Good morning, good afternoon and good evening. Thank you very much for joining Nidec’s Fiscal Year 2020 Second Quarter Conference Call.

I am Yoichi Orikasa, General Manager of Kyoto Branch at Mitsubishi UFJ Morgan Stanley Securities. As we kick off the conference, I’d like to ask you to make sure all the materials are ready in front of you.

If not, please download the files on Nidec's homepage at this moment. Please note, this call is being recorded and the conference material will be posted on the Company's homepage for the coming week for investors and analysts who want to revisit or cannot join today's call.

Now I'd like to introduce today's attendees from Nidec Corporation. Mr.

Jun Seki, Representative Director, President and Chief Operating Officer; and Akira Sato, First Senior Vice President and Chief Performance Officer. First, Mr.

Sato will make a presentation. After his presentation, we will move on to our Q&A session, and Mr.

Seki and Mr. Sato will answer your question.

Mr. Sato now present Nidec’s Q2 fiscal year 2020 results, future outlook and management strategy.

Mr. Sato, please go ahead.

Thank you very much. Good day, ladies and gentlemen, and welcome to today's conference call.

My name is Akira Sato, Chief Performance Officer of Nidec, and I will be your main speaker for today. And joining me is Mr.

Masahiro Nagayasu, General Manager of Nidec's IR team; and also, [indiscernible], special speaker today, who is – and Mr. Seki, President and Chief Operating Officer, Nidec.

He is joining us in this conference call, particularly in the Q&A session. For the forward-looking statements, please see Slide number 2 of our presentation material for details.

Now I will review the key figures. Please see Slide number 3 for our first half results.

As summarized on Slide number 4, the first half net sales has increased 0.1% year-on-year to JPY751.8 billion, and operating profit has also increased to 12.0% year-on-year to JPY69.2 billion. So both net sales and operating profit has made a year-on-year increase.

The net sales for the second quarter has increased 23.2% quarter-to-quarter to JPY414.9 billion, and marked a record high. The operating profit for the corresponding period has increased 48.9% to JPY41.4 billion, due to contributions from comprehensive improvements on cost structure and optimization of fixed cost through WPR4 program.

The operating profit ratio has recovered to double-digit 10.0%. As a result of all of these, we have made an upward revision to full-year fiscal year 2020 financial forecasts.

On Slide number 5 and 6, you have step charts showing the comparison of net sales and operating profit year-on-year and quarter-on-quarter, respectively, by product groups with exchange rate effect, eliminations and the structural reform expenses. As you see on Slide number 6, the net sales and operating profit have increased quarter-on-quarter in all of the segments and a small precision motors, automotive and appliance, commercial and industrial or ACI have been the main drivers.

Please see the Slide number 7, due to our continued efforts for a higher cash conversion cycle or CCC, our free cash flow is on its way to improvement from the first to second quarter, and our free cash flow for the first half this fiscal year has recovered to almost the same level as the first half of fiscal year 2018. As shown on Slide number 9, we have made an upward revision to full-year fiscal year 2020 financial forecasts based on the first half result.

Please see Slide number 12, which is showing changes in our regional production on a month end basis, where the pre-pandemic average utilization ratio is assumed to be 100%. The regions of Europe, Americas and Asia, excluding China and Japan whose ratios were lower than China and Japan as of the last result have caught up in the second quarter and are on their way to near full recovery.

The WPR program progresses the net sales hit the bottom in the previous first quarter and operating profit in the first quarter of the last fiscal year, and operating profit has recovered to the double-digit 10.0% in this second quarter. We are setting even further recovery in this second half.

Please see Slide number 14. The sales volume of six models of electric vehicles, or EVs, that have adopted our E-Axle, exceeded 80,000 units on a cumulative basis as of the end of September and total volume of each month in the second quarter is exceeding that of previous month.

Please see Slide number 15. We are expecting that Nidec's E-Axle for the S shaped curve in the product life cycle theory and enters a super long growth stage.

Last month, the governor of California issued an executive order requiring all new cars to be zero-emission by 2035. And in the same month, our European Commission announced its plan to increase from 40% to 55% reduction of greenhouse gas emissions by 2030, compared to 1990 levels as part of the European Green Deal.

Meanwhile, due the technological innovations, the cost of EV Power Train is expected to become cheaper than that of Internal Combustion Engine or ICE around 2024, and customers for E-Axles are spreading from initial innovators, such as GAC and GE to early adopters after the turning point year of 2025, and sales are expected to expand rapidly thereafter. Please see Slide number 16.

Based on the expected rapid sales expansion of E-Axles after 2025 that I've just explained, Nidec is setting up local R&D bases in the China where significant technological innovations and structural changes are happening in the EV industry. As illustrated on the upper right, we are planning to establish an R&D center in China, Japan, Dalian local development cooperation demonstration zone, which is, at most the same scale as Shiga Technical Center, our core R＆D site in Japan, with 1,000 employees.

Also shown on the lower right, the operating ceremony of R＆D center in Suzhou was held last month, and it's already up and running now. This is one of world’s biggest R＆D site with 12,000 square meters of floor space and 36 motor testing systems.

Please see Slide number 17. As we are entering the edge of the CASE, which stand for Connected, Autonomous, Shared and Electric, Nidec is transforming our business model from one based solely on motors to one based on systematization and modularization in the product areas in not only E-Axles that I have mentioned, but seat system, pump module, door system and electric power steering system in order to increase added value.

Please see Slide number 18. Both net sales and operating profit ratio of ACI are steadily on their way to improvement from the first to second quarter due to the WPR program.

ACI is currently undergoing a comprehensive review of its cost structure and is ready to improve operating profit ratio by optimizing outsourcing costs, labor costs and fixed costs. Please see Slide number 19.

Nidec’s Compact, light-weighted and energy efficient brushless DC motors are playing a very important role in coping with the strong demand for home appliance left on the back of the work-from-home trend caused by COVID-19, and we are seeing further growth of our brushless DC motor business and appliances such as, air conditioners, dishwashers, refrigerators, washers, dryers, robot cleaner and other vacuum cleaners. Please see Slide number 20.

The shipment of ultra thin and ultra small fan motor, UltraFlo FDB, or UFF, which is used mainly for the PC application, marked a record-high level in the second quarter for two consecutive quarters. UFF family supports the demand for work-from-home.

Please see Slide number 21. On the back of explosive increase of digital data due to the fully-fledged launch of 5G, Nidec offers solutions to the heat generated by the faster CPU.

We are aiming to achieve the sales of JPY100 billion in this product area in fiscal year 2023, by introducing Heat pipes, Heat-sink, Vapor chambers and modules and Liquid cooling system. Please see Slide number 24.

Motors are the core components of anything working with electricity. Motor accounts for approximately half the world’s power consumption.

Nidec will supply efficient motors globally and contribute to the reduction of CO2 emissions and economic development of emerging companies as number one comprehensive motor manufacturer in the world. Thank you very much for your attention.

Now we would like to open up the call for your questions.

Thank you very much, Mr. Sato.

Now we would like to turn to the Q&A session. Senior management of the company will take questions from you.

Today’s Q&A session will be conducted electronically. [Operator Instructions] Okay.

Our first question today is from James Pulsford of Alma Capital. Please go ahead.

Good evening, and thank you very much for your time. I appreciate that in the second quarter you did well across the Board.

One of the areas this performed very strongly was your small precision motors, HDD motor area. And I just wonder could you give us a few comments in terms of perhaps volume data comments on ASP, and if there’re any major changes to mix?

So for example, sort of nearline volumes. And could you also let us know what the operating profit margin was for your HDD business in the second quarter, please?

Okay. Thank you, James.

This is Nagayasu speaking. And that you’re asking, what was the situation of the hard disk drive spindle motor shipment for the past quarter like a September quarter.

Then we are roughly shipping 63.2 million spindle motor, where the average selling price was $7.02. Then we were shipping roughly a 17.8 million nearlines, which is much larger than the previous quarter like a June quarter, okay.

So clearly, we have been seeing the mix is improving and nearline is getting higher and also ASP is getting higher. Then you’re asking the profitability.

Clearly, for this quarter, we have a little bit better OP margin over the first quarter, which is over 31.8%.

31.8% September quarter, and it was 30.5% June quarter.

Is that fine?

Sorry. Did you say it was 30.5% in June and it was 31.8%?

Is that correct?

Yes. 30.5% in June quarter.

Yes. 30.5% in June, 31.8% in September quarter for our spindle motor activity.

Okay. Thank you very much.

And can I ask one follow-up question please? Is that okay?

I was interested seeing your waterfall chart that the operating profit, structural reform expenses in this first half seem to be higher than they were in the first half of last year, which surprised me. So am I correct in thinking that structural reform expenses were JPY6 billion in the first half of last year, and so therefore, JPY8.2 billion this year.

Where they very heavily weighted to the second quarter, I was surprised to see such a big number. Can you comment on that please?

Yes. Structural reforming expenses, it is JPY4.3 billion at September quarter, and JPY2.8 billion in June quarter.

So JPY1.5 billion – it was increased. And the main is due to the restructure kind of a hard disk drive [indiscernible], we are spending more in September quarter than in June quarter.

Okay. Thank you very much indeed.

Okay. Thank you, James.

Do you have any further comments or questions? Are you all right?

Well, I should probably get to the back of the queue.

Okay. Thank you very much.

Thank you, James. Okay.

Our next question is from [indiscernible]. Please go ahead.

Thank you very much for your time today. It's very good opportunity because Seki has joined the today’s call.

So I’d like to ask, it has been six months since you assume the Presidency. So what is your take on the challenges?

Could you just phrase it at the moment?

Thank you, [Jason]. I will reply, but today’s main Q&A must be for the financial announcement, so I’d like to ask everyone not to ask just myself, okay.

Since this is first one, I’d like to answer you. You're right, six months.

And then it’s a very different work from automotive to motor power. Our challenge here, still I’d say, automotive – I don’t say automotive is so, but automotive has – almost like a command cycle from the introduction of the concepts over the models to make that model happens, and then sell like five years.

But here, in Nidec, so fast – much shorter lead times and decision speed is very fast. And then while usual company having like executive meeting monthly.

This company holds weekly basis at least, and then if necessary on a daily basis. So things need a decision, never wait, this is a meeting, and that is a concept.

And then I'm enjoying very much. I like the speed, I don't need like 100% daily basis, but if it need my services, I would like to go ahead.

And then Mr. [Nakayama] has been here, some [indiscernible] to go there.

So that's my challenge and I'm enjoying very much Jason.

Thank you very much.

Any questions?

Are you all right, Jason? Okay.

Our next question is from [indiscernible]. Doug, please go ahead.

First of all, congratulations on a very strong quarter. And again, thank you so much for hosting this timely call every quarter, and a special thanks to President, Seki for this opportunity to speak to you directly, as I actually never heard your voice before.

So this is great. Coming up on the previous question from [indiscernible], I just want to focus on the kind of bigger question or bigger picture regarding the EV penetration globally.

It seems that China is definitely leading the pack here. Is there any major technological difference between Chinese makers and also like the rest of the world in terms of EV technology, what they're adopting and so forth?

And how is that changes is going to benefit Nidec going forward? And also if you can kind of specifically talk about maybe production capacity increases from now to 2025, when you believe there's going to be a critical turning point and also 2030 and so forth that will be great.

That is the question to Sato.

Okay. Thank you.

First, I have to correct your assumptions. China is one of a major market, but otherwise Europe, China is not outstanding anymore at this moment.

We don’t know the futures. If we look at the September sales, [indiscernible], we don't because the EV and probably hybrid and e-power – those are using like traction motors.

So for us, we categorize the new energy vehicles as the new energy vehicle sales in Europe is higher than China. So this is accelerated by additional incentive from each country, particularly Germany and France.

And then, we are predicting at this pace, we continue for awhile. So both Europe and China are very important.

In terms of technologies, yes, you're right, preference is very different. Actually China customer, actually China OEM and many of the domain, if it's in-house motor or motor supplied by suppliers like us.

So they have more flexibility for that choice. That's why our penetration in China is going ahead, while European OEM is [indiscernible] because they developed their motor by themselves and they are still sticking.

They want to build by themselves. But not all of us.

For example, like PSA and they chose to JV with us, so investing half and half. They're enjoying our technologies and competitiveness.

So time by time, it's different. But at this moment, I would say most of the European OEM is testing if they build by themselves or if they choose outside.

And then, of course, some technology preferences are different. I don't have the detail, but more – like 800 plus 400 magnet, if it’s heavy magnet or no magnet.

So those are different, but we are the specialists of motors, so we're fully aligned with each preference. And then the last point is maybe capacities.

At this moment, our capacity – our action production lines in China, which started to progress in last May, but very soon, we have a second line, which is JV with Guangzhou Automotive, and then [indiscernible] also launched in mix shift next summer. So we have already [indiscernible] and total capacity is about two.

Then, our firm is a JV in PSA. This is announced already as – or shared the information.

That started production in 2022. Rest of the things, we have approached, but because it's related directly with our customer, I don't want to say, but our current volume prediction in 2025 is reaching 2.5 million.

Then in 2026 and 2027 rapidly grow, so we're going to set up a capacity for not only just volume in 2025, but preparation for next growth in 2026 and 2027. That's what we are going to do.

So at today’s financial announcement prior to this meeting, our Chairman said that we are going to set up 5 million in 2025, and then it's not all the message, so that we are predicting and anticipating. I don’t know if I am replying to all of your questions you raised.

Are you all right.

Thank you so much. Yes, it sounds very clear.

Thank you so much. Thank you.

[Operator Instructions] Okay. Now going back to the Q&A session, we now take the second question from Alma Capital, James.

James, please go ahead.

Great. Thank you very much indeed for your time.

I wonder – I got a couple of questions. Your R&D expenses in the first half of the year were in these JPY31.2 billion compared to full-year of JPY85 billion.

So you seem to be expecting – well that's a very low figure and you're expecting a big increase in the second half of the year. Could you comment on whether that's correct and why that's the case?

And then as this sort of second one, which maybe related or may not be related, I don't know. Could you comment on the specific profitability of your automotive area, which obviously improves a lot from the first quarter, but it's still obviously relatively depressed and talk about product development costs for all the actual contracts that you're winning, and how you expect those product development costs the way those to change over the next two or three years, please?

First of all, the R&D cost. As you mentioned, we spent JPY31.2 billion in the first half.

There could be low level that we are going to increase the R&D cost for, of course traction motor, and also the other new so-called three new, new market, new customers, and new product. Those spending of R&D is really needed in the second half, so that we are expecting that R&D cost will be up to JPY85 billion in this fiscal year.

That’s the current status of R&D cost. And then what’s your second question though?

The second question was related to that – was the profitability of the automotive side, which obviously has gone from breakeven in the first quarter to best figure sort of over JPY4 billion in the second quarter. But I know that's still a relatively low figure, and it's because you’re bearing a lot of product development costs for all the E-Axle future contract that you're winning.

So that's sort of forward investments. And I wonder if you could comment on the level of product development costs, the new contracts that you're bearing this year compared to last year, and how you expect that to change over the next two or three years, looking at all the contract wins that you have in the pipeline that’s a game to start playing through?

Okay. Thank you, James.

Can you refer page five please.

Yes.

That’s the comparison of last year second quarter versus this year. Lots of growth except automotive, which is minus US$87 million.

This is actually straight to minus US$67 million in Q1s and minus US$20 million in Q2s. So Q1 is reasonable because of very low demand of automotives, but in Q2 it’s recovery, not fully recovered yet, but still minus US$20 million.

And then this minus US$20 million is closest to plus US$20 from the existing business, and then minus US$45 million – minus US$40 million from traction motors. That means three [indiscernible] spending US$40 million more than last year, but I need spend this money.

So program area is fully recovered from automotive areas. If we look at the July, August, September, September, we are seeing much bigger profits from automotive area and it’s continuing in October and November, so it's definitely coming back.

In some quarter, I think we have positive from last year to this year as the automotive total. And then keep increasing profitability from over the period.

And then point is development costs for traction motors. If we need to spend traction motor, which I have already got orders, definitely I can sustain this level.

But it's good and bad, but actually good I believe. But day-by-day, we are receiving new order from the customers.

We talked about volume in 2025, which I explained that about 2.5 million. It was 1.2 million last quarter, which I explained.

So it's [indiscernible], so if we have a more increase from now to 2026 or 2027, I may have to increase this development, but we don't afraid of this because it’s proving we are gaining market share. We can enjoy scalability, right?

So we have – I’m fully aligned with Chairman. We take as much as possible for this – for market shift.

If we have to spend development cost, we do. And then I also need to accelerate profit margin improvement from organic side.

At that time, I do think. So with this current pace, I definitely make that positive in Q3, but if we have a further order from customer, it may stay slightly negative, but not everyday negatives.

And that's for future. Am I replying your questions?

You are indeed. Thank you.

Can you say anything more about the increase in your projected volumes that you have for 2025 in terms of the – is that mostly from Chinese customers that have taken? Can you give any details of sort of mix of where the increase has from?

Let me tell a specific one, but I think I can explain by regions. Lastly, 40% from Europe, 40% from China, 20% from others.

So China, Europe is growing in the same speed.

Okay. And that's – that percentage, that's the increase that you've given me.

No, no. That's a percentage from 2.5 million.

2.5 million. Okay.

I would say it’s proportional, slightly bigger in Europe for incremental volumes from last time to this time.

Okay. And previously you've made statements, I think that you have – including inquiries, you have a potential aggregate value of – if you like orders and inquiries of JPY630 billion, was the figure equated with these additions?

Do you have a revised figure for that you could provide or not?

So you mentioned the JPY630 billion for the…

Yes.

For the particular year or maybe we have mentioned that number as a total.

It’s the aggregate base.

Yes. Aggregate total.

Yes.

And then you are asking what will be the number as of today covering 22 E-Axle customer and seven traction motor customer? Is that your question?

I think so. On the same basis before, I just wondered if you have – that’s been reclassified.

Yes. The total sales for aggregated basis sales from 2019 to 2025, right.

That's correct. Thank you.

Well, that number as of today is – the previous was something like JPY630 billion.

I believe that the case here.

Okay. And the total revenue we are expecting is something to JPY750 billion.

JPY750 billion. Okay.

Thank you very much, indeed. That's great color.

Okay.

Okay. Thank you, James.

Our next question is from SSGA, [indiscernible] please go ahead.

Yes. Thank you very much for taking the question.

I'm just trying to improve my understanding on page number 15 in the presentation. So you mentioned the target is roughly 2.5 million for E-Axle by 2025.

So this also includes the volume of traction motors in this target. Can you please explain the target for E-Axle and traction motor?

And the second question, I mean following that, so can you give the number of customers in the E-Axle and traction motors? I think you actually have previously 15 customers.

And how would that improved in this particular quarter?

So first about the 2.5 million in 2025. Most of them in traction motor sales, some are just motor alone, let’s say combination is about 85% and 15%, 85% traction motor, 15% motor alone.

So you're asking whether that 2.5 million correspond to the number, we said 1.5 million or other number such as the number, including the traction motor for mild hybrid, right. That’s another 4.1 million, which we mentioned.

Then today, we say – the previous quarter, we say 1.5 million E-Axle, that correspond to today, 2.5 million. Then 4.1 million, we mentioned in the previous quarter.

Now today we say 6.1 million roughly. So that's another market, right, as you understand the traction motor market.

Okay. So that we say roughly that the 10 million total market for EV, the battery base EV, then our number is 2.5.

So we say our share is 25%. Mild hybrid according to the IHS market, 20 million is the market size for fiscal year 2025 or current year 2025.

Our number is over 6 million, which is roughly 30%. So you can understand that we are going to take a 25% of the battery EV market and 30% of the mild hybrid market.

That's what we say in this disclosure. Is that fine?

Yes. That's great.

That's really helpful. Thank you.

Okay.

And on number of customers you have compared to last quarter for both of these markets.

How many customers we have for mild hybrid?

Yes.

Okay. The seven as we mentioned – the same number as we mentioned last time.

Okay. Thank you.

Okay.

Okay. Thank you.

Our next question comes from [indiscernible] please go ahead.

Thank you very much for taking my question again. So my next question – second question is that if Nidec will be able to sell 10 million unit of E-Axle system.

So how much impact will Nidec have in terms of operation profit?

You said 7 million?

No, 10 million in 2030.

2030 we’re going to sell 10 million.

Yes, 10 million.

Okay. When we are selling 10 million, how much profit we are gaining, that's your question, right?

Yes.

Yes, if you look at page 15, we're splitting the three terms. I don't know what thing we said.

We are splitting, introduction stage and growth stage and maturity stage. I can say once we reached maturity stage, it's similar to overall profitability at this time because we are going to dominate this world and then probably over 30%.

And then for the growth stage – sorry international stage, that's more priority to grow fast because we have to eliminate our competitor as best as possible. And then for this growth period, I think we can finally confirm probably around 10% to 15% total percentage, but still this is like in between introduction and the maturity.

So if we need to compete with our competitors, we do because market share is our first priority. So lastly, 10% to 15% by units before a maturity period, which is 30% that is just a very high level prediction, I would say growth part.

Okay. Thank you very much.

Okay. Thank you.

And now it seems that James has remaining question. James, please go ahead.

Thank you very much, indeed. I wonder, could you talk a little bit about the other precision motors?

They’re not the HDD motor area, and performance in both the second quarter and also the prospects going forward. In the second quarter your operating margins here are around 5%, so they remain relatively low.

I know long-term you target, I think 15% here. And I'm just wondering if you could comment on how difficult you expect that to be to improve margin, which has been depressed some time here that predates, it's not to do necessarily with COVID, it’s predates COVID.

Could you comment on that? And also within that, in the second quarter, within that you have some sales of vibration motors, if you could specifically comment on that – on the value and profitability there, that would be kind as well.

Thank you.

Okay. So number one, when we are talking about a small precision motor, there are three categories; hard disk drive spindle motor, DC motor fan and others and [indiscernible], there are three different areas.

So when you divide it into three categories. The DC motor fan and the other category, for example fiscal year 2019, it was merely a 2.9% OP margin.

So it's not really making so much profit. Then that's going to be coming down into the 2020, the first quarter that the June quarter, there was a 5.4%.

And then the second quarter this quarter is something like 5.7%. So it’s clearly getting better.

And the topline is also getting a little bit higher, where we are reporting in the second quarter, roughly 62.4 billion, which is over 57.2 billion in the June quarter. Then if you’re looking back the fiscal year 2019, the last year, the highest quarter for that category was 62.5 million in the December quarter.

So we already reporting almost the same as the last year December quarter, which is before the COVID-19. So the future, clearly there are several areas.

Number one is the IT area, especially data center area. Then we believe that market – that segment is growing.

That's number one. Number two, the other area is the 5G base stations.

Then we see our business might somewhat coming down in the December and the March quarter because our major customer following was brought by the American government, now that's going to be maybe transferring to the Nokia or other 5G makers. So it will take some time to make those changes.

So the 5G base stations, cooling fan demand is coming down. But the biggest one is clearly at this moment, we are looking at the – so-called the holiday season.

Then clearly we are looking at the fan and the some other DC motor for the home appliances were coming up. So those are the biggest trends.

Then you are asking the fiery trend in the haptic and vibration. Clearly, this is more seasonal one.

But overall, we say we are – maybe the American smartphone makers, a smartphone will be saying, well, then we will be something like a one-third of that number will be using our haptic. That's something that we are expecting.

James is that fine?

That’s fine. So can I just check, so the vibration motors in the first half of the year, you ended up then losing a little bit of money in the first half of the year?

Is that correct?

Okay. So profitability and the sales is not same, okay.

So if you're looking at the haptic vibration motor business, we reported right clearly in the first quarter, 10.2 billion sales. And then this September quarter, we reported 9.4 billion.

So the topline is coming down, but OP was negative 0.1 billion in the June quarter. But now this quarter, we are reporting 3 billion, roughly 2.8%.

So overall, still we have to write-off the machines and others, which is really inherent to this project because this project has only last one-year and any investment, which is not resulted in the topline then they had to write-off after the project ended. So it's very difficult to make money, but still we are doing very fine with the topline, roughly a 10 billion per quarter.

So roughly 40 billion per year, then although we say that's going to create 4% to 5% of the margin. That's what we are looking at this business for this fiscal year.

Is that fine?

That's fine. Thanks very much.

And on the fan motor side, where your margins as you mentioned are a little late as 5% at the moment. Do you think that the other precision motors, includes fan and others?

When you look at the next couple of years, how realistic is it to expect a significant improvement in profitability there and what will drive it?

Okay. The key is the fan motor part so-called the one fan motor say per unit is not making so much money because we are competing very fiercely against the – our, so-called Taiwan competitor like DELTA, SUNON and all the others, okay.

And also we are now competing against the Chinese manufacturers. So it's really difficult to make money.

So what we are trying to do is try to solve the thermal question using our fan motor. Fan motor is one of the device to clean down the system, but usually a fan means using the air, right.

But the overall cooling system is now shifting from air to the water. So how we are combining those and to try to solve the customer, our program to how to clean down the whole system.

That's going to be a very big data center, or that’s going to be a very, very small smartphone, whatever the case, the thermal demand is rising, then we are not [indiscernible], but rather we try to become a problem solver for those thermal questions by any of our customers. Then by providing a better solution for our customer, we believe that we could improve the profitability.

Is that fine?

It is. Thank you very much, indeed.

Okay.

Okay. James, thank you very much for your question.

And now we have only a few more minutes to barely accommodate one more question if any. Is there any question from today’s participant?

Now there seems to be no further questions and we would like to conclude the conference call. I'd like to appreciate for your participation today.

Should you have any further question – sorry there is a last minute question from [indiscernible] please go ahead. And this will be the today’s final question.

Please go ahead.

Sorry for that. And yes, just a quick question.

Can you break down your volumes in terms of 2.5 inch and 3.5 inch and helium as a percentage of nearline motors?

For a September quarter shipment, right?

Yes September.

Okay.

Yes, exactly.

The total which I mentioned – the total number of spindle motor shipment for the quarter was 60. Let me just see the number here.

63.2 million and 2.5 inch high end is 0.9, nearline is 17.8, 3.5 inch is 22.6 and 2.5 inch is 21.9. And as I mentioned, the total ASP is US$7.02.

Do you need more information regarding the pricing?

Yes. If possible please.

Okay. So 2.5 inch was 7.20, nearline is 13.23, and 3.5 inch is 4.69, and the 2.5 inch is 4.38.

Then you are asking helium, the helium is 10.3 million out of 17.8 million nearline. Is that's fine?

Yes. Thanks.

Great. That’s really helpful.

Appreciate that.

Thank you.

[Mr. Neelam], thank you very much.

Now we'd like to conclude the conference call. Again, I'd like to appreciate for your participation today.

And should you have any further questions, please do not hesitate to contact Nidec’s Corporation or your sales representative at Mitsubishi UFJ Morgan Stanley Securities. Thank you very much for joining the conference call and you may now disconnect.

Thank you, everyone.

Thank you, everybody.