Disclosure Based on TCFD Recommendations│Sustainability│SUMCO CORPORATION

In April 2021, we expressed our support for the TCFD^*1 recommendations.

This section discloses our governance, strategy, risk management, and metrics and targets in line with the TCFD recommendations.

The Task Force on Climate-related Financial Disclosures established by the Financial Stability Board (FSB)

1. Governance and Risk Management

SUMCO has appointed an “Executive Officer Responsible for Sustainability Promotion” who promotes our sustainability initiatives, and established the Sustainability Promotion Department, a dedicated organization under the direct supervision of top management. In addition, we convene the “Sustainability Promotion Council” twice a year as a company-wide meeting to oversee our sustainability initiatives, attended by executives at the managing executive officer level and above. An overview of the Sustainability Promotion Council is regularly reported to the Board of Directors, where active discussions are held with the participation of outside directors.

Furthermore, for risks assessed as potentially affecting our business continuity, including those related to sustainability, we implement risk management activities based on our Basic Rules on Risk Management to prevent risk events and minimize their impact.

CSR and Sustainability Promotion Structure

2. Strategy

We recognize that the risks and opportunities associated with climate change are among the key business issues that will affect our future finance.

We therefore forecast and quantified the risks and opportunities that are likely to have a financial impact and carried out a scenario analysis in line with the TCFD recommendations.

(1) Major risks and opportunities related to climate change

Scope: SUMCO Group
Timing of embodiment: short term (1 year or less), medium term (1 to 3 years), medium to long term (3 to 10 years), long term (over 10 years)
Possibility: small, medium, large
Degree of impact: small (1 billion yen or less), medium (1 to 10 billion yen), large (over 10 billion yen)

Classification		Expected result	Timing of embodiment	Possibility	Degree of impact
Risk	Transition risk	Increase in procurement costs due to enhancement of carbon neutrality initiatives at suppliers and reflection of a carbon tax (carbon pricing) cost in a raw material unit price	Medium to long term	Large	Medium
		Increase in operating costs due to the introduction of a carbon tax (carbon pricing)	Medium term to medium to long term	Large	Medium
		Increase in waste disposal costs due to the formation of a recycling-oriented society	Medium to long term	Large	Medium
		Increase in business costs due to the increased burden of renewable energy levy	Short term to medium to long term	Large	Medium
		Decreased potential for capital acquisition due to the growing difficulty in meeting the demands of increasingly sophisticated ESG-oriented investors	Medium term	Large	Small
	Physical risk	Suspension of business activities due to wind and flood disasters	Short term	Medium	Small to large
	Physical risk	Supply chain disruptions due to wind and flood disasters	Short term	Medium	Small to large
Opportunity		Expansion of demand for energy-saving-related equipment due to the advancement of energy conservation and renewable energy	Long term	Large	Large
		Expansion of demand for automotive products due to the spread of Evs	Medium to long term	Large	Large
		Expansion of demand for data centers due to the enhancements of communication traffic and data processing	Medium to long term	Large	Large
		Expansion of demand for infrastructure and automation equipment aimed at enhancing energy efficiency	Medium to long term	Large	Large

(2) Scenario analysis

Although all the items identified as risks and opportunities are evaluated as having a significant impact on SUMCO, three items (blue items in the above list) have been selected for the scenario analysis in the current fiscal year.

1) Increase in operating costs due to the introduction of a carbon tax (carbon pricing) [Risk]

Since we emit large amounts of greenhouse gases and there will be a significant impact on our business if a carbon tax is introduced, we conducted a scenario analysis for the 2℃ and 4℃ scenarios.

(i) Assumptions of scenario analysis

(1) Total emissions for scopes 1 and 2

Emissions in 2030 are estimated, with emission factors calculated for each country's electric utilities based on the World Energy Outlook (WEO) 2019 of the International Energy Agency (IEA).

	2℃ SDS (Sustainable Development Scenario)	4℃ STEPS (Stated Policies Scenario)
Emissions in 2030	Approx. 430,000 t-CO₂/yr	Approx. 675,000 t-CO₂/yr

(2) Carbon prices

Carbon prices of each country are set on the basis of the World Energy Outlook (WEO) 2019 of the International Energy Agency (IEA).

	2℃ SDS (Sustainable Development Scenario)	4℃ STEPS (Stated Policies Scenario)
Japan, USA, Taiwan	＄100 / t-CO₂ ^*2	＄33 / t-CO₂ ^*4
Indonesia	＄75 / t-CO₂ ^*3	＄12 / t-CO₂ ^*5

The value for advanced economies is adopted.
The value for selected advancing economies is adopted.
The value for EU is adopted.
The lowest value among the values given for different countries in the WEO 2019 is adopted.

(ii) Scenario analysis

The cost burden will increase by about 2.4 billion yen/yr under the 4°C scenario and about 4.7 billion yen/yr under the 2°C scenario.

(iii) Proposed cost reduction initiatives

Since the scenario analysis has indicated that the total cost decreases when the unit cost of procuring renewable energy is lower than the unit carbon price, we continue to discuss the introduction of renewable energy in addition to our current efforts toward energy conservation.

Image of costs associated with carbon tax

2) Expansion of demand for energy-saving-related equipment due to the advancement of energy conservation and renewable energy [Opportunity]

As we move toward a decarbonized society, demand is expected to increase for power semiconductors that provide stable and efficient power supply and streamlined, high-precision control.

We have conducted scenario analysis for representative products that are expected to become more widespread in the future due to climate-change-related factors and for which both the 2°C and 4°C climate change scenarios exist and have evaluated changes in the demand for power semiconductors in each industrial sector.

		Consumer equipment sector	Electric railcar sector	Energy sector	Automotive & electronics sector	Information & communication equipment sector	Industry sector
Market size of power semiconductors in percentage ^*6		20%	A few percent	A few percent	25%	25%	25%
Products and devices with semiconductors having promising growth potential		Inverters for home appliances, AC adapters, etc.	Electric railcars (inverter modules)	Solar and wind power generation equipment, power transmission infrastructure, etc.	EVs, quick charging stations, wireless power supply systems, etc.	Server power supplies, UPS, etc.	High-voltage and high-current applications, such as motor control, inverter control, and welding machinery
	Power semiconductors targeted for scenario analysis	IGBT, Power MOSFET	IGBT, Power MOSFET	IGBT, Power MOSFET	IGBT, Power MOSFET	This sector was not included in the analysis because there are no appropriate climate change scenarios for the sector, and the cycle of products and services is shorter than in other sectors, making medium- to long-term projections difficult.	IGBT, Power MOSFET
	Changes in power semiconductor demand toward achieving the goal of less than 2°C in 2030	Production of high-efficiency air conditioners with inverters is estimated to be about 1.3 times higher than that under the 4°C scenario (business as usual). The production percentage of air conditioners with inverters is also expected to rise.	The demand for rail travel, whose CO₂ emissions per travel distance is low, will grow. The production of railcars is estimated to be about 1.2 times higher, compared to the 4°C scenario (business as usual).	Although it is difficult to forecast the volume of power semiconductors to be installed in power generation equipment and related products, we estimate that the amount of solar and wind power to be introduced globally will be about 1.5 times greater than in the 4°C scenario (business as usual).	A separate scenario analysis is conducted for general automotive semiconductor devices(see "Expansion of demand for automotive products due to the spread of EVs")		Although there are no climate change scenarios for individual equipment and products in this sector, we estimate that energy intensity in the manufacturing industry will decrease by about 7% in comparison with the 4°C scenario (business as usual) due to energy conservation and improved efficiency.
Our business opportunities in the transition toward achieving the goal of less than 2°C		Increased production of air conditioners due to global warming and greater extremes of weather is expected to have a positive impact on demand for our products.	Although the market size is small, we expect a positive impact on demand for our products as demand for electric railcars increases due to a modal shift.	Although the market size is small, we expect that the global shift to renewable energy will increase the production of power conditioners and other products, which will have a positive impact on demand for our products.		Considering that there are no direct climate change factors affecting the demand for products and services in this sector, we assess that the difference in demand for power semiconductors in this sector between the 2°C and 4°C scenarios is small.	We expect that demand for power semiconductors will increase due to such factors as progress in energy conservation and higher efficiency in factories, which will lead to increased demand for our products.
	Our business opportunities with the spread of next-generation power semiconductors	The market for next-generation power semiconductors, using new materials (SiC, GaN, etc.) which are currently undergoing development, commercialization, and cost reduction, is expected to expand significantly by 2030. We will continue to monitor the spread of next-generation power semiconductors, pursue development, and increase our capacity.

Based on a research company's forecast data

3) Expansion of demand for automotive products due to the spread of EVs [Opportunity]

In forecasting the demand for automotive wafers, we estimated the ratios of future EV/HEV production as shown in the figure below.

Regarding the right-side graph (New scenario) as the 2°C scenario and the left-side graph as the 4°C scenario (business as usual), we analyzed the trend of silicon wafer demand until 2030 by multiplying the projected area of silicon wafers for automotive semiconductors by the production ratio of each vehicle type.

The results indicate that the demand for silicon wafers in 2030 will be more than doubled compared to 2020 in both the 2°C and 4°C scenarios. When both scenarios are compared, the demand as of 2030 under the 2°C scenario is estimated to be about 1.1 times higher than that under the 4°C scenario.

In the automotive and electronics sector, we expect, as a baseline, increasing demand for automotive semiconductors due to such trends as automated driving and computerization of display devices. In addition, we expect that the spread of EVs and PHEVs for decarbonization will have the effect of further boosting demand, with a positive impact on demand for our products.

We will therefore continue to develop high reliability and durability of our products and increase our capacity.

The scenario analysis was conducted with the help of an external research company in collecting and analyzing external information.

3. Metrics and Targets

Tackling climate change is one of the goals in SDGs, and delinking of economic growth and environmental degradation is strongly required. The SUMCO Group, which supports the growing semiconductor industry, set goals for carbon neutral covering Scope 1+2 of SUMCO Group (Japan) , in September 2021 toward the realization of a sustainable society, and in February 2024, changed the goal to comply with the SBT(^*1)'s 1.5°C scenario from SBT's 2.0°C scenario. In addition, in February 2025, we changed the goal that covers domestic and overseas sites, and set the new goal covering Scope3. As a result, we obtained SBT certification for its Near-Term goals on June 12, 2025.

Target Year	2030 (Near-term Goal)	2050 (Long-term Goal)
Scope1+2 Goals	42% reduction from 2023 (6.0% reduction per year) [in conformity to 1.5℃ scenario of SBT(^*7)]	100% reduction (Carbon Neutral) [in conformity to the declaration aiming at carbon neutral by 2050 by the Government of Japan]
Scope3 Goals	25% reduction from 2023 (3.6% reduction per year) [in conformity to WB2℃ scenario of SBT(^*7)]	－
Initiatives	Continuous energy-conservation activities Further introduction of more renewable energy (such as Solar power generation, Wind PPA, etc.) Procurement of environmental value (such as Non-Fossil Certificates and J-Credit, etc.) Promotion of initiatives for carbon neutral by our suppliers, etc.

Science Based Targets
Reduction targets of greenhouse gas emissions set by companies that comply with the standards of the Paris Agreement