Now it's time for us to start the presentation on Nidec Corporation's financial results for the first half of fiscal year 2023. First, please make sure to turn off your mobile phone or switch it to silent mode. Thank you. Presenting the company's financial results are as follows: Mr. Shigenobu Nagamori, Representative Director, Chairman, and Chief Executive Officer; Mr. Hiroshi Kobe, Representative Director, President, and Chief Operating Officer; Mr. Mitsuya Kishida, Executive Vice President and Executive General Manager of AMEC Business Unit; Mr. Akinobu Samura, Senior Vice President and Chief Financial Officer; Mr. Masahiro Nagayasu, General Manager of Investor Relations and CSR Promotion Department. That is all. In today's presentation, these executives representing Nidec Corporation will provide an outlook and the details of the company's financial results for the first half of fiscal 2023. After that, floor will be opened up for questions.
This conference is planned to last until 11:30. Thank you.
Thank you very much for gathering at this conference, despite your busy schedule. I am Kobe, the President of the company. Mr. Samura will present our company's financial performance in detail for the first fiscal year of 2023, and Mr. Nagamori will explain the details of the company's performance. The floor will be opened up for questions for us to be able to answer. Now, Mr. Samura, please start your presentation.
This is Samura speaking. I would like to give you a brief outline of our performance for that brief period. If you take a look at slide three, first half, net sales stood at a record high of JPY 1,160.7 billion. Operating profit is increased 21.1%, and operating profit ratio was 10.0%. Profit before income taxes increased 22.8% to JPY 144.4 billion, and profit attributable to owners of the parent increased 22.4% to JPY 106.1 billion. When it comes to sales and all the operating-related ratio, were all record high.
Now, here in this time, sales and other operating-related figures were record high as well, but the annual forecast remains unchanged. That is all from me.
Now, I'd like to give you the details of our financial performance for the first half of this fiscal year. Please take a look at slide four of the document. We have four main business categories. When it comes to small precision motors, compared with the Q4 of 2022 fiscal year, we hit the bottom there, and in Q1 and Q2 of this fiscal year, we made a recovery. When it comes to this particular business segment, we increased our prices and it was delayed, but this process was almost completed by the end of September.
On a quarterly basis, we made a profit of JPY 10 billion, approximately. That's the type of structure of this small precision motor business. When it comes to the sales, it used to be JPY 368 billion in total. That's the target we need to go back to, and we are expecting to achieve that goal. There are some new products in this area. We would like to grow this business with these new emerging products.
When it comes to automotive business, I believe this is one of the most paid attention to areas. We have a business strategy in place. We have changed it. First of all, we have focused on certain countries, in other words, China. We have deeply dependent upon the country so far, but now we have diversed our interest to Japan, the United States, and Europe. We have receiving many inquiries from these regions and countries. Profit recovery is the most important task that we have. There are quite a few companies that are in deficit in competition with us. The competition over the product's performance is not there yet. We are competing over prices in China, and these competitors are in deficit constantly while competing with us. Such a price-based competition is not something we are used to.
It's not necessarily maybe healthy, but we have been in a competition, and sometimes some competitors are enjoying 5% profit, others even more or less. We need to recognize the values of other, other companies with each other, and that's, that's the type of the competition we should be in. We launched Gen 1 in the past. At the most, they are at the breakeven point. Currently, we have not accepting orders for Gen 1 products, even though they do come to us. Basically, we would like to achieve operating profit ratio target of 15%, and we would like to compete with other companies to be able to generate at least 15%, operating profit ratio. I cannot give you any names at this moment, but in Japan, there are some OEM manufacturers.
We are going to receive orders from an OEM manufacturer in the country. Instead of having many, inexpensive products orders, and we have had a productive production capacity. With such a system in place, we won't be able to foresee in many, a bright future, much bright future. Therefore, we decided to decline those, inexpensive offers for inexpensive products. We would like to secure profit first. We would like to be focused on generating profit. Starting next April, we're going to have NPE in Europe to be consolidated into our Nidec group's performance.
I'd like to give you detailed figures in detail later in this conference. In addition, we have Japan, U.S., new customers. Compared with the current business partners, we have better unit prices, and we shouldn't generate any more deficit while we try to increase our production. In order to continue to win going forward in the business, when it comes to performance, we are a specialized motor manufacturer. Compared with other competitors', performance, product-wise, our products excels. Our products excel them. We're not going to discount our products anymore.
Because when it comes to components that we use, we're going to use some of the components that are manufactured in China. It is okay, according to our customers, for us to continue to use China-made components, but we need to make some changes for that, too. The local production, local consumption is very important in China. When it comes to Japanese customers, they want us to produce components in Japan.
When the production size is right, we will produce those components for the customers in Japan. When it comes to United States, American customers, we will produce our components, products in Mexico. It may not be right now, but in the future, we are likely to be able to achieve the operating profit ratio of 15%. That's the type of operating profit ratio that we need in order to avoid generating a deficit. We would like to avoid negotiation for lower prices when it comes to our products. It has been 50 years since I founded this company, and it has not been really profitable to be in such a type of price reduction type business. We have never tried to reduce our motors prices, and all those competitors had to withdraw from the business.
Because of that, we have been able to achieve profitability. Performance has not been so much of the focus, but the price has been people's focus. In such a market, we try to reduce our price to the best extent possible. We still needed to make money. If we cannot make money, we shouldn't be in such a business. Fortunately, we have some customers have been giving us inquiries, orders, and we have negotiated with our Chinese customers to decide on appropriate level of prices for us to sell our components to our customers... that, that's the direction we're going into. We are selling Gen 2 and Gen 3 prices. We're going to reduce the prices of these new emerging products, but we will make sure to secure a healthy profit.
We will review all the designs and everything else in our products. The performance will not be declined, but this is a very new market. At this moment, it is not wise for us to try to reduce our price components and the products' prices. In the end, in all cases, we have become the world's leading manufacturers, and the details of this area will be explained by our Executive Vice President in this area.
When it comes to appliance, commercial, and industrial products, I have purchased Emerson's businesses in, in three—on three different occasions. We have launched a lot of reforms when it comes to people and others, and top executives are there. We have a new business units called ACIM and MOEN.
Both of these business units are under my operation over the past 10 years or so, and they all know, do understand Nidec's policy. They have launched many new products, and they are enjoying a very good profitability. They are making sure to achieve at least 15%, 15% of operating profit ratio. Their management is very stable. Their profitability in Q1 and Q2. There are some seasonalities, but still, their profitability is going toward the 15%, 15%. When it comes to slide 24, this is very important for our future profitability. When it comes to large industrial motors here, this is part of the infrastructure business in the United States and other places.
Many parts of the infrastructure is being replaced with new ones for the next 10-15 years, and these were originally built in 50 years, and it's time for replacement. On the other hand, we have some strict issues, serious issues such as CO2 emissions. Motors efficiency is, is in question. Slide 24, you can see the market, JPY 2.5 trillion, and that's the size of the market. These induction motors and others are included in this market. Over the past years, I have researched in this area. This is one of the most, best areas that we are very truly best at. We have brushless motors, and we have induction motors. Now, high-efficiency motors are here, and they are now brushless already. Now, finally, my ideal is coming to reality, high-performance motors.
Now, they are here. It has taken a long time, but they are here, and we are, SynRA is the brand that we have for this product. But, two years ago or so, this was introduced into the market. In the United States, technological innovation is already taking place, has received three major technological innovation awards in the United States already. And you can see the performance related to differences between a conventional and this conventional motors and this one. And this is 48% smaller than the conventional ones, as you can see, among other features. This area has had only 3% per year when it comes to profit. Now, it's now up to 18%, 18%. When you go to 2024, in the small circle here.
You will see the market environment here. Nidec has No. 4 in market share up until now. Now, with SynRA motor being launched, I think we have been able to take away shares from our competitors all at once. In FY 2030, the market size is expected to grow to about JPY 5 trillion, and we believe that we will be able to take more than half of that market share. So, you know, the 18% today will increase to about 19% in margin. So the profitability of appliance and commercial industrial segment is increasing and becoming stable, and this is—we're looking at this on a long-term basis as well. The induction motor market, as for the. You know, they still have very large size motors.
The Tesla's new motor is using an induction motor, and this is the conventional induction motor, so they're not using a very highly efficient motor but with the technological innovation, I think we will be able to capture No. 1, overwhelming No. 1 market share in the world, and I think we, our profitability will exceed 20%. It's already implemented in the market. That is why, with the products that are actually, monopolizing, some of the markets in the United States, we are able to see, further growth, in this business segment for appliance, commercial, and industrial, and we will also enhance our profitability.
The motor industry, like I said, for example, in the infrastructure segment, they use a lot of, large motors, but, there's a lot of, energy, electricity consumption here, and then with the size, there's so much difference, and the market, for, induction motor in the world will change quite significantly.
So for appliance and commercial, especially for industrial, I think the profitability structure will change quite significantly for the industrial segment. So induction motor used to be cheap, and because it's easy to build, and they thought it was good, but because efficiency is so bad, and so in terms of CO2, it's not compatible. So that is why there the specification is changing. So there's really no choice. They are no longer able to enter the market unless you have that IE5 specification or standard, and we are actually meeting all the way up to number fifth IE5. So the situation is changing quite significantly. And it's not just increased sales, but also better profitability. And this is a very large change that we're seeing in the motor segment.
Also, this area, we're implementing new products like, for example, the flying cars, from 2026. We're expecting to launch this. And we have already placed the order for the first manufacturer. This is JPY 250 million. I think this will come down to about JPY 2 million in the future. Also, in terms of investment in this area, in India, there's a very large plant. So I think there's a lot of concentration. To have concentration in one particular country or region will pose a lot of risk in the future. So often, you know, if we are considered to be a company with a great dependency on particular country, then that's actually problematic. So we are looking at, you know, Vietnam. So the mainstay will be in India and also the United States, Mexico.
So there will be large investments in those, regions, countries. That's the direction. So in the world, we want to spread out our production bases. And we're also seeing customers that want to have their, have manufacturing bases in certain areas. So the idle plants we're utilizing in Japan, because customers want to have it, built in Japan, and there's a request from, customers asking for collaboration. So there are about three plants which we are actually trying to resume in Japan. So we can see a lot of, different types of, risks in the future, but the company needs to make sure that we're able to, deal with these risks.
So whether it be the manufacturing bases or whether it be the sales bases, we need to make sure we scrutinize so that we can mitigate risks in terms of manufacturing and sales. So this will be different from the way we have done in the past. And next is machinery. Now, this is affected by a global trend, but we actually advancing to machine tool. This most recent case would be Takisawa. We have actually did a tender offer to this company, and we're almost done with this. But most of the large machine tools have already been included in our lineup, including lathe. And there's a little bit that we're still missing in our lineup, but we will try to add on to that with that. And then we have a company called, like, OKK.
This used to be a company that was booking large losses. But I think Mitsubishi having had acquired this and then... I'm sorry, we have acquired this company, and we have been able to make a lot of profit, like 18%, same with Takisawa as well. So we think that we can rebuild this company in a short term, and generate large profit. And as for press machines, we have been doing it from before, but we're beginning to see increased demand, especially, like, EV motors are very large and therefore uses a lot of press machines. So this is in the machinery automation business unit, but so we're looking at press machines and also reducers, gears.
The robot business performance isn't doing so well right now, so it's not as good, but the lines, you know, before and after the press process, we have acquired it with our mandates, so we have been able to enjoy great competitiveness. So I would say the greatest challenge we face today is even for auto, the traction motor. So other motor businesses, aside from traction motor, is also doing well. It's starting to recover, so brake motors, power steering, they're also performing quite nicely. We're beginning to see nice profits generated. And traction motor, this is about, you know, running. We need to make sure that our strategy doesn't go wrong here.
Of course, in my past, my track record, I have never backed out of anything like this, especially at a degree like this. Whenever I started, I want to make sure I finish it strong. So of course, you know, we have to adapt to the market, and there's a way we need to compete according to what the market, the environment is at that point in time. But if we do that, we can be strong. So for auto, I want to say it at the outset, that this year, as for traction motor, we are expecting to lose about JPY 15 billion on an annual basis. We already generated that amount on an overall basis. So JPY 15 billion, by the end of this fiscal year in March, we will develop different types of models.
So we are looking at a loss of about JPY 15 billion. We are estimating that, but with that, it doesn't mean that overall AMEC business will be loss making. That's not the level, because we have the brake motors and other types of motors from conventional business, which is generating profit, so I think we should be able to offset that loss of JPY 15 billion. And also, another major change next year is that, you know, this year we were expecting to be profitable in traction motors, but unfortunately, we're looking at a conservative loss of JPY 15 billion. But next fiscal year, NPE will be consolidated. So my Vice President will explain a little bit more about what would happen to this.
So my name is Kishida, and I'm responsible for the automotive products business.
So if you could go back to page 18. As we had explained earlier, at this point in time, with regards to the China business, we're seeing a rapid price destruction. And so we are intentionally trying to restrict orders so that we can be more profitable, especially our joint venture partner, like NPE and Guangzhou. We want to make sure that we will accelerate our orders from our partners. That's our policy. And if you look at the current number today, you know, how solid are they? So as of today, the firm orders, we have revised it to the firm order numbers, and going forward, we will do the same. We will be very severe with our forecasting, and we will engage in order-taking from that.
In 2025, that's the time in which the market will explode, and we still have time for that. How are we going to really finalize our strategy for that? I think that's really critical. From 2024, NPE's number will be added to our consolidation. We're looking at 1.55 million, and then this will go to 2 million, 3 million, 4 million, and our target is to achieve 10 million, so there's no change with our target. We want to make sure that we're profitable in the China business and accelerate order-taking in Europe. As for Japan, we want to make sure that we're able to increase business in Japan as well. That's our target for 2024, 2025. If you could turn to page 19.
So on a monetary basis, this is how it looks and when it's translated, so from 2023 to 2025. As for traction business, we're looking at flat. Mainly, after 2024 fiscal year, NPE will be consolidated into our group and JPY 24 million and we have a going to achieve of JPY 500 million. Currently,
JPY 387.2 billion is in our target, and we're going to do—we're sending our models into these vehicles, and we would like to expand our sales based on the sales of these models into these vehicles. There are some regions where this forecast is coming true. But when it comes to China, where price competition is extremely tough, what we need to do is to—we need to focus on production productivity, work productivity. In 2024 and onward, we're going to have a new joint venture with a new partner. Supply of components to Europe is something we're going to launch as well. That, that's part of this green section, part of the green section on this slide.
And external sales of the components, and that's another chance in business we would like to make come true. This battle has just begun. We are at just the starting point of this battle. That's one thing that I'd like to reiterate here. And we have investment in research and development. Please go back to slide 17, Generation 3 or Gen 3. We have Gen 1 and Gen 2 in place. We are doing our business with these models, Gen 1 and Gen 2. It's about 70% and 30% respectively in our business, automotive business. Towards the June next year, we would like to launch Gen 3 in the market. This is not really our random target of entry into business. This is in automotive manufacturing plant with GAC, our partner.
Here, you can see the 7-in-1 model. 7-in-1 is what we are going to start our business with. 7-in-1 includes, these, three major components, inverter, motor, and gear. We have IPS included in it, and here, the PTC heater is also included in it. We have... These are all heater resource, heat resource-related components. These will be part of our inverter. That's how it's called 7-in-1. ECU will be included in it. This is how we like to slash our cost as much as possible. As has been explained by Mr. Nagamori, we will produce and complete all the business in China, in China, for China, in China. This is a very important point. 35% of materials are for inverters. We need to reduce the cost for that.
When it comes to our customers, they are requesting us to use semiconductors produced in China for their products. We have found the partners for that, so that we can develop inverters in China, so that we can produce Gen. 3 products in China with these inverters on. That’s part of our additional research and development investment for this fiscal year, and that’s part of our profit and loss statement. That’s one thing that I wanted to add. That is all from me. Thank you.
I would like to open the floor for questions, if that’s okay. Thank you very much. Now, I would like to open the floor for questions and answers. If you have any questions, please make sure to raise your hand, and we will hand over the microphone to you. Does anyone have any questions on floor?
This is Takayama from Goldman Sachs. Thank you. My question is regarding China's E-Axle strategy has been changed, I believe. When it comes to Gen 3, will the Chinese market going to remain unchanged? Are you going to continue to have a price competition? Do you have any risks for any changes? Do you have any ultimate form that you have in mind when it comes to these products that are used in China? What is the ultimate form going to be for these products? That, I'd like to ask this question to Mr. Nagamori and others on stage.
When it comes to the traction motor strategy that we have as a company, if we take a look back, we have made some mistakes.
I'm not going to say anything about the people who are no longer with us. But back then, one of them wanted to take everything in his power to make decisions on the automotive business of Nidec, and delegating the responsibility was my mistake. When it comes to motors, our company is the world's leading manufacturer, motor manufacturer. We have purchased new companies. Inverter is the critical component. We have made a major mistake in the inverter strategy. We have components from China, we have components from Europe. We wanted to use those products in these regions in our country. We were performance-focused. If you disassemble these components, at 25% pro-profitability for motor gear, 15% inverter, 25%-30% in deficit, that's the inverter. So, it is clear that where we had a mistake is in our strategy.
It is not right to purchase other components to assemble these components into one inverter, and that's not really meaningful. I'm talking about the Chinese market here. If for our Chinese customers, we should use all the China-made components. At CNY 2,000 can be reduced to a lower price, like CNY 1,200. That's how much you can reduce the price in China by using China-made components. And we were given a permission to use China-made components for our Chinese customers. There are some quality issues, but even if they happens, that's not going to be a problem for a motor. Those are the problems with inverters, not with motors. We have a very good inverter manufacturer that is very reliable, and we decided to outsource the co-production of this inverter production.
Their products are very inexpensive. We need to be a competitive—we need to use competitive components in China. That's how, by switching the strategies like that, we can increase our profitability. Inverter has a loss of 25%-30%. In renminbi, the price was at CNY 2,000, but additional costs are associated with such a problem. So far, when it comes to inverter business, we are yet to be capable enough to be able to produce inverters on our own. We cannot rely on ourselves to make everything, including all the inverter components and inverter itself. When it comes to Japanese customers and European customers, situation is different. They are purchasing our products at a higher price than they do in China.
When it comes to NPE, next fiscal year, sales are expected to be CNY 250 billion, including currency exchange rate changes. NPE, it does not say it is okay for us to use China-made components for inverters. We can expect a 5%-8% operating profit ratio from the beginning when it comes to NPE joint venture. That's the goal or the threshold that has been set between us and NPE. The price reduction aggressiveness doesn't exist in our European customers. They are willing to pay a price, despite some problems that we face. Same thing can be said about Japanese customers. People understand what products are suitable for them and what products are not suitable for them.
So when it comes to performance, some customers are making, were used to make these products on their own, but they were now, are now attracted to use our products because our products seem to be of better quality than theirs. We. It is not wise to do a loss-making business. Performance has to be considered in a right way, and price has to be set properly based on the performance. That's the type of customers that we are looking for. Still, the Chinese market is expected to grow even larger than it is now. There are quite a few Chinese companies there in China, and some of these companies are withdrawing from their market. Numbers are rapidly increasing. We need to be very selective in choosing our customers so that we can increase our overall profitability.
For a certain period, I believe it is okay for to be in a deficit, but a long-term deficit is not really a business that should be involved in. That's not part of our Nidec policy. At least, we have many customers in 2025 or so. 2025 will be a critical point, in my opinion. And then there is some customers are coming to us because their prediction was not really right when it comes to 2025 as the critical turning point. The first step is to secure a very healthy profitability. When it comes to power steering unit and brake motors, we have been in this business over the past 20 years. And among the manufacturers that are supplying these components.
There are quite a few companies that have to recall their products from the market due to some problems, but that's not the case with us. It has never happened to us at Nidec. We are reliable, and our customers are not aggressive in a price reduction on us when it comes to these customers. And we clearly state that we cannot do business with certain customers at a certain price range if that range is not acceptable to us. You know, we are making products that make the car turn, stop and run. Traction motors is the unit that make the car, is for the car to be able to make very good turns. A deficit, generating a deficit constantly is not really good at all. Sometimes you have an increase in production, productivity, or volume over the past three months or so.
We need to secure profit so that we can... It is not really my concern about receiving or being subject to criticism in investors conference like this one. We need to secure profit. I'm not really answering your question at all, I believe, but that's what I wanna say here, in response to your question.
When it comes to Stellantis that you have referred to, it says 8%? This number here on the slide doesn't cover that much. What is the secured amount of money or profit and sales for Stellantis? These are all in yen, Japanese yen, in 120, 130 per euro. Euro is currently 150 per yen. So that's the difference between... In the current exchange rate.
Can you answer the question, Mr. Nagamori?
This is Kishida speaking. I'd like to answer the question. 130 per euro, 130 JPY per EUR. 100... Please make sure to use the right currency. I'm talking about in terms of euro. So 8%, 7%-8% can be secured. Yes, that's right.
Another last question. In FY 2025, you said JPY 4 trillion, organic JPY 3 trillion. So, with the conversion of the China strategy, you know, you're thinking if not here, maybe somewhere else, so you have it all built up. But whether it be ACIM or machine tools, but, you know, can you tell me a bigger picture on, you know, how to derive to that number, which would compose what?
Well, so we have ACIM large motors, so this will become a very big pillar for us going forward. I talked about the sales size, it's written here, but it's a very large market already. You know, infrastructure, you know, it takes like, you know, 20-30 years to change, so I know that, we can expect large sales. And also, as you can see from the market size.
We have the 10%, you know, market share, and if this increases to 55%, then the profitability also. Even if it's, you know, conservatively looking 20% in the profit margin, that's still a very large amount. But having said that, there's not that many companies that do large motors. So we will leverage M&A, and this will become a very large and stable business for us, which we want to continue to grow. And application is wide-ranged. So up until now, they said, you know, because it was bad efficiency, maybe there's thermal issues, and so they had all these problems. But if you have something with a great performance, then we will have expanded application.
You know, this is a small market today, but it's not a small market, it's actually, you know, trillions of yens in the market size. It has taken us decades to develop this, but we will have a new brand name, SynRA, that's the brand name. And we will market this around the world, and I know that this will sell well in Japan as well.
Thank you.
We would like to take other questions. So the gentleman from the second row in the front.
Uchino from Mitsubishi UFJ Morgan Stanley Securities. Kishida, I want to ask this question to you. With regards to automotive, you talked about specific strategy on Gen. 3, now focusing on, you know, customers, and you talked about 7-in-1. So next fiscal year, what are you planning to introduce from June? Is it substantially, like, mostly 7-in-1, or would it be concentrated on high-end cars? Could you be a little bit more, give us more color? And also, you talked about JPY 15 billion in losses. Is this, you know, JPY 15 billion in just all R&D, anything else in there?
Well then, let me answer that question. So first of all, in June 2024, that's our target. At the beginning, will be 135 kilowatts. That will be the first gen kilo. It used to be a 100 kW, but actually we're seeing better performance, so we're aiming for 135 kW for luxury cars, so high-end cars. That's our plan. After that, within GAC, Guangzhou Automobile Group, we have received a lot of inquiry. So we will start with Guangzhou, not high-end, excuse me, Guangzhou Automobile Group, and we will produce at the joint venture basis, and we will supply them. So that's where we want to start with. So we will begin with the 135 kW, but we will have a 70 kW as well. Now, at this point in time, from GAC, we have received formal orders from them.
Aside from this, at GAC, they have a ICE engine group company, and they are building hybrids. So as a hybrid motor, they're inquiring us about motors. And within their affiliate, there are several domestic companies as well, so we're starting dialogue with them as well. So we should be able to disclose them when the appropriate timing comes, and we will do so. And the second point about the JPY 15 billion this year, this is a very large downward revision, and we do feel the responsibility for that. However, we talked about, you know, how there's this rapid price decline, and as Mr. Nagamori said, the moment we think this is a price decline of destruction, then we will be defeated in this competition.
So even if there's a price decline, there's not much history of that, that being recovered, so the price will, you know, declining. There's. You know, every generation with the development of these new generations, we will need to accommodate this declining prices. That's the environment we need to compete in. So Gen. 3 will be able to accommodate that decline in prices, and that is why we're adding on this R&D cost in order to accommodate that. And last year, we had JPY 30 billion in losses. This year, even on our own, we are generating about JPY 1 billion in losses. And we are adding own R&D cost, so that is why we will be booking fifteen billion in losses for this fiscal year. So this is organic plus R&D in JPY 10 billion or so.
So this is a natural cost increase. Is this because of inverter in China development, or is that very big? Inverter, yes, and other than that, we're trying to accelerate some of the developments as well. What we call it as inverters, it's not just that control type, but also because, you know, we're implementing 7-in-1, we have this new IPS. This is a new type of control circuit for power sources. So we are also looking for partners, and we want to be trying to accelerate that process, so we can complete this by this fiscal year. You know, Nidec Mobility, you know, which Omron has talked about. You know, we are specializing in converters.
They are specialized in converters, and we want to collaborate with them, and we want to do joint research as one Nidec. And in terms of the inverter, one of the challenges is that there's a lot of electronic components that we will be using. And being able to deal with the pricing, price issues, you have to be able to have a certain level of volume, otherwise you will not be able to keep the cost or the price down. So going scale is important. And so, for example, there's a power source, a manufacturer in China, and they use a lot of our components. So maybe we can outsource it to them. That would be price-wise, maybe, you know, decreasing 30%-40% or so.
So as long as we're not booking losses with the inverter, then we're able to make profits from motors and gears. So we need to also polish up on our inverter technology in the meantime. But if you look at the companies in the West, and if you look at the semiconductors in manufacturers in Japan, to be honest, I mean, they can't really lower the prices. That just doesn't become cheap. So in order to compete against this price competition, we have to buy it from someone who actually produces it at the cheapest price. So, you know, whatever we can, we will do so. But with regards to chips, you know, you can't immediately produce this in-house.
So up until now, we have tried to produce everything in-house, but in order to go to producing chips, at this situation, the investment involved is quite large, so we may need to leverage the power of a third party. It's completely different, you know, we say... You know, the manufacturer says, we say 2000, they say 1200. So that is why, you know, what happens is that we all end up with components from China. So, you know, and Chinese companies do purchase it from us. But with regards to the Japanese companies and the European companies, maybe they think it's a little too early in stage, so we have to separate it, by customers. Also, from one development, if you need to make a drastic change, basically tell them not to do anything like that.
You have build the base, and you modify slightly and have someone else purchase it, because otherwise you can't make a completely new development every time. Because, you know, right now, even you know, nothing is free lunch, and so be expensive. So, in order to... We don't know if that company could survives. So, we have to basically cut business with unprofitable customers. You know, you know, just because we want orders, we don't have to, like, go purchase, take orders from everyone. And this is because the management was coming from outside the company, and that is why they used to think that way, but we need to eliminate that kind of thinking. We have to be profitable, in our order taking.
My second question then, with regards to induction motors. You've mentioned about, you know, application being wide, and I can see that there's a lot of potential, and you said that you talked about Tesla in automotive. Can you actually apply, have this application in automotive?
Yes, for induction motors, yes, it's everything. So the induction motors percentage is about 60% in industrial. So we have this very large market share, but we have not been able to convert it because induction motors are cheap. So Tesla's first cars were using, adopting induction motors. But efficiency is bad for induction motors, so that is why Tesla is going to brushless motors, magnetic. But that's not necessarily, you know, with an efficiency improvement like this with auto, you know, they will switch to induction motors. I mean, that's a possibility.
Of course, we're already starting with experiments in this. So depending on the application, I think that, you know, 50 kW, you know, 30 kW, these smaller cars, they're cheap. So, you know, induction motor doesn't use magnets, you know, just as long as you have power source, it moves. So, you know, and with this much of a efficiency improvement, I think this is quite innovative, in fact, dramatic. And the market, implementation has started, and with AMEC and MOEN, the reason why their profitabilities are improving is because of these, you know, they have contributed. So they're still yet to take off, but it, it's coming. And MOEN has already... I'm thinking, I think, I think we've declared that the sales will double by 2025, I think. I think I wrote it somewhere in the document here, but page 25.
Application is expanding. At the bottom left corner, 2025, and so page 25, it says, "Very large, enormous motor." This, you know, if the efficiency difference, they will be able to cut down on CO2 quite significantly as well. We have never produced anything as big as this in Japan. I think there's only one or two global players who's able to do this.
We're going to make the one of those main mining factories in India, which is going to have a huge campus. It's a huge investment for us. It makes a serial motor, a manufacturing factory here in it. Yeah.
Thank you very much for your explanation.
Thank you. Any other questions, please? Other person from the third row.
And this is Hira of The Nikkei, a newspaper. Firstly, I'd like to ask you about Gen. 3 products. It says June plan is, a target is for next June. Are you going to set a target for Chinese customers? You have talked about the Japanese OEM manufacturers as well in your presentation, but are you going to first target the Chinese customers?
When it comes to next year, Chinese customers are already fixed. They are official.
When it comes to Japanese domestic customers, we need to contact them. We have already doing that. We are already doing that this year. If these businesses come through, January will be more a product and more successful as a business. Whether it be China or any other overseas businesses, traction motor business scale as a whole, when it comes to Japanese auto manufacturers, they are going to launch their vehicles from now and for that, the larger scale of components, these traction motors are required. As the changes continue, there will be a restriction on the height, and there will be a request on shrinking or making the motors small from a Japanese domestic and European customers.
They are targeting 2027, 2028, and they will be giving us those requests to us as far as we can predict. So compared with Gen 2, Gen 3 products are much better. That is all from me. And plus, there are quite a few major changes happening in China. They are, they have started exporting their products, not just automobiles, but other products as well. They are exporting them. Of course, price are very strictly restricted, but there are some products that they would like to for which they would like to use Japanese products, according to our customers. For, products to be exported, Japanese products are preferred. When it comes to fans, for example, they would like to have a high-efficiency fans in order to avoid export-related problems.
So it's not that the cheaper, the better for Chinese customers, but this is as a result of growingly intensifying competition. Those advanced companies, such as those in Europe, maybe not in the United States, but when it comes to Southeast Asian countries, for exports, they have specifications for exports, and products have to be in our specifications for exports. We need to think about it very carefully, about what models that we should use for each of these individual countries and regions. There has been one person who bragged about everything about our business, and the person is now gone. Now, we have a very much more serious person in charge of this business. He is not going to be very, you know, optimistic about the future.
And we need to be able to use figures to convince everyone. We have many customers visiting and visiting our research and development facilities. Good products have to be, you know, regarded as such. And price doesn't have to be the sole point of contention or discussion. That's not something that I like very much. And some customers are very strict about making a payment, and some customers are not really willing to pay us. Some customers are not really willing to keep the deadlines with us. We have a GAC at Guangzhou, which is a very nice, very, very great company. They are export-oriented, and they are trying to establish a factory in Thailand, and they would like to partner up with us in Thailand, outside of China. Now, such companies are not really a problem at all.
Now, 300 companies used to be in the market, but now the 200 of them are gone in a Chinese automotive market, EV market. Only 100 are remaining in the Chinese EV market. Now, we are learning about how to survive in this business in China. And as a result, you know, our, you know, sales are down. Our sales may be down, but if you want to... if you are disappointed about this result, please make sure to sell your shares, of course, that would be no problem. And next question is about, you're talking about, companies going back to the Japanese market from overseas market and appliance and home appliance and industrial.
Do you have any ongoing cases?
This is concerning our customers, so I cannot disclose so much, but we have many companies returning back to the Japanese market from overseas due to various reasons. We have our factories, two of us, two of them, in fact, two of these factories are under construction. And they would like to use Japanese products when it comes to our customers for these pro- There are quite a few issues, like political issues. We're not really expert on that, but that's the type of trend, and the yen is being depreciated. So it is okay. It makes sense, business-wise, to produce products in Japan instead of overseas. And they have make... They are making those decisions to back- coming back to Japan, based on, c- after considering those risks.
American customers are requesting us to make our components in Mexico in exchange, under the condition that we will be their single-source supplier. When it comes to India, there are quite a few Chinese manufacturers going over there. In Thailand as well, there are Chinese manufacturers that are doing business in the country. Such phenomena are occurring here and there. As far as we are concerned, we have been making investment in China in a significant amount, and we are making a very stable profitability, enjoying a very stable profitability in China. Some things happen. War may occur or take place in some places in the world. We need to make sure to avoid drastic destructive damage to us by thinking ahead. That's all the thing we can do. We are in the business in 46 countries around the world.
If we are dependent upon a certain country, we will cause a significant damage or problem to our customers. We should avoid that situation at all costs. If customers are requesting us to make products in Japan, we will try to do that right away, and we would like to be a single-source supplier or sole vendor for that. That's what we say in the negotiations with such customers. As far as Nidec is concerned, it has become 50 years old this year. We have been doing various reforms on wages, for example, or salaries. We need to make sure that we are competitive enough in comparison with other companies in terms of salaries, et cetera, et cetera. We need to make work-life reform as well, work-balance reform as well.
As I've stated already, you know, we are now solely focused on our growth. That's not the case anymore. We need to make sure to generate very sound, healthy profit in any business that we do. In India, for example, this is going to be an investment for a large production of large motors. Now, we are transporting our technologies from overseas to India. This is fourth or fifth factories that we're going to construct. We're going to make a large-scale investment in India. We may be having some shortage of battery. Energy platforms are growing rapidly. As you can see from these figures, we have a joint venture for battery and production business. We need to establish... We have already established our supply chain for that business.
There are quite a few areas that could potentially grow in the future. We're not going to be dependent upon traction motors only. You may think that our share price may decrease because of the traction motor, but we need to make investment where necessary, and we grow after generating profit. When it comes to ACIM, they used to be having a very low operating profit ratio of 2% or even 3%. It has taken time for us to establish a very good management system. We have purchased a very good company. We made a lot of reforms, and I believe they will make wonderful contributions. We started our company with this small precision motor business. We have been highly dependent upon hard disk drive business, but now we have new businesses emerging.
We are going to make a focus on two-wheeler business. That will take time still. But still, we have been receiving many inquiries. I believe this business as well is going to make a very good contributions to us, and water cooling modules as well. Microprocessor, thermal, heating production will be going to be huge. Fans will be not enough to cool down this, these devices. This is a very expensive system, several million JPY, and we have been receiving a lot of inquiries for that as well. This is a very highly efficient, profitable business for us. And no matter how far we go, we will be a motor manufacturer, and we will be the world's leading motor manufacturer. We will be unbeatable in that regard. And all the, product, our products will be, installed with a motor or related component.
We are going to be number one, continue to be number one in this area. We're going to have high-efficiency induction motors as part of our business portfolio. This is an innovative, revolutionary products that we have invented or developed successfully. And we, and this SynRA motor has received multiple wonderful prizes, awards, and we have been receiving prizes, compliments from around the world. And customers are liking it, and this product is ranked number four, and you will believe it will occupy that first rank place, and 50% share is not going to be a dream in the future. This is something we are making that other companies cannot. You know, we are not dependent upon products that other companies can make easily.
You know, we're not going to be in the price reduction war with other companies by making such, easily copyable, imitatable products. We're not going to do that. Thank you.
Any other questions from anyone on the floor?
Thank you. This is Akizuki of Nomura Securities. I have two questions for you. Kishida, my first question goes to you. When it comes to automotive motor, you have purchased many companies overseas. How do you manage these companies? What will be the best or an ideal way of managing these companies? And you joined Nidec from the outside. How would you evaluate the way Nidec manages its o verseas business basis? That's my first question.
Thank you very much for your question. I believe you.
I myself have spent a year, last year, at one of the subsidiaries that we have purchased. I spent some time in Stuttgart, in Germany, up until I returned to Japan recently. When it comes to Nidec is full of challenges as a company. In my previous occupation, I was in Germany for a long time. A challenging spirit is here at Nidec. The strength to take on challenges, that, that's the best thing that we have compared with other companies. When it comes to regions, by region, a type of management, we're not doing that, and we have grown this far without doing that. I believe that's part of the essence of Nidec's strength. You usually go overseas to establish regional businesses as a part of the business network.
One thing that surprised me is that in Europe, for example, there is not really an organization to manage the entire business basis in Europe. It is all up to individual basis. That, that's one thing, and that's another. That's one area of improvement, I believe.
In any case, in the last two years, it seems as though actually the two years is 10 years, but it's always been exciting, and there's a lot of new things, one after another. I mean, there are deepness in the challenges, but the target, the, the goal that they're aiming for is, high, and it's, you know, very motivating. I'm not sure if I'm able to communicate that very well, but that's my honest feeling.
Thank you. My second question is for Chairman Nagamori. Your induction motor business, I think it's Reluctance Motor, actually, but, Reluctance Motor, you know, it's taken, you know, 10 years. I mean, don't say that easily. I mean, we did apply the, you know, principle, but we can't, you know.
You know, we have spent more time and more co-development cost for that induction motor. But you know, when you acquired Emerson's business, the reluctance motor technology was extremely important, and because of, as it was, you were not able to miniaturize it. So the question was: What kind of development did you do in order to make it smaller?
Well, we did build a R&D center in Taiwan, and Taiwan is, you know, quite known for motor research as well. And also, U.S., we have our engineers, they work together. And what I say is a reluctance motor requires no magnets, but you know, vibration is strong, so large noise.
Reduction motor, we used to just build a washing machine, but because it was too noisy, it was not good. So reduction motor has a slip, and it doesn't sink, so there's some drawback for that. And the induction motor itself is bad in efficiency, so we need to have highly efficient, synchronized, and a very little vibration. That's sort of the themes, the challenges that we have been working on over many years. And if you really are interested in details, you can actually look at our patent documents. I can go and talk about this for five hours. It's an amazing motor. So based on that, your strategy is to really increase your share based on that.
Is it M&A? Is it partnership?
I think, industrial motor is very much dependent on the relationship with the customers. Even if you have a good product, it's very difficult to, generate, sales right away. Well, U.S., you know, Americas, it's really, regulators. You know, America, has been, quite ahead in that, and same with Europe. So, it's not just efficiency and it's, you know, if, if the government, if the country supports it, the regulation supports it, then I think we'll be able to increase, you know, sales. But if the, the regulation is not so concerned about, efficiency or CO2, then maybe we will not be able to increase the sales. So but I think it's, we have come to the age where technology really makes a difference.
Thank you.
Then, we would like to take other questions. The person in the blue necktie.
My name is Naito from Citigroup Securities. So I have one question about E-Axle. So you have developed Gen. 3, and you're seeking for further cost reductions and acceleration, and you're spending, you know, more in R&D, so that was out of the need. So ahead of that, in Gen. 4 and Gen. 5, have you seen any changes in your strategies from before? So you talked about, you know, the any development going forward will be the modification for Gen. 3. So what is your projections in development for Gen. 4, Gen. 5, and the years after that?
So EV, I think one of the greatest effects of EV is, you know, people talk about CO2, but I think it's the miniaturization. The cars have been able to make it smaller.
The kei cars, I think this is where we see the greatest benefit, it is the kei cars. We, you know, if, you know, it talks about, you know, running about 500, 600 kilometers, you know, just, you know, in one fuel, one charging. You know, no one goes, takes many trips in Tokyo like that. About 10 years ago, I used to tell the floor shop worker: "What is it that you want the most?" And he said, "Mobile phone. Mobile phone." That's what they said. Now, today, people say: "I want car. I want a car." You know, there's not that many, you know, cheap cars, especially the OEMs don't want to develop these cheap cars. It's 30 kilowatt or 20 kilowatt, perhaps..
I think those would be above JPY 500,000, maybe at most, JPY 1,000,000. If we're able to launch that kind of a car, then the world become, will become more convenient. But if we produce cars like that, you know, OEMs will not be profitable. So that is why it's the large cars. Now, you have to have loads of batteries to run a big, large car. But a day-to-day car runs on only about, you know, 20, 30 kilometers per day. I don't think any really car would go anywhere from 100 kilometers or beyond. It's just like commuting to work. So that's why they don't. But they don't, you know, launch these types of cars. I think they should be putting more emphasis on that. But. And finally, we're beginning to see, you know, 17-kilowatt, but the car is still expensive.
But, so I don't think you can sell it like that, at that price. You have to, you know, offer cheaper cars. That's what I've been saying. So the cars are manufacturing kei cars, and there will be new cars, you know. So the Tesla is making money, from big cars, and that's why they're profitable. Now, smaller cars, people say it's not profitable, but actually, a car with a 30 kW, you know, 40 kW, you know, maybe you don't need to have an automated door. A car that runs is sufficient. And solar power, you know, there's a lot of sunlight, you know, so a lot of cars could run, with just solar power. So why is it that we don't go in that direction?
Car company.
Car companies don't want to compete with the customers. That's what they say. They have 600 kilometers or 700 kilometers. It costs JPY 4 million-JPY 5 million. If it's any high-end, it's like JPY 10 million. But that's not the main objective of EV. The objective is, in the past, when it was a cold day, moms would have to hand wash the clothes of your children, and that was a lot of labor, so that is why washing machines were developed. So companies should not be focused on just profitability, but they have to solve social issues. So they need to offer solutions. That's where they need to put more emphasis in. So they say, "Can we do hybrid?"...
You know, in Japan next year, I'm sure that the average temperature in the summer will exceed 40 degrees. So who are going to solve those issues? But if I say that, you know, if people resist and sometimes our share prices go down. So I shouldn't be talking about this too much, but that's the fe- you know, my passion for this company. And I think we have been able to develop a lot of convenient products. You know, for example, if you look at PCs, the reason why it's thin is because hard disks are thinner, and if you don't make the motor smaller, then you will not be able to produce these thinner hard disk drives.
In the last decade or two, you know, we have struggled, you know, we have not necessarily been always successful. And I think if we're able to build something even smaller, then we can improve efficiency, and we have finally been able to develop a brushless motor. But now, maybe with the cheap motors, efficient motors, we will no longer need brushless motors. You know, right now, we're able to generate 92%-98.5%. Brushless motor is, like, 90% or so. But, you know, the price is different because they don't, the cheaper ones don't require circuits. So, if we're able to, you know, develop these kind of products, we will be able to see even a more convenient society. So, you know, induction motor, same thing. With the current efficiency, induction motors are no good.
The efficiency is only about 70%, but if we can achieve an efficiency of 92% or 93%, I think it would achieve 95% or 96%, if we're able to continue with the development improvements, and it will be innovative. I know that, you're not too familiar with motors. I'm a motor person. I have loved, you know, motors all my life. But with such a low efficiency, I know that it will not be able to sell. So that is why, you know, wisdom is like that. You have new ideas, one after another, and you're able to achieve a certain goal. And I know that, you know, this is a huge development that would help us, generate a very large profit. Of course, you have to see our financial results.
I have to make sure that I'm just not... It's not a pie in the sky, but it's already been demonstrated with all these awards that we have won, so.
Thank you very much. Maybe we... I have one more question. In the short term..
Who's asking the question?
Excuse me, Naito from Citigroup. One more question. This is more of a short-term question, but ACIM, you're seeing improvement, and MOEN is driving that. In addition to that, the conventional appliances, I think, you can achieve a greater growth. So what about overseas in Japan with regards to appliances, and what about the market environment?
So appliances is not very good right now. And during COVID, you know, everyone purchased refrigerators.
The components that's used in the refrigerators, like compressors, are no longer doing good today. But, you know, COVID, that period, was strange in the sense that I was wondering why refrigerators were being sold so much. So I think this is, we will begin to see normalization eventually. But miniaturization, that sort of technology needs to be leveraged more and more. Everyone, you know, if they buy these large refrigerators, it takes up a lot of space, it's noisy, and so they will look for smaller refrigerators. So that's why you have to make the motor smaller, and that's why we need to do more R&D.
You know, I work, you know, so much in R&D, and, you know, I'm wondering why we get so criticized for this, and our share prices don't reflect that. But, you know, what we do, I know it will be rewarded eventually. So we will begin to see these new areas, one after another. For example, I'm trying to introduce this at the very beginning on the cover page. This is, this is ultra-large motor.
Can you explain this?
This motor is in Qatar. Oil energy field is where it is used. This is a new electric motor, high speed, ultra-size megawatt speed motor. It is a very expensive product. Several hundred million JPY is its price. This is the type of products that we are receiving the orders for. So far, it has been gas turbines that they used. It would generate a lot of CO2s. Now, the motor is installing these new products. CO2 is not really emitted. It's for the green revolution. Qatar Oil Energy's oil field is where it's going to be used. Now, still, they are extracting oil energy, and therefore, this is a very profitable business. Such applications are everywhere, emerging in large numbers in the world.
This is about JPY 5 billion per unit and about 50% profitability. Not many companies can produce these types of equipment. These other companies are, have to, you know, have to be subject to a lot of price reduction competition. This is the area, one of the areas we need to grow even further.
Thank you very much.
Thank you. Now, it is time for us to finish this meeting regarding Nidec Corporation's financial results for the first half of fiscal year 2023. Thank you very much, everyone, for your attendance today, despite your busy schedule. Thank you.