Fujikura : FY2025Q2 Financial Results Conference Call Q&A Summary

Nov. 13, 2025

Date and Time: Friday, Nov. 7, 2025, 16:30-17:45 Speakers: Naoki Okada, Director, President and CEO

Kazuhito Iijima, Director, CFO

• 1stHalf Financial Results and 2ndHalf Forecast

  Q1. I would like to ask about the operating profit forecast for Telecommunication Systems business in the second half of the fiscal year. The outlook is flat compared to the first half, is this due to production capacity constraints, or is the forecast being viewed conservatively?

  A1. Looking at the Telecommunication Systems business as a whole, the Engineering business experiences seasonal factors, such as reduced demand for construction work in Canada during the winter. Additionally, the exchange rate for the second half is expected to be 145 yen to the dollar, which assumes a stronger yen compared to the recent rate. Taking these factors into account, we recognize that the plan is somewhat conservative.

  Q2. I would like to confirm the growth rate of optical fiber cables. According to page 8 of the "FY2025 Q2 Topics," the data center business grew 2.7 times from FY2023 to FY2024, and is expected to grow 1.6 times in FY2025. On the other hand, if the average annual growth rate going forward is 20 - 30%, it could be perceived as a slowdown. Including changes in the competitive environment, is a growth rate of 20 - 30% for next fiscal year and beyond a reasonable figure?

  A2. The annual growth rate of 20 - 30% is an expected value based on forecasts of increased data traffic. Our actual results have exceeded this, especially as our focus on ultra-high-count optical cables has become a differentiating factor, leading to high profitability. While it is unclear whether the demand for all optical cables in the data center market is growing at the same rate, we recognize that demand for our optical cables is growing at an annual rate of more than 20 - 30%. We also recognize that competitors are working to increase their supply capacity, but due to the significant increase in demand, we cannot clearly grasp changes in the competitive environment at this time.

  Q3. According to the graph on page 8 of the "FY2025 Q2 Topics," the data center business appears to increase by 20 - 30% from the first half to the second half, while the infrastructure business appears to be flat. Is the plan for the second half conservative?

  A3. The reason for the flat outlook for the infrastructure business in the second half compared to the first half is that we have factored in the tendency for reduced demand for construction work in the Engineering business during the winter. Additionally, the supply situation will depend on how

  much of the shortfall in optical fiber can be procured externally and how much our productivity improvements will take effect. Taking these uncertainties into account, the outlook is somewhat conservative.

  Q4. As communication speeds within data centers shift from 800Gbps to 1.6Tbps, it appears that optical connectors are transitioning from MPO to MMC. Previously, it was explained that MMC accounted for about 10%. Could you share your view on the composition ratio of MPO and MMC connectors from next fiscal year onward, and on margin improvement due to changes in the product mix?

  A4. In the medium to long term, with the spread of generative AI, the number of connection points within data centers is expected to increase, and accordingly, the number of optical connectors used will also increase. Therefore, we believe the trend toward miniaturization of optical connectors will continue. On the other hand, considering that international standards for interfaces such as transmission equipment and transceivers are based on MPO, we do not expect a rapid shift to MMC. At present, we recognize that MMC accounts for about 10%, but we do not expect a sudden increase to 50% next fiscal year.

  Q5. Is it correct to understand that it will take about 2-3 years to transition to MMC?

  A5. We believe it is necessary to consider whether international standards will change in the future.

  Q6. Regarding the tight supply of optical fiber, to what extent could this become a constraint on sales expansion in Telecommunication Systems business from the second half onward?

  A6. We feel that the supply-demand balance for optical fiber is tight worldwide, but as mentioned earlier, we are evaluating optical fibers from multiple manufacturers and working to secure usable optical fiber. Meanwhile, the new SWRTMplant at the Sakura works, which was completed in February this year, is still in the ramp-up stage in terms of productivity and yield, and retains some spare capacity. We hope to increase production volume as soon as possible. However, demand in the data center market has greatly exceeded initial expectations even in the past few months, and it is difficult to procure enough optical fiber or increase productivity to meet all customers' demands. Therefore, we are considering additional measures, including accelerating the launch of the next-generation plant and frameworks with the U.S. Department of Commerce.

  Q7. Sales in Telecommunication Systems business in the second quarter increased by 10% compared to the first quarter, and profits also showed strong growth. Was there any special factor in the strong performance in the second quarter?

  A7. From the first to the second quarter, demand in the data center market continued to be strong, and the effects of capital investment have steadily materialized. We recognize this as growth based on solid grounds.

  Q8. There was no comment on HDDs in the Electronics segment, but could you share the current situation?

  A8. Demand for HDDs in the data center market is also high, and we are increasing production capacity. However, the proportion of HDDs in the Electronics segment is small.

  Q9. Looking at the full-year earnings forecast this time, the outlook for equity-method investment profit has been revised downward from the previous forecast. I believe profit from US Conec is significant, but could you explain the reason for lowering the forecast from the previous outlook?

  A9. As of August 7, the full-year outlook for equity-method investment profit was 8.9 billion yen, but we made a slight revision based on first-half results. There has been no change in the outlook for US Conec, which accounts for most of the equity-method investment profit.

• Capacity Enhancement

  Q10. The data center market is expanding with more opportunities. As inference-type systems are adopted, the number of GPUs per node increases. With CPO, the number of switches is expected to increase by 16 or 18 times. This could further expand the demand for optical connectors and optical cables. While it may be possible to enhance the capacity of MT ferrules and optical connectors, is there a risk of running short on optical cables and optical fiber? Can you meet demand by procuring from third parties? Given that the effect of the next-generation plant announced in August (45 billion yen investment) will not be seen until FY2029, how will you bridge the supply-demand gap until then?

  A10. We recognize that there are many opportunities in the data center market. For optical connectors and MT ferrules, large investments are not required, and the lead time to ramp up is short, so our policy remains to enhance capacity in a timely and appropriate manner. On the other hand, regarding the shortage of optical fiber, until the next-generation plant is operational, our policy is to procure optical fiber from other companies. We have already started procurement from some sources and are evaluating new suppliers and whether they can be applied to SWRTM/WTCTM. However, if demand increases further, external procurement alone may not be sufficient to meet all demands. We are also working to increase output by improving productivity at our facilities, but capacity shortages remain, so we must consider optimal allocation of limited resources. For data centers, demand for high-performance optical fiber cables is high, and we prioritize areas where we can leverage our unique technological strengths. We are also proceeding with price revisions in response to supply and demand.

  Q11. Regarding the growth rate of the data center market, it was mentioned that the average growth rate is 20-30%. Can you share your outlook on whether you will be able to meet the increasing demand for optical cables going forward?

  A11. We are currently investing 45 billion yen at the Sakura works, based on an assumption of 20-30% annual growth. Until the next-generation plant starts operation, we plan to respond through external procurement of optical fiber and productivity improvements at existing facilities, but it

  is uncertain whether we can maintain 20-30% annual growth during this period. We aim to achieve sales growth through strategic responses, including focusing on areas where we can leverage our technological strengths and implementing price revisions.

  Q12. Is it possible to use Chinese-made optical fiber for SWRTM/WTCTM?

  A12. Depending on the market and customers, it may be difficult to use Chinese-made optical fiber, so careful judgment is required.

  Q13. Regarding the production capacity of MT ferrules, the previous briefing mentioned a 30% capacity increase. What are the plans for capacity enhancement in the second half of the year?

  A13. For MT ferrules, we are working to increase production in FY2025 to 1.5 times that of FY2024.

  Q14. I would like to reconfirm the capacity of MT ferrules. My understanding was that capacity was tripled year-on-year as of Q4 last year, and would be 1.3 times as of Q2 FY2025. Are you planning to further increase capacity to 1.5 times? Does this mean production volume will increase from the first half to the second half?

  A14. Your understanding is correct. As of the previous quarter, we were conservatively aiming for 1.3 times, but given the increase in demand, we now plan to raise it to 1.5 times. Production volume of MT ferrules will increase from the first half to the second half.

  Q15. Regarding the enhancement of MT ferrules, ideally you would like to increase capacity further, but is the increase limited to 1.5 times due to the shortage of optical fiber?

  A15. Since there is also a business for selling MT ferrules alone, the enhancement of MT ferrules and the supply-demand situation for optical fiber are independent matters.

• Signing the Framework Agreement with the U.S. Department of Commerce

Q16. Regarding the framework with the U.S. Department of Commerce, the original text from the White House refers to AI infrastructure investment, but does not mention the word "demand." Please explain the background for Fujikura interpreting this as $20 billion in demand.

A16. Since the Fact Sheet explicitly mentions the supply of optical cables, we understand the $20 billion as demand.

Q17. Regarding the agreement with the U.S. Department of Commerce, when will you be able to discuss details such as candidate sites for capital investment, scale, and the presence or absence of subsidies?

A17. This matter is currently under consideration. While it is not necessary for the production base to be in the U.S., considering that the consumption area is the U.S. and the impact of tariffs, there is a possibility of choosing the U.S. On the other hand, producing in Japan has the advantage of being able to introduce the latest technology. Since it is not guaranteed that the entire $20 billion demand will be allocated to our company, we would like to examine various conditions and

proceed with concretization in the next medium-term management plan.

Q18. Up to now, in response to BEAD, you have procured optical fiber domestically in the U.S. and built SWR production lines. Is the signing of the framework agreement with the U.S. Department of Commerce an addition to existing initiatives, or is it a separate matter?

A18. We recognize this framework as a U.S. government-led AI infrastructure project. It is unclear whether U.S. hyperscale data centers will be involved, but we consider this to be a project at a different stage from our previous business.

Q19. While Fujikura has a high share in the telecom market in North America, it seems you have not entered much into Tier 1 telecom carriers. Will this AI infrastructure initiative be a tailwind for business with U.S. telecom carriers?

A19. We are very honored that our SWRTM/WTCTMhas been selected by the U.S. government. We understand this is the result of our high evaluation in U.S. hyperscale data centers. With this increased recognition, we expect infrastructure demand for data center interconnect (DCI) to rise, and business opportunities with Tier 1 telecom carriers to increase. Verizon has certified our Air-blown WTCTMfor DCI, and including this initiative, our technological capabilities are being increasingly recognized. We hope to leverage this recognition for future business opportunities.