Good morning, good afternoon and good evening. Thank you very much for joining Nidec's Fiscal Year twenty twenty Second Quarter Conference Call. I'm Yoshi Yorikasa, General Manager, Kiosk Branch of 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 file 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 would like to introduce today's attendees from Nidec Corporation. Mr. Jun Seki, Representative Director, President and Chief Operating Officer. Hello, everyone.
And Akira Sato, First Senior Vice President and Chief Performance Officer. Good morning, everyone. First, Mr. Sato will make a presentation. After his presentation, we will move on to a Q and A session and Mr.
Seki and Mr. Sato will answer your questions. Mr. Sato now presents Nidec's Q2 fiscal year twenty twenty results, future outlook and management strategy. Mr.
Kato, 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 Partner Officer of Nidec, and I'll be a UMA speaker for today. And joining me is Mr. Masahiro Nagayasu, General Manager of Nidec's IR team.
And also, we have a special speaker today who is mister Seki, president and chief operating officer Nidec. He is joining us in this conference call, particularly in the Q and A session. For the forward looking statements, please see slide number two of our presentation material for details. Now I'll review the key figures. Please see Slide three for our first half results.
As summarized on Slide four, the first half net sales has increased 0.1% year on year to 751,800,000,000.0, And operating profit has also increased 3% year on year to JPY 69,200,000,000.0. So both net sales and operating profit have made a year on year increase. The net sales for the second quarter has increased 23.2% quarter to quarter to 414,900,000,000.0 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 costs through WPR4 program. The operating profit ratio has recovered to double digit, 10%.
As a result of all of these, we have made an upward revision to full year fiscal year twenty twenty financial focus. On Slide number five and six, we have you have step chart showing the comparison of net sales, operating profit year on year and quarter on quarter, respectively, by product groups with exchange rate effect, eliminations and structural reform expenses. As you see on Slide number six, 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 ACM have been the main drivers. Please see Slide seven. 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 free cash flow for the first half this fiscal year has recovered to almost the same level as the first half of fiscal year two thousand eighteen. As shown on-site number nine, We have made upward revision to three year fiscal year twenty twenty financial forecast based on the first half results. 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 region of Europe, Americas, and Asia, excluding China and Japan, whose ratios were lower than China and Japan as of the last results have caught up in the second quarter and are on their way to near full recovery. At the the repeal program progresses, the net sales hit the bottom in the previous first quarter and operating profit in the fourth quarter of the last fiscal year.
And operating profit has recovered to the double digit 10% in this second quarter. We are setting even further recovery in this second half. Please see Slide 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 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 Nidex e axle for s shaped car in the in the product life cycle theory and enters a super long growth stage. Last month, the governor of California issued a executive order requiring all new cars to be better emission by 02/1935. And in the same month, European Commission announced its plan to increase from 40% to 55% reduction of greenhouse gas emission by 2030 compared to 1990 levels as part of the European Green Deal. Meanwhile, due to the technological innovations, the cost of EV powertrain is expected to become cheaper than that of internal combustion engine or ICE around 2024.
And customers for e access are spreading from initial innovators such as GSE and GD to early adopters after the turning point year of 2025. And sales are expected to expand rapidly thereafter. Please see is sign number 16. Based on the expected expansion of the axles after 2025 that I've just explained, Nidec is setting up local RMD basis in China where significant technological innovations and the structural changes are happening in the EV industry. As illustrated on the upper right, we are planning to establish a R and D center in China, Japan, Dalian local development cooperation, the most demonstration zone, which is at most the same scale as Shiga Technical Center, the core our core R and D site in Japan with 1,000 employees.
Also shown on the lower light, the operating family of R and D center in Suzhou was held last month, and it's already up and running now. This is one of world's biggest R and D site with 12,000 square meters of floor space and 36 motor testing system. Please see slide number 17. As you we are entering the age of a case, which stands for connected autonomous shared, and electric. ELECT is transforming our business model from the one based story of models to the one based on systemization and modularization in the product areas in not only EXO that I have I have mentioned, but c system, pump module, door system, and electric power steering system in order to increase added value.
Price please see slide number 18. Both net sales and operating profit ratio of ACI are steadily on their way to improvement for the first to second quarter due to the WPO 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. Nidex compact, lightweighting, and energy efficient brushless DC motors are claimed a very important role in coping with the strong demand for home appliance product on the back of the work from home trend caused by COVID nineteen.
And we are seeing further growth of our brushless DC motor business and appliance feed such as air conditioners, dishwashers, washers, dryers, low off cleaners, and other vacuum cleaners. Please see sign number 20, the shipment of RudraStim and RudraFlo from motor, RudraFlo FBV or UFS, which is used mainly for the PC application, marked a decode high level in the second quarter for two consecutive quarters. UFS firmly supports the demand for work from home. Please see slide number 21 on the back of explosive increase of digital data due to the free fledged launch of five g. Nidec offers solution to the heat generated by the faster CPU.
We are aiming to achieve the sales of 100,000,000,000 in this plot area in fiscal year twenty twenty three by introducing heat pipes, heat sink, vapor chambers, and the modules and liquid cooling systems. Please see slide number 24. Motors are for components of anything working with electricity. Motor accounts for approximately half the world power consumption. Nidec will supply efficient efficient motors globally and contribute the reduction of c o two emission and economic development of emerging countries 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 and A session. Senior management of the company will take questions from you. Today's Q and A session will be conducted electronically.
Okay. Our first question today is from James Perthold of ARMA 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, but one of the areas that performed very strongly was your small precision motors, HDD motor area. And I just wondered, you give us a few comments in terms of perhaps volume data, comments on ASP and if there were any major changes to mix, say, 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 Nalias speaking. And that you were asking what was the situation of the hard disk drive spindle motor shipment for the past quarter, like a September. Then we are roughly shipping 63,200,000 spindle water where the average selling price was $7.02 Then we were shipping roughly a 17,800,000 nearlines, which is much larger than the previous quarter like a June, 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 we are a little better OP margin over the first quarter, which is the over 31.8. Eight percent, September quarter. Right.
And it was 30.5% June quarter.
Is that fine?
Sorry. So it was 30.5% in June and it was 31.8%, is that correct?
Yes, 30.5% in June.
Yes, 3.5 in June, '30 '1 point '8 percent in September for our spin motor profitability.
Thank you very much, Chief. And can I ask one follow-up question, please? Is that okay? Was interested to see in 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 there was structural reform expenses were €6,000,000,000 in the first half of last year and so therefore €8,200,000,000 this year?
And were they very heavily weighted for the second quarter? Could you I was surprised to see such a big number. Could you comment on that, please?
Structural reforming expenses, but it is JPY 4,300,000,000.0 September quarter and JPY 2,800,000,000.0 in June. So JPY 1,500,000,000.0, it was increased And mainly due to the restructure, the kind of how described factors. That's mainly the reasons why we are spending more in September than June.
Okay. Thank you very much indeed.
Okay. Thank you, James. Do you have any further comments or questions? Are you all right?
I should probably go to the back of the queue.
Okay. Thank you very much. Thank you, James. Okay. Our next question is from Sattul Ojigai of MWA Securities, EMEA.
Please go ahead.
Thank you very much for your time today. It's very good opportunity because Sisan is joining today's call. So I would like to ask, it has been it has been six months since since you assumed the presidency. So what is his your take on the challenges that Grudel faces at the moment?
Thank you, Jason. I will reply, but today main Q and A must be for the financial announcement. So I would like to ask everyone not to ask just myself. This is first one, I would like to answer you. You're right.
Six months and then it's a very different world from automotive to motor power. Challenge is, you know, speed, I would say. You know, automotive I don't say automotive is slow, but automotive has almost like a common cycles from introduction of concepts of models to make that model happens and then sell to, like, five years. But here in NINEC, it's so fast, much shorter lead times and additional speed is very fast. And then while usual company having, like, executive meeting monthly, this company hold weekly days at least, and then if necessary, it's a daily base.
So things need a decision. Never wait. This is your meeting. That is the concept. And then I'm enjoying very much.
I like this speed. You know, I don't need, like, a % evidence, but if it's meet my sales, I'd like to go ahead. And then mister Nagami giving me some autonomy to go there. So that's my challenge, and I'm very much. Okay.
Thank you very much.
Any questions?
Are you all right, Jason? Okay. Our next question is from Dzak Inouye of MUFG. Dzak, 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. Following up on the previous question from Ochiai san, I just want to focus on a kind of bigger question, 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 rest of the world in terms of EV technology, what they're adopting and so forth? And how is that changes going to benefit NYDEC 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 02/1930 and so forth that will be great.
Yes, question to Sartos or? Yes. Okay. Thank you, Inoue san, that particular reply. First, I have to correct your assumptions.
China is one of the major market, but otherwise Europe. China is not outstanding anymore at this moment. We don't know the futures. But if we look at September sales, we call it new energy business. We don't because EV and private hybrid and e power from Nissan, those are using, like, traction motors.
So for us, we categorize it's new energy vehicles, and the new energy vehicle sales in Europe is higher than China. So this is accelerated by additional incentive from the EUs sorry, each country, particularly German German Germany and France. And then we predicting that this pace will continue for a while. So China 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, many of them don't mind if it's in house motor or water supplied by suppliers like us. So they are more they have more flexibility for that choice. That's why our penetration in China is going ahead, while European OEM is a bit conservative because they developed their motor by themselves and they are still sticking. They have to they want to build by themselves, but not all of them.
For example, like a PSA, J. Jones JV with us. So investing half and half, they're enjoying our technologies and competitiveness. So time by time is different. But at this moment, I would say most of the European OEM is tasting if they build by themselves or if they choose outside.
It has not been determined, clearly. And then, of course, some technology preference are different. I don't go detail, but the voltage, like, 800 versus 200 or magnet if it's heavily used magnet or no magnet. So those are different, but we are specialist of motor. So we are fully aligned with each preference.
That's all. And then last point is maybe capacities. At this moment, our capacity our actual production line is only one in China, which started production last May. But very soon, we have a second line, which is JV with Ganjo Automotive. And then third one also launched in next year next summer.
So we have already family plant three lines and total capacity is about two years. Then fourth one for our farm plant is JV in PSA. This is announced already as official information. It does start production in 2022. Rest of the things, we have a plan, but because it's related directly related with our customer, I don't want to say, but our current volume prediction in 2025 is reaching 2,500,000.
So and then in '26 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 '26 and '27. 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 5,000,000 in '25 and then it's not over messaged. So that's where are predicting and anticipate.
I don't know if I will reply to all your questions.
Are you alright?
Not very good. Thank you
so much. Yes.
That was very clear. Thank you so much. Thank you.
Okay. Before we go to take next question, I'd like to for the benefit of all the participants of the call, I'd like to remind that if you would like to ask a question, please press and 1. Again, please press and 1. Okay. Now going back to P and 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've got a couple of questions. R and D expenses in the first half of the year were only €31,200,000 30 1 point 2 billion euros compared to full year of €85,000,000,000 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 a sort of second one, which may be related or may not be related, I don't know, could you comment on the specific profitability of your automotive area, which obviously improved a lot from the first quarter, but is still obviously relatively depressed and talk about product development costs for all the E Axle contracts that you're winning And how you expect those product development costs, the weight of those to change over the next two or three years, please?
First of all, the R and D costs, as you mentioned, we spent 31,200,000,000.0 yen in the first half. That could be lower, we are going to increase the R and D cost for, of course, the traction motors and also the other new so called three new market, new customers and the new product. Those spending of R and D is really needed in the second half so that we are expecting that R and D cost will be up to R85 billion dollars alone in this fiscal year. That's a current status of R and D cost. And what's your second question?
Well, second question was
the profitability of the automotive side, which obviously has gone from breakeven in the first quarter to a better figure of sort of over €4,000,000,000 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 actual future contracts that you're winning. So it's a sort of forward investment. And I wondered if you could comment on the level of product development costs for 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 contracts wins that you have in the pipeline that's going to start flowing through?
Okay. Thank you, Greg. Can you refer Page five, please?
Yes.
That's the comparison of last year second quarter versus this year. Lots of grades except automotive, which is minus 87,000,000 US dollars. This is actually split to 60 minus 67 in Q1s and minus 20 in Q2s. So Q1 is reasonable because of very low demand of automotives. But in Q2, it's recovering, not fully recovered yet, but still minus 20%.
And then this minus 20% is consist of plus 20% from existing business and then minus 45 minus 40 from traction motors. That means at least traction motor spending 40,000,000 US dollar more than last year. But, you know, I I won't need to spend this money. So program area is for recovery from automotive areas. If we look at July, August, September, September, we are seeing a much bigger profit from automotive area and it's continuing October and November.
So it's definitely coming back. So in third quarter, I'm seeing we have a positive from last year to this year as automotive total. And then I keep increasing profitability from all the periods. And then point is development cost 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 a new order from customers. We talked about the volume in '25, which I explained about 2,500,000.0. It was 1,200,000.0 last quarter, which I explained. So it's rapidly increasing.
So if we have a more increase from now to '26 or '27, and they have to increase this development. But we don't afraid yet because it's proving we are gaining market share. We can enjoy scale merit later on. So we have I am fully aligning with Chairman Nelamowitz. We take as much as possible for this volume and the market shift.
If we have to spend the development cost, we do. And then I also need to accelerate profit margin improvement from side from a organic side. That's I'm looking for. So with current pace, I definitely make that positive in Q3. But if we have a further order from customer, it may stay as slightly negative, but not a negative, and that's for maneuver for futures.
Am I replying your questions, please?
You are indeed. Thank you. Can you say anything more about the increase in the in your now projected volumes that you have for 2025 in terms of the is that mostly from Chinese customers that have taken out there? Can you give any details of the sort of mix of where the increase has come from?
Okay. Please let me avoid to tell a specific one, but I think I can explain you by regions. Roughly, 40% from Europe, 40 Percent from China, Twenty Percent from others. So China, Europe growing same speed.
Okay. And that percentage, that's the increase that you've given me, yes?
No, no. That's a percentage of 2,500,000.
Two point five million. Okay. Okay.
Would say proportional, slightly bigger in Europe for incremental volumes from last year, but 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 JPY $630,000,000,000 was the figure quoted. With these additions, do you have a revised figure for that, that you could quote or not?
So you mentioned the JPY $630,000,000,000
for I believe that was yes.
I think right here or maybe we have mentioned that number. It's a bigger three
ks base.
A
Yeah. And
then are you asking what will be the number as of, you know, today covering 22 customer and the seven traction motor customer. Is that your question?
I think so. On the same basis as before, I was just wondering if you have that's been reached.
The total sales for an aggregated basis sales from '19 to 2025. Right?
Correct. Thank you.
So that number as of today is the the previous was something like the 630. Right?
I believe that's the case. Yeah.
Okay. And the total revenue we're expecting is something like a
50,000,000,000 yen
7 50 billion yen Okay. Thank you very much indeed. That's very good. Okay.
Okay. Thank you, James. Our next question is from SSGA's Mr. Ramzi Nilam. Ramzi, please go ahead.
Yes. Thank you very much for taking the question. I'm just trying to improve my understanding on Page 15 in the presentation. So you mentioned the target is roughly 2,500,000 for EXL by 2025. So this also includes the volume of traction motors in this target?
Or can you please explain the target for EXL and traction motor? And the second question, I mean following that, so can you give the number of customers in EXL and traction motors? Think EXL you have previously 15 customers and how that improved in this particular quarter?
So first, about $2,500,000 in 2025. It's most of them are traction motor sets. Some are just motor alone. Let's say, combination is about 8515%, eighty five % attraction to 50% for water alone.
You're asking the whether that 2,500,000.0 correspond to the number we said EUR 1,500,000.0 or other number such as the number including the traction motor for mild hybrid, right? That's another EUR 4,100,000.0 which we mentioned. Then today, we say the previous quarter, we say $1,500,000 E Axle. That correspond to today, 2,500,000.0, okay? Then $4,100,000 we mentioned in the previous quarter.
Now today, we say $6,100,000 roughly. So that's another market, right, as you understand, the traction motor market.
Yes.
Okay. So that we say roughly that the 10,000,000 total market for a EV, the battery based EV, then our number is EUR 2,500,000.0. So we say our share is 25%. MadHybrid, according to the IHS Markit, million is the market size for fiscal year '20 '20 '5 or current year 2025. Then our number is over 6,000,000, 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 are saying 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 customer we have for a mild hybrid? Yes. Okay. The seven as we mentioned the same number as we mentioned last time.
Okay. Thank you.
Okay.
Thank you, Ramzi. Our next question comes from Satoru Jayageng of MMT Securities EMEA. Mr. Otse, please go ahead.
Thank you very much for taking my question again. So my next second question is that if Nilek would be able to sell 10,000,000 units of OE access system, so roughly how much impact will Nidec have in terms of operation profit?
$7,000,000 Okay, Sao. You said 7,000,000 No. In 02/1930,
thousand
'30, we're going to sell 10,000,000.
Yes, 10,000,000. Yes.
10,000,000. When we are selling 10,000,000, much profit we are gaining? That's your question.
Right? Yes. Yes.
You look at the page 15 Mhmm. No. We are splitting the three terms. I don't know what English said. Just a moment.
Yeah. Yeah. We're splitting introduction stage and growth stage and maturity stage. I can say, once we reach maturity stage, it's same level of profitability as how this drive 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, you know, eliminate our competitor as best as possible.
And then for this growth period, I think we can can finally confirm probably around 10% to 15% OP percentage, but still this is like in between more introduction and maturity. So if we need to compete with our competitors, we do because market share is first priority. So roughly, 10 to 15% per unit before a maturity PU, which is 30%, but that is just a very high level of corporate predictions. I would say growth fast.
Okay. Thank you very much.
Okay. Thank you, Mr. OTI. And now it seems that James has remaining questions. James, please go ahead.
Good. Thank you very much indeed. I wonder, could you talk a little bit about the other Precision Motors, so 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. And 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 margins, which has been depressed for some time here that predates it's not to do necessarily with COVID, it 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 and the profit 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 pressure motor, there are three categories, how to drive spindle motor, DC motor fan and others, and the a hot kick and vibration motor. There are three different area. So when you divide it into those three categories, okay, 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 twenty twenty. The first quarter that the June, 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 top line is also getting a little bit higher, where we are reporting in the second quarter roughly a 62,400,000,000.0, which is over TWD 57,200,000,000.0 in the June.
Then if you're looking back the fiscal year 2019, last year, the highest quarter for that category was EUR 62,500,000,000.0 in the December. So we are already reporting almost the same as the last year December, which is before the COVID-nineteen. So the future, clearly, are several areas. Number one is the IT area, especially data center area. Then we believe that market or that segment is growing.
That's number one. Number two, the other area is the five gs base stations. Then we see our business might be somewhat coming down in the December and the March because our major customer Huawei was brought by the American government. Now that's going to be maybe transferring to the Nokia or other five gs makers. So it will take some time to make those changes.
So the five 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 some other DC motor for the home appliances will coming up. So those are the best trend. Then you are asking the finally the 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, you know, number will be using our haptic. That is something that we are expecting. James, is that fine?
That's fine. So can I just check, so for 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 point '2 billion sales. And then this September, we reported JPY 9,400,000,000.0. So the top line is coming down, but OP was negative JPY 100,000,000.0 in the June.
But now this quarter, we're reporting JPY 3,000,000,000 roughly, okay, 2.8%. So overall, still we are we have to write off the machines and others, which is really inherent to this project because this project is only last one year and any investment, which is not resulted in the top line, 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 top line roughly a $10,000,000,000 per quarter or roughly $40,000,000,000 per year. Then overall, we say that's going to create 4% to five percent of the margin. That's what we are looking at this business for this fiscal year.
Is that fine?
No, that's fine. Thank you very much. And on the fan motor side, where your margins, as you mentioned, are a little over 5% at the moment, do you think what all the other precision motors, which 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 the one farm motor, say, per unit is not making so much money because we are competing very fiercely against the our so called the Taiwan, a competitor like Delta, Sunon, and all the other. Okay. And also, we are now competing against the Chinese manufacturers. So it's very difficult to make money.
So what we are trying to do is try to solve the thermal question using our fan motor. Because fan motor is one of the device to clean down the system. But usually, 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 problem to how to clean down the whole system.
That's gonna be a very big data center or that could be a very, very small smartphone, whatever the case, the thermal situation thermal demand is rising, then we are not limited to the fumbles, but rather we are trying to become a problem solver for those thermal questions by any of our customer. Then by providing a better solution for our customer, we believe that we could improve their profitability. Is that fine?
It is. Thank you very much indeed.
Okay.
James. Thank you very much for your questions. And now we have only a few more minutes to barely accommodate one more question, if any. Is there any questions from today's participant? Now there seems to be no further questions and we would like to conclude the conference call.
Like to appreciate for your participation today. Should you have any further questions? There is a last minute question from SSG-eight Ramsay. Ramsay, please go ahead. And this will be 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 inches and 3.5 inches and helium as a percentage of nearline motors?
For a September shipment?
Right? Yeah. September. Okay. Yeah.
Yeah. Exactly.
Oh, the total which I mentioned, the total number of spring water shipment for the quarter was 60. Let me just see the number here. 3,200,000 and the 2.5 inches high end is 0.9, nearline is 17.8, three point five inch, 22.6, and 2.5 inch is 21.9. And as I mentioned, the total ASP is $7 or 2¢. You need more information regarding the pricing?
Yeah. If if possible, please.
Okay. So a 2.5 inch was 7.2. Nearline is 13.23, and 3.5 inches is a 4.69, and the 2.5 inches is 4.38. Then you're asking helium. The helium is 10,300,000.0 out of 17,880,000.00 here.
Is that fine?
Yes. Thanks. Great. That is really helpful. Appreciate
Nilang, 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 Corporation or your sales representative at Mitsubishi USA, Morgan Stanley Securities. Thank you very much for joining the conference call and you may now disconnect.
Thank you, everyone. You, everyone. Thank you,
everyone. Bye.