Hello, this is Yoshida. Today, I would like to explain the consolidated financial results for the third quarter of the fiscal year ending March 31st, 2022. Consolidated net sales for the third quarter for the fiscal year ending March 31st, 2022 was up 10.4% year-on-year, and up 7.9% quarter-on-quarter to total JPY 304.345 billion. Operating income totaled JPY 25.532 billion, which was 32.1% up year-on-year and up 3.3% quarter-on-quarter. Profit for the period attributable to owners of the parent increased 14% year-on-year and decreased 9.8% quarter-on-quarter to JPY 18.395 billion. Net sales hit record high for a quarter.
Net sales, operating income, and quarterly profit all hit record highs for nine months. We estimate the foreign currency translations have a year-on-year impact of +JPY 16.3 billion in net sales and +JPY 4.6 billion in operating income. Quarter-on-quarter impact was +JPY 4.3 billion in net sales and +JPY 1.5 billion in operating income. We made a slight retrospective changes to last fiscal year's financial statements due to the PPA for ABLIC. Please note that the figures on the following pages are revised figures. Please go to the next slide. This is for the quarterly trend in net sales, operating income, and operating margin.
The operating margin for the third quarter was 8.5% up 1.4 percentage points year-on-year, and down 0.4 percentage points quarter-on-quarter. Please go to the next slide. This is the difference between the forecast as of November and actual results for net sales and operating income by business segment for the third quarter. Net sales for the Machine Components business segment were slightly lower than projected due to sluggish sales for office automation and home electronics caused primarily by the shortage of semiconductors. The Electronic Devices and Components business saw lower than expected net sales, and that were also mainly due to lagging sales for office automation and home electronics in addition to a slow recovery of sales to the automobile industry. The MITSUMI business enjoyed higher than projected sales mainly for mechanical components and optical devices.
Sales for the U-Shin business were almost on par with the forecast. Operating income for the Machine Components business segment was almost on par with the forecast if we were to exclude the negative impact of approximately JPY 0.4 billion due to the special factor of a sharp rise in electricity prices in Singapore. The Electronic Devices and Components business experienced lower than expected operating income due mostly to the sharp rise in materials prices. The MITSUMI business operating income exceeded the forecast, thanks to growing sales of optical devices and mechanical components that pushed profits up along with a further increase in the profitability of analog semiconductors. The U-Shin business experienced lower than expected operating income due to a change in the sales mix. Please go to the next slide.
Now, let's take a look at the results by segment, starting with the Machine Components business segment. On the left is a graph indicating quarterly net sales trends, and on the right is a bar chart showing quarterly operating income trends along with a line chart for operating margins. Third quarter net sales decreased 2.7% quarter-on-quarter to total JPY 43.1 billion. Ball bearing sales dipped 3.0% quarter-on-quarter to total JPY 33.9 billion. The monthly external shipment volume was down 3.7% quarter-on-quarter for an average of 232 million units. This is due primarily to a slowdown in sales with office automation and home electronics. Sales of aircraft bearings remain sluggish due to the stagnant market.
Sales of rod ends and fasteners totaling JPY 6.4 billion were down 1.5% from the previous quarter. Sales of pivot assemblies decreased 2.2% quarter-on-quarter to total JPY 5.8 billion. Operating income for the quarter totaled JPY 11.6 billion, and operating margin was 27%. Operating income decreased 2.4% quarter-on-quarter, while the operating margin improved 0.1 percentage points. If the special factor mentioned earlier, that is the sharp rise in electricity prices in Singapore, were excluded, operating income would have totaled JPY 12 billion and operating margin would have stood at 27.9%. Looking at the results by product, we see that operating income for Ball Bearings and Pivot Assemblies decreased quarter-on-quarter, while for rod ends and fasteners was up compared with the last quarter.
Please now go to the next slide. Now let's look at the Electronic Devices and Components segment.
Net sales decreased 3.2% quarter-on-quarter to total JPY 90.7 billion. Looking at the results by products, we see that sales of motors increased at 0.5% quarter-on-quarter to reach JPY 66.5 billion. This is mainly due to robust sales for HDD despite impact of decrease of production in the office automation industry caused by the shortage of semiconductors. Sales of electronic devices are decreased 18% quarter-on-quarter to total JPY 14.2 billion. Sales of sensing device totaling JPY 9 billion were down 3.5% from the previous quarter. Operating income came to JPY 3.7 billion and the operating margin was 4.1%. It was down 38.7% quarter-on-quarter, while the operating margin decreased at 2.4 percentage points.
This downturn was mainly due to a drop in electronic device sales and raw material price hikes. Looking at the results by product, the operating income for Sensing Devices, for Electronic Devices and for Motors were all down from the previous quarter. For your reference, figures shown for the fiscal year ended March 2021 and before are based on the classification used before the business segments were changed. Please note that the same applies to the rest of the presentation. Next slide, please. Let's look at the performance for the MITSUMI business segment. Net sales increased at 21% quarter-on-quarter to total JPY 134.2 billion. As seasonal demand picked up, so did the sales of Optical Devices and mechanical components. The sales of Analog Semiconductors remained strong.
Operating income came to JPY 15.2 billion and the operating margin was 11.3% on a quarter-on-quarter basis. Operating income increased 34.4%, while the operating margin rose 1.1 percentage points. The primary factors behind these increases include a further increase in the profitability of Analog Semiconductors, in addition to seasonal demand. Next slide, please. Finally, let's look at the U-Shin business segment. Net sales increased 10.5% quarter-on-quarter to hit JPY 36.1 billion. This jump was due to the diminishing impact from production adjustments made by some automakers in response to the semiconductor shortage. While our operating loss totaled JPY 0.3 billion, the operating margin was - 0.9%. Next slide, please.
The bar graph here shows trends in profit attributable to owners of the parent, while the line graph shows changes in the profit for the period per share. The profit for the period was JPY 18.4 billion. Earnings per share was JPY 45.4. Next slide, please. Next, we have the quarterly inventory trend. At the end of the third quarter, inventory totaled JPY 224.6 billion, which is JPY 10.5 billion more than what it was three months ago. Next slide, please. This graph contains a bar chart showing trends in net interest-bearing debt, which is total interest-bearing debt minus cash and cash equivalents, and a line chart indicating free cash flow.
At the end of the third quarter, net interest bearing debt totaling JPY 115.5 billion was up JPY 31.1 billion from what it was at the end of the previous fiscal year. Next slide, please. We made upward revisions to the full year forecast for the fiscal year ending March 2022, which was announced in November. We have revised the forecast for the net sales to JPY 1.1 trillion and the operating income to JPY 92 billion. The estimated net sales figures for the Electronic Devices and Components, MITSUMI businesses and U-Shin businesses were revised upward. Along with the revisions of net sales, we have revised the operating income figures respectively. The exchange rate is assumed to be JPY 114 to a dollar, U.S. dollar. Next slide, please.
This slide shows the forecast by business segment. This concludes my presentation. Thank you.
Next, President Kainuma, please.
From my side, I would like to give you some highlights for today's presentation. Please go to page 14. This slide is very busy, but very well against various environments. I think we have done well. I think this third quarter, we've been able to accomplish. We don't know whether our operating profit is going to reach between JPY 30 billion or JPY 32 billion. Because we have been able to reach the sales level, we haven't closed the third quarter, but on the internal level, about JPY 97 billion of sales is what we think we'll be able to achieve. Based on what we have in January, we have been able to exceed JPY 93 billion. We have two months left for this fiscal year.
JPY 1 trillion, I think, we'll be able to achieve that, with a lag of two years. In terms of the ball bearing business, we have been very aggressively investing. In March, 336 million of production is what we are doing. By August, the first round of investment, the 345 million capacity, we think we'll be able to reach that capacity. Parallelly, the new plant, the building, is going to be built. Fiscal year 2022, meaning that in November, they'll start operation. Next year, August, there will be 365 million capacity is going to be achieved. This is a three-month delay compared to what we have promised.
In terms of the parts procurement, there has been a delay in that side. If you consider this current situation, I think this couldn't be avoided. For the MITSUMI business, I think this has changed drastically. In 2017, before we integrated MITSUMI, the operating loss was -JPY 5 billion, but currently they are reaching a record high level. The record high levels for them were JPY 33.2 billion. Internally, we are forecasting over JPY 40 billion, and maybe it will fall short against that. That said, I think we have been able to reach a certain phase for MITSUMI business. This main theme for today is the transfer of the Tokyo headquarters and the next year's image.
This is the thing that I want to focus on today. Let's go to page 15. I have talked to you several times. 13 years ago, I took this position as the President, and in the earnings report meeting, I said that the mission is to maximize the share value and then lay the foundation for the 100th year anniversary. I think I have certainly moved forward this objective from my point of view. Back at that time, this Electro Mechanics Solutions, this basic solution or strategy, has been announced. This Sogo is the keyword that we are using. I think basically that has been the basis of what we are focusing on. We have had aggressive targets, like JPY 1 trillion, JPY 2.5 trillion.
We have these aggressive targets, and towards these targets, we have been moving forward. To be frank, for us to talk specifically about a future strategy or our direction, I think we have not been this specific because I have the conviction that we are able to reach this type of target. That's the reason why I'm becoming specific in terms of the targets. Page 16 is the message that I want to show to you today. The blue-colored trend is the conventional trend. In 2009, I took the role of the President, and since then, thankfully, through M&A and through organic growth, the CAGR was at 11%, and we have seen that level of growth.
I have always been explaining that as a result, we have grown along with the world economy and development. In terms of these high-end components, we grow in line with that. The GDP, if it grows, the disposable income of individual will increase. If the disposable income grows, it means that they want to have a healthy and a life that is full of culture. The needs for these high-end products will be heightened. These high-end products will use high-end components. If you look at China, I think the story is the same thing. In this past 20 years, China has developed in leaps and bounds. Then we look at India, and then Africa will follow the same track. When these countries grow, this conventional trend will continue to go up.
In that context, we will offer precise components that match their needs. That is the growth scenario. That is unchanged. However, I have announced the new strategy, QCDESS, this E, eco/ efficiency. It stands for eco and efficiency. We have extracted this. We call this a social issues. This is more or less in the developed countries, what is drawing a lot of attention, this new trend that is happening, meaning that energy, environment, disasters, low birth rates, and longevity. These factors in the developed countries is drawing a lot of attention, is an issue. These edge devices that can solve these issues is going to come out one after the other. There's a lot of examples. For example, this streetlights, for instance.
Last month in Spain, 35,000 of these streetlights were sold. Today, a certain prefecture in the Kanto region, 15,000 of these streetlights. 5,000 out of 15,000 have a controller. We have been able to allow this connectivity. Japan has finally come out with this type of initiative. How are we going to solve these social issues? Always there'll be an edge device. The various elemental technologies that we have developed will be integrated. This is my conviction that I have had in recent days. That will be on top of this conventional trend. That is the image that I have. This should be a business opportunity.
We will come face to face with the social issues and then supply what is necessary. In these 13 years, I think we have been able to improve our productivity and production. In terms of production and manufacturing, I think we are the winner. What is going to be important going forward is how are we going to win through technology in this low birth rate and aging society in Japan? How many engineers can we be able to collect or hire and show the direction? Integration, how we can go forward with this integration of Sogo. I think that will be the focus of a future direction. Going to page 17. That is the reason why we are setting up a new Tokyo base. As shown here, the major objectives are threefold.
One, to go into new growth areas, we want to aggressively go into those areas. We want to secure the human resources. For that, we want excellent and capable and talented people to come to our company. Another point is that, not only within our sites and within our companies, the exchange with overseas or exchange with external parties, we want to have a base that can allow us to do so. We want to end up PMI. MITSUMI has about 600 plus people in Tama area. Their business unit is still working out of Tama. At the Mita headquarters, we have about 600 people, and we have another building in the neighborhood. We have about 600 people, salespeople there. In the Tama area, we have 600 people.
Less than 2,000 people are working in, out of Tokyo. The Tama and Mita, well, we have, we call these as locations by their names. But my work mission is to try to integrate all these people into one. To go forward with the three focuses, now that we'll be setting the foundation for the 100th anniversary, and that I think will be absolutely necessary. It's not the case that if we move next year, everything's going to be all right. I think it'll take three to five years to see results. But the vision I mentioned, I think this is a conviction that I have. It means that we're putting in more of a components and contribute to the society and sustainably grow. I think that is a very important thing.
Next slide, please. Page 18. This shows the overview why we are buying this property, some people may ask. As I always say, those are people usually own their houses. I think we should buy this one, and that is because, for 20 years that we were leased the building in Meguro, and we paid JPY 11 billion or JPY 11.6 billion. When we moved to Mita building, we only had the restoration obligation. The rent that we paid JPY 11.6 billion will not come back to us.
The Mita building, we are in this building for eight years, and we should enjoy about JPY 10 billion of proceeds of sale of this property. Because we bought this property in Mita, I don't know for sure how it will turn out, but this is in Shimbashi, facing the ocean and facing Hama-rikyu. The location is quite prime. It's right in the center of Tokyo. As you can see, I will not be able to build such an excellent building. It's really wonderful if you try to build such a building now due to the material cost increase and labor cost increase. It's almost inconceivable. It should be outrageous.
Of course, that will be outrageous if you try to build the same kind of building right now. It's wonderful.
Nevertheless, it's been 20 years since it was completed, and therefore Mita and buildings two buildings away and Tama, the total cost of those three buildings, this purchase price will not be so different from the total cost of the three buildings. Therefore, I think it will be quite effective to buy this property. Page 19. Taking this opportunity, we are to establish a new Kansai base ORDC. The one in Tokyo is called TRDC, and we are opening ORDC in Kansai. Because I have this strong conviction that we must attract high-quality engineers in order to develop what the society needs, not only in Tokyo, but in Kansai as well.
In addition, the sales, we need to work in tandem with salespeople so that engineers can always speak with salespeople. That is the reason why we are building this in Kansai as well. The substance is virtually the same as what I explained about the Tokyo new headquarters. I would like to ask for your kind understanding. I myself am very excited about this. I would like to establish our Tokyo headquarters that would attract many people. Page 20. This is the last page, and this depicts the image for next fiscal year. Fortunately, we have been able to renew the record of highest sales. However, we operated in the middle of a headwind, like a shortage of semiconductors, which affected the automobile business and material price hikes.
Above all, the COVID-19 and many companies shut down operations, which caused disruptions in supply chain and aircraft industry because of the reduced air travels. The aircraft industry was adversely affected. Having said that, however, next year, I think that these problems will be resolved and operating profit will exceed JPY 100 billion, not easily, but my gut feeling is that it will exceed that number. I will share with you more details when I announce the results in May. For bearings in August, we'll have 345 million units of production capacity for aircraft bearings. In the second half, I think things will recover. Roughly speaking, 70% of the pre-pandemic level.
Mechanical components for this year is like JPY 46 billion, and it is likely to be JPY 53 billion or so in the next fiscal year. The motors, the general motors and small size, the precision motors. We saw a huge decline for autos and the shortage of semiconductors and in toilet the hot water supply and cameras, all of these, those things were in shortage. The semiconductors and supply chain problems, when the problems are resolved, because the companies will need to build up inventories, we can expect a recovery. Fortunately, semiconductors in 2024, FY 2024, we expect that the semiconductors will exceed JPY 100 billion, which is one year ahead of the original plan.
Now, we are working so hard and so quickly to start a Shiga plant, and we will see many of these. Averyx and Chitose, former MITSUMI sites, we are working on enhancing the capability and capacity, and therefore we can expect a growth in sales. Semiconductors should be fine. In December, the order placement sort of slowed down. In January, things recovered, and we have about a half a year backlog. Next year, we will be very busy for sure. Probably a 10% growth rate can be expected. OIS. We have been heavily investing in OIS. Frankly, in Cebu, we had the space issue, and we considered the possibility to build a new plant.
Customers wanted us to stay at the same location, and therefore, about the 1-hour drive from Cebu plant, we leased 30,000 sq m of the site. There, the sales will be 1.3-fold at the least. It'll be sales that will be greater than that, probably. Next year, our growth will be quite solid. More specific figures I will share with you in May, but I just wanted to share with you the image. U-Shin. You may think that is that all? As you may know, our U-Shin business is entirely auto business. Since October, our customers kept changing the plan. Get ready and stop. In other words, a stable production was not possible for auto business.
However, in our portfolio, it's not that all items are good, but the high-performing items can offset the decline in low-performing items. Therefore, next year Access Solutions and U-Shin profitability will improve. That is something to look forward to for you. This concludes my presentation. Thank you very much.
Mr. Kainuma, thank you very much. We'd like to go into Q&A session. First question from Goldman Sachs, Takayama-san, please.
Thank you very much. Can you hear me?
Yes, we can. Please go ahead.
I have three questions. The first two is about the background of the numbers. In terms of MITSUMI, the third quarter, the reason why it has overshot the forecast. I think there has been a breakdown of the profit, which has been the greatest contribution. I would like you to rank that. Another follow-up is that the fourth quarter, how is this going to trend? More specifically, semiconductor, OIS, and games. Against the initial forecast, how has this trended? I would like to know the contents.
If possible, for the semiconductors in the second half, the president said that, the profit is not going to go down that much. Initially, you have been hiring people and investments. Compared in the first half and the second half, and basically the second half, you were anticipating it to go down. Has your forecast changed? That's my first question.
Maybe the follow-up will be, I will be answering, and Yoshida-san will follow you up on the numbers. Well, this has been a surprise, a pleasant surprise for us. To be frank, we thought that profitability is going to go down, but we have been quickly looking. There's a lot of orders and inquiries coming, and there's a lot of prototypes that we are making. That means that the loss has been going down, and then other semiconductors' profit has gone up. For us, this has been a pleasant surprise. The semiconductors of the second half is better than we have expected. Then, Yoshida-san, please follow up in terms of the detail of the numbers.
This is Yoshida speaking. The third quarter, in terms of ranking, which contributed most to the overshoot, the first contributor will be the Optical Devices. That will be 2/3 of that contributions coming from. Then the mechanical components, and then the others will be in line with our expectations. Is this okay? For the fourth quarter, I think the same trend. This fourth quarter, Optical Devices will be strong, and the mechanical components will go up as well. Others will not be that different from the forecast of November. That's about MITSUMI. The president talked about the better performance of semiconductors. Well, in terms of the semiconductors, yes, it is better than our expectations. In terms of the ranking. Excuse me, I would like to correct myself.
Optical Devices about half a contribution, and the remaining half will be the mechanical components. Besides that, a little less than half of mechanical components, and then will be some semiconductors. Well, the second point is that the current third quarter goes down, but the fourth quarter is going up will be the Electronic Devices and Components business and U-Shin. Maybe that is due to the impact of the customers. Maybe for the electronic devices, it's about the material cost.
In terms of the profit improvement of the fourth quarter, can you give me some update in terms of how much the performance is going to become better in the fourth quarter for the Electronic Devices and Components business and U-Shin?
I would like to ask you about that.
Well, first for the electronic devices, as you have pointed out, currently a lot of materials prices is going up and that has been a huge impact. The semiconductor impact was more than we have anticipated. Maybe the automobile business hasn't come back as much as we have expected. The selling price, we are correcting our selling price, and there is a time lag, and I think that has impacted our performance. In the fourth quarter, we think that the things will improve more. In terms of the fourth quarter, but that said, with automotive business, because there's a lot of issues, but compared to the third quarter, we think that for the motor business for the fourth quarter, we can expect a certain level of recovery.
The motor business for the automotive business is a relatively high profitability, so that is the reason why we think the fourth quarter is going to recover for the electronic devices business. For the MITSUMI business, the major OEM customer, their performance was struggling compared to other OEMs in terms of the reduction of production, et cetera. They were suffering more than the other OEMs. Going into the fourth quarter, they will not go back to full capacity production. That said, in the fourth quarter, we can expect the recovery to some level. Same goes to the Europe business. Sales will be flat. That is our expectation. We have some. The customer or the products that has a higher profitability, the ratio of that business will increase.
That is the reason why we think the fourth quarter will improve for the MITSUMI business.
Understood. For the profitability of MITSUMI, I think basically, is it visible in the fourth quarter?
Well, we can't be complacent. We have to be on our toes. Compared to the October outlook, it is a little below currently, but in terms of the improvement, it is continuing to improve. Our customers' condition is improving. Against that backdrop, if the sales recovers, it means that the profit will improve as well.
Understood. Mr. Kainuma, so page 16, you talked about the mid to long-term solutions solving social issues. I think I agree completely with you, but the realization of the economic value is, have to continue from the, for the capital market.
I think basically you have to maximize the economic value at the same time you're going to solve social issues. Maybe if you go to the stage, it will be different from the condition of manufacturing. How are you going to improve your return?
Yes, I agree with you because for the infrastructure business it takes time to develop and there is a certain level of volume, but in terms of the public, you know, sector has a budget, so there's some issues surrounding price. What do I want to focus on is that this is only a part of what I have in mind. There's a lot of things that we can engage in. Maybe I'm, you know, I'm not serious enough.
Maybe people will say so. Currently, we don't know what actually is going to be successful or not at this stage. This idea that maybe these type of things are going to be useful or it's going to attract a lot of attention or be successful. What is going to accelerate in terms of growth, you don't know until you start. From our point of view, the focus is that for us, rather than trying to think beforehand and try to do something, these edge devices that can contribute to solving social issues. Whether we can offer components to those edge devices or not, I think that's the important thing. As a result, maybe the result would be A or B or C.
We really don't just focus on A, but we want to focus and distribute our focus to A, to B, to C, because focusing on one thing is risky. It's the same thing. We want to, you know, hedge our risks. The system-related business, so I think basically just selling the devices is better. I think selling a system, selling its devices, I think both is acceptable. If we can offer a system, then that would be okay, but we don't have to stretch ourselves to do so. Rather than that, we want to find the right customer, and if we can sell a product, I think that would be the best way to do business.
Understood. Thank you very much.
Let us move on to the next question, which is from Morgan Stanley MUFG, Sato-san.
This is Sato speaking. Thank you for this opportunity. I have three questions. First, about the camera actuator. From Q2 to Q3, how sales are changed? Vis-à-vis the outlook made in November, how much upside are you expecting this year and from this year to next year? So the revised up forecast, the 30% up and breakdown between North America and China, I wonder how the picture looks like and when the products for our Chinese market that will have a full-scale startup.
Yoshida-san, please.
With regards to the Chinese market, right now, we are making various activities.
However, unfortunately, as of today, I cannot explain specific numbers that can be realized at a specific timing. High-end smartphones, we are exploring business opportunities in high-end smartphones. The actual production volume has been sluggish, and we are struggling right now. In May, we may be able to share with you how much growth we can expect in the next three years. That is what I'm hoping. I see. Also, the Optical Devices, the recent results, the sales have been increasing quite significantly, huge upside that we saw.
In Q3, the sales forecast has been estimated to be JPY 134.2 billion. Correction?
Yes. Well, the actual was JPY 134.2 billion.
Regarding this number, vis-à-vis the guidance, this is almost a JPY 30 billion up from the guidance. In terms of the number, the mechanical products had the biggest upside in the full year basis, bigger than JPY 10 billion upside can be expected. Next year, with this number as the floor, as Mr. Kainuma explained, at least 30% up, we are thinking about. More specific figures, we hope to share with you in May.
Thank you. My second question is also about the numbers.
Ball Bearings, October, November and December production for both internal and external sales as well as the outlook for January to March period. Ball Bearings production in October, the unit will be 1,298. November, 319. December, 294.
January, 320. February, March, 336. External sales, October, 232, 236, 229. January, 229. February, 228. March, 244. Internal sales, October, 67. November, 67, and December, 67. January, 59. February, 60. March, 62. Those are the assumptions.
Thank you. Compared with November, what changes have you experienced compared with the three months ago in main products?
While your customers are trying to build up inventory and how things are expected to change, if you could explain about that. The figure for each application, we'd rather not disclose. But recently, our numbers in November, the auto market or auto business is likely to recover in the fourth quarter.
The home appliances and office automation in Q3 compared with Q2 recovered slightly. The Q4, due to a shortage of semiconductors, the numbers are likely to decline. Roughly speaking, in average, 233 million units of production is expected, so there may be some ups and downs.
Thank you. Lastly, the third question about MITSUMI. In 2017, MITSUMI was integrated. Initially, game business improved, and then the camera actuator and the like. In other words, improvement is continuing. Post camera actuator and semiconductors, what kinds of businesses seem promising, I'm wondering? Next year onwards, camera actuators and semiconductors, are they going to be the growth drivers? Shiga plant, MEMS technology in the medium term, what kinds of contribution is it going to make for MinebeaMitsumi as a whole?
I would like to respond. As you rightly said, the game, camera actuators, and semiconductors, we have seen improvements. What about the future? We think that the Eight Spears, as I have kept saying, and MITSUMI's products included in Eight Spears are connectors, power supply, IoT-related, and these are going to keep growing. Our strategies that we have worked on thus far in each area we will make sure to do a good job. That is one growth scenario. In addition to that, the things that are not in that category, like something MITSUMI is working hard, like the products to solve societal issues and regarding locks. Wireless locks and all kinds of things related to that are handled by MITSUMI.
Some may not be MITSUMI's products yet, but the MITSUMI engineers are working on them. I do not have a crystal ball, so I cannot tell you what will happen in the future. Among these things, I'm sure that we can see growth drivers. We are working on sales projects with our customers, and they may turn out to be growth drivers. I would like you to understand it that way. MEMS, on the other hand, we must grow MEMS. This is a kind of a product that we must grow, and the market will grow substantially going forward. We only have limited resources in this area, but we would like to add the headcount in this area in order to achieve growth.
I see. Thank you.
Thank you. Next, from Mitsubishi Securities, Goto-san, please.
Can you hear me?
Yes, go ahead.
My question. In terms of inventory asset level, I think it has gone up. Why? What has happened? What is the reason behind this? Can you explain about that? For next fiscal year, including the cash flow perspective, how are you going to manage your inventory?
Yoshida-san, are you going to answer this question?
This is Yoshida. I'll answer this question. As I've said before, the semiconductors and ball bearings, they have not had any inventory at all. The inventory level is going up, but these two products are exceptions. For the ball bearings, in terms of production and sales outlook, based on that, from this quarter, we have been able at last to increase the inventory. Your question is that why this inventory is going up. This is because mainly, the raw materials inventory has gone up overall. In this COVID-19 pandemic and the second quarter, third quarter situation surrounding COVID-19, my understanding is that, as Mr. Kainuma has explained, we had unprecedented level of changes in production plans on the customer side.
For the production plan of the automotive companies, I think historically speaking, there was no situation that was so unpredictable. But that said, for the customers, we'll have these forecasts in terms of the delivery plan. In terms of the material inventory, we have to hold some level of inventory for material. That is the reason why the inventory has gone up. The semiconductors or other materials. I don't know whether the reason behind this is COVID or not, but if the situation is resolved, I think the raw inventory will go down. From our point of view, we have some visibility about this. Towards the fourth quarter, we think that we are targeting to reduce the inventory level drastically in the fourth quarter.
That's what we're doing internally. I guess in terms of the cash flow, basically in terms of the cash collection, the cycle has gotten slower. In terms of the inventory level and the material inventory, it will not just continue to go up. We want to normalize and correct the inventory level, but depending on the type of components, we have to have some safety inventory. Overall, we want to bring the inventory level to a healthy level going forward. That's all from me. Thank you.
Thank you. According to your explanation, production inventory has gone up and you haven't been able to get the kind of the utilization profit, the Ball Bearings is still, you don't have the sufficient inventory.
If the shipment is going down in terms of the utilization level effect, it won't be that bad. In terms of Ball Bearings, the current inventory level is very low. As we have been saying before, we wanted to increase the production capacity and we wanted to go ahead and increase the capacity, but unfortunately, because the impact of COVID-19 situation in Southeast Asia, the operation has gone down and we had difficulty in procuring the parts and we're not being able to have an inventory of the components. Currently, these issues have started to be resolved, so towards next fiscal year, as Mr. Kainuma has said, the new capacity is going to start operating, and basically we want to continue to operate under full capacity. That is our intention, and that is unchanged. Thank you.
We would like to take one more question. Tokai Tokyo Research, Nishino-san.
Can you hear my voice?
Yes. Please go ahead.
I have one question. Globally, Analog Semiconductors are in great shortage. In that sense, you have a huge backlog as well as a sales amount and can you elaborate on this point?
As I said a little bit previously, at this point in time, next year's, up till the first half of next year, it's being completely filled up. I mean, our capacity is completely filled up up till the end of the first half of next year.
Does that mean, you need to think about making additional CapEx, capital investment?
Yes, of course. The government is providing us with various supports like subsidies. We would like to capitalize on that in order to increase production capacity. JPY 100 billion for our semiconductors, we do not have production volume target, but we have amount target, sales amount target, and we are doing this one year ahead of the plan and we need to be prepared for that.
I see. Thank you. When things are decided, please share with us the information. Thank you very much.
Thank you.
As the time has ended, we would like to end the Q&A session. With this, we would like to close today's meeting. Thank you very much for participating.
Thank you.
Thank you.