Toshiba Corporation47Toward the Future Society that Quantum Technology will CreateQuantum technology will have social value in the resolution of future mega-issues(carbon neutrality, a secure data society, pandemics (drug discovery, etc.)) and contribute to the creation of Global datafuture societyThing dataQuantum computer technology(Year achieved, market size (both forecasts))Quantum cryptography and quantum communication-related technologies(Year achieved, market size (both forecasts))Photoelectric fusion devices (silicon photonics) are expected to be used in both “quantum computers” and “quantum cryptography and quantum communication” (figures inclusive)Secured SCADA network(2025, 10 to 100 B yen)High-security communication services(2025, 10 to 100 B yen)National land dataHuman dataDatabase search, image recognition(2030, over 10 T yen)Medical information base(2025､10 to 100 B yen)Quantum chemical calculation (solar cells)(2026, figures inclusive to over 10 T yen)*Photovoltaic power generationGovernment dataFinancial information base (2025, 10 to 100 B yen)Transactions between securities-related institution (2030, 10 to 100 B yen)Interbank settlements (2030, 10 to 100 B yen)AircraftQuantum chemical calculation (catalysts)(2026, figures inclusive to over 10 T yen)*Wind power generationNew industryPlantManufacturingDACHydrogenation plantSynthetic fuel production plantAmmonia plantCarrierTailor-made drug discovery(2030 to 2040, 1 to 10 T yen)Storage batteryTraffic control(2030, 100 B to 1 T yen)FarmQuantum chemical calculation (ammonia synthesis)(2026, figures inclusive to over 10 T yen)*Key power sourceCyber drug discovery base(2040~2050､1 to 10 T yen)Hydrogen power generationLogistics and human logisticsLogisticsAgriculture, Forestry and FisheriesEnergyHospitalGovernment and Ministries and Agenciesother public officesDistribution (Loading ratio improvement)(2025 to 2027, 100 B to 1 T yen)Energy (electricity)(2025, ¥100 billion to ¥1 trillion)Houses and buildingsMedical careBankFinancial engineering (portfolio optimization)(2025, over 10 T yen)Data-driven finance(2025~2030, over 10 T yen)Finance* The earliest year for implemented use case of quantum science calculation and the overall size of the product are provided.(solar cells/ammonia synthesis/catalysts constitute portions of overall market size)Reference: Q-STAR, Quantum STrategic industry Alliance for Revolution”Industrial Image of Carbon Neutral” (Ministry of Economy, Trade and Industry)https://www.meti.go.jp/press/2020/12/20201225012/20201225012-4.pdfModified to accommodate Q-STAR use cases© 2022 Toshiba Corporation48Today’s Key MessagesWhat remains unchanged“Committed to People, Committed to the Future”Continue to support daily lives of people and the society, and to contribute for the economic security assuranceWhat we aim to achieve with the evolving digital economyOur business:Transformation through “DE→DX→QX” to develop data service as a primary source of revenueOur challenges: Break through both the internal and the external rigidity Our action: SHIBUYA Approach → Being “software defined” is keyContribute to the achievement ofcarbon neutrality and a circular economy through digitization© 2022 Toshiba Corporation© 2022 Toshiba Corporation4949Committed to People,Committed to the Future.© 2022 Toshiba Corporation© 2022 Toshiba Corporation5050