100 Years of Nikon Vol.I

Contents 100 Years of Nikon Vol. I

Publishing the 100 Years of Nikon

Kazuo UshidaRepresentative DirectorPresident

Chapter Born by Consolidating Japan’s Optical Technology1. (1917tol945)

Section 1. Founding......... 4

A. Events leading up to our establishment..........4History leading up to the development of the optics industry / The birth of achromatic lenses and optical glass / The optics industries in France, Britain, and the United States / The sudden rise of German optics /Optical instruments and the "Century of War" / Japan's optical technology and optics companies

B. The birth of Nippon Kogaku..........11World War I and the disruption of imports / Koyata Iwasaki's decision / Establishing Nippon Kogaku / The new Oi Plant / Changes to the management structure

C. Appointing German engineers.......... 17The introduction of German optical technology / Increased appointment of German engineers /The roles and achievements of the German engineers / Acht's lens designs

Section 2. Acquiring and Developing Technology.........24

A. Products and technology during the founding period..........24

Acquiring advanced technology / Products during the founding period

B. Internal production of optical glass..........26Restarting glass production / Increasing production of optical glass

C. Evolution of R&D..........28Research into basic technology and research themes / Research into inspection methods and standards

D. Development of military optical instruments..........30Periscopes / Rangefinders / Directors

E. Commercial products..........34Binoculars / Astronomical telescopes / Measuring instruments / Microscopes and scientific equipment / The birth of Nikkor lenses / Supplying photographic lenses to the Precision Optical Instruments Laboratory I Cine lenses and stereoscopic photo-sculpture / Participating in the Optical Industry Promotion Trade Exhibition

Section 3. Business Fluctuations Caused by National Policy......... 42

A. Declining results and revamping business.......... 42Washington Naval Conference and the Great Kanto Earthquake /Execution of various measures by the new top management / Improving employee relations

B. Coping with demands for increased production.........47Changing to a wartime footing and a sharp increase in orders /Completion of the Oi New No. 1 Building and building more factories / Strengthening our fund-raising capacity / Acquiring labor and labor policy / Changes in business results and management

C. Struggles until the end of the war.........55Deteriorating war situation and business results I Evacuation of factories and air raids

Chapter

2.Rebirth as a General Opdeal Equipment Manufacturer (1945 to 1959)

Section 1. Resurrecting the Company during the Postwar Reconstruction Period (1945 to 1950)......... 60

A. Deciding to keep the company going.......... 60The decision to rebuild with a smaller business I Postwar Action Council and the second restructuring of personnel / Establishing the Commercial Goods Production Subcommittee / Production plans and the third restructuring of personnel / Authorization to convert to commercial production and moving up development of cameras

B. Starting production and struggles at the Oi and Shiojiri Plants.......... 66Starting the production of binoculars I Developing the "Crisis Overcoming Production Movement" /Promoting the Production Reconstruction Movement

C. Reconstruction plan and acquiring funds.......... 70Authorization of the reconstruction and improvement plan / Troubles with financing

D. Labor unions and labor policy.......... 73Forming of an employee labor union and signing a labor agreement /Progressive wage and safety and hygiene management systems

E. The effects of occupation policy.......... 76Restricted company designation and ending of military compensation / Reparation designation and its cancellation ! Forming an industry organization / Reforming top management because of the purge of public officials I Change in Occupation policy and lifting of designations

E Closing of factories because of the Dodge recession.......... 80A reversal of fortune because of the Dodge Line / Closing the Shiojiri Plant and restructuring personnel

Section. 2. The Optical Products that Helped the Company Convert to Commercial Production......... 82

A. Various types of optical equipment..........82Restarting business with commercial products / Binoculars were our first commercial products /The start of binocular exports carried our business / Entering the eyeglasses market by utilizing our lens technology I Contributing to the rebuilding of Japan with surveying instruments /Contributing to medicine and research with microscopes /Domestically produced polarization microscope and the birth of the Model S /Profile projectors that were used in factories / Contributions to astronomy and solar observation

B. Improving optical technology and Nikkor lenses..........96The evolution of glass manufacturing technology /Joint production of high refraction index and low dispersion glass by five companies !Development of coating and optical design technology / Development of Nikkor lenses

Section 3. The Birth of Nikon Camera and the Worlds Reception......... 102

A. Nikon I and the birth of the Nikon brand..........102Deciding on camera development I Concentration on 35mm compact cameras / Troubled prototype development / Release of the Nikon 1 / Refining the Nikon I - the M and S / A complete lineup of camera lenses

B. World recognition for Nikon and Nikkor.......... 110LIFE magazine and Duncan / Praise from the New York Times

C. Unflinching praise for the Nikon S2 and SP.......... 114The wall of German dominance / Challenging with the Nikon S2 / Lens refinement and the motor drive / Praise for the S2 / Development of the high spec Nikon SP for professional use / The Nikon SP earns high marks / Nikon S3 and S4 were cameras for the general public / Quality inspection supported our strong reputation

D. Expansion of Sales/Service in Japan and Abroad.......... 123The economic boom created by the Korean War and the camera industry I Strengthening domestic sales competitiveness I Establishment of the Nikkor Club / Cultivating the US market / Providing technical services overseas / Export expansion beyond North America

Section 4. Stabilizing the Management Base (1950 to 1959)......... 132

A. Recovery of business results and the ending of the post-war transformation.......... 132Revaluating assets and recovering business results / Completing the post-war clean up

B. Establishing a new business and operating structure.......... 134Advancing the modernization of production / Introducing quality control methodology I Establishing a quality control system / Human resource development for improving technologies and skills / Adding a welfare program and facilities

C. Another round of stagnant business.......... 141Recording losses in net income / Rejuvenating the company

Building a Global Brand (1959 to 1978)

Chapter

3.

Section 1. The Birth of the Nikon F......... 146

A. A new flagship model for the high-end market.......... 146The Nikon F that opened up a new era / Starting SLR development I Development of the Nikon F I Development of lenses for SLRs / A wide assortment of accessories and the Nikon F Photomic series I Refined design

B. Best in the world.......... 154Launch promotions and winning praise / The Olympics and Nikon I Nikon F, the face of press cameras

Section 2. Management during Rapid Economic Growth (1959 to 1973).........A. Business expansion.......... 158

Rapid economic growth and the optical industry / Sharp growth in business performance I Changes at the top and reforms in management structure / Establishment of the guiding precepts / Relocation of headquarters to central Tokyo

B. Modernization of management.......... 164Adoption of a business division structure / Deciding on a long-term plan I Strengthening the research system I Expansion and penetration of the “Nikon” brand / Strengthening our financial structure / Division in the union and establishment of a modern labor-management relationship I Reduction of working hours and measures to improve the work environment / Promotion of anti-pollution measures

C. Establishing a production system.......... 174Modernization of production management / Oi Plant’s reorganization and expansion of production bases / Establishing the Yokohama Plant / Opening the Sagamihara Plant / Establishing 3 production subsidiaries

D. Enhancing design and production technology.......... 180Using computers in optical design / Updating lens coating technology - from single to multi layer / Advancing aspherical surface processing technology / The completion and evolution of continuous melting equipment / From automated parts processing to NC adoption / Improving efficiency of assembly, painting and inspection /

E. Overseas development.......... 186Export expansion and reinforcing corporate structure / Constructing a distributor network /Establishing the EPOI and capital participation / Establishing a marketing center in Europe

Section 3. Overcoming the Oil Shock (1973 to 1978)......... 192

A. The demise of rapid growth.......... 192Overcoming the first oil shock / Worsening business performance and counter-recession measures

B. Adoption of new management methods.......... 194Introduction of a CA system / Adoption of management by objectives / Creation of a new production control system / VE and VIP / Developing small group activities

C. Reforming the Instruments Division.......... 199Separating the Instruments Division / Improving the structure and profitability of the Instrument Division / Developing the Industrial Supplies & Equipment Division

D. Responding to yen appreciation.......... 202Converting to yen-denominated transactions / Further yen appreciation and securing international markets / Recovery in business performance

158

Section 4. Expanding the Camera Business and Growth of the Eyeglass Business......... 204

A. Product development to attract a wide range of users..........204The rapid growth of Japan-made cameras / Rising popularity and market overheating I Introducing the Nikkorex / Releasing the Nikkormar and expanded single lens reflex sales I Further expanding our lineup of interchangeable lenses / Developing the Nikonos underwater camera / Developing an 8 mm cinema camera /NASA cameras and Antarctic expeditions

B. From Nikon F to the F2..........215Developing the F2 / The Nikon F2 launch / Camera electronification / Developing autofocus technology / Introducing the Al system / Further electronification and miniaturization

C. Experimenting with new materials..........221Developing ED glass / Developing EP technology

D. Expanding camera sales and service networks..........223Strengthening ties with domestic retailers I The domestic sales structure and strengthening sales promotion activities I Improving service systems

E. Becoming a comprehensive eyeglass manufacturer..........228Sudden expansion of the eyeglass business / Establishing a domestic sales network / Entering the market for eyeglass frames I A complete line of eyeglass lenses / Development of plastic lenses /Special order lenses and laboratories custom-ordered lens / Promoting the slogan “Nikon also does eyeglasses” I A unique variety of ophthalmological and optometry instruments

Section 5. Instruments Business Progression and Flowering Technology......... 238

A. Progress of the instruments business..........238From rapid growth to a slump / Shift to multi-function microscopes / Innovating the CF system for microscope optics ! Profile projector evolution and the development of encoders /Expanding demand for surveying instruments and intensifying competition / Large-scale astronomical telescopes / The diffraction grating spectrometer I Consignment of development of measuring and measuring reference equipment / Progress of telescopes and binoculars

B. Advancing into semiconductor-related fields..........252Developing the ruling engine / Developing length measurement technology using light wave interference /Developing a frequency-stabilized laser / Developing the Ultra-Micro-Nikkor / Ultra-Micro-Nikkor technology ! Developing semiconductor measuring and inspection equipment IMoving into the semiconductor manufacturing equipment business / Focusing on the step-and-repeat method /Receiving orders from the VLSI Technology Research Association IDeveloping elemental technologies and the delivery of Unit 1

Chapter Establishing a New Pillar of Business 4. (1978 to 1988)

Section 1. The Start of the Semiconductor Lithography Equipment Business.........268

A. The Rapidly Advancing Semiconductor Lithography Equipment Business..........268Evaluation of the First Model / The Launch of a Commercial Model /The Pursuit of High Resolution and High Throughput / A Sharp Rise in Business /The Development of Related Product Lines

B. Structural Improvement to Cope With Our Expanding Business..........277Expanding the Yokohama Plant and Establishing the Kumagaya Plant INSR Projection Lenses and Expansion of the Sagamihara Plant IStructural Improvements and Response to the Semiconductor Market Recession / Sales and Service Base Improvements / Placing Emphasis on Securing Personnel

Section 2. Creating a Management Base Under Stable Economic Growth (1978 to 1983).........286

A. Introduction of a New Management Plan..........286Deciding the Long-Term Plan Details / Business Measures to Return to Stability IFormulation of a Long-Term Management Framework / Six-Year and Three-Year Plans

B. Intensifying Technology Development..........291The Technology Center Concept / Strengthening the Research and Development System /The Launch of the P90 Investigation Project and FCP

C. Improvement of Production and Sales Bases..........295Investing in Operating Locations I Direct Sales in the North American Market / Direct Sales in the European Market /

D. Management System Reform and Improvement..........299Reforming the Human Resources System / Strengthening the Consolidated Management System and Finances ! Development of TCD Activities

Section 3. The Search for a New Nippon Kogaku (1983 to 1988)........304

A. Further Focusing on Semiconductor Lithography Equipment..........304Management Structure Reform / Concentration of Management Resources in the Precision Equipment Business I Shifting Production to Subsidiaries / The “Never-Ending Quest for Superior Semiconductors”

B. Management Under the Silicon Cycle..........307Encountering the Semiconductor Recession and Yen Appreciation I Dealing with Yen Appreciation /Dealing with the Silicon Cycle / Another Growth Phase

C. Promotion of New Business......... 311Development of Electrochromic Devices I Establishment of the Biomedical Engineering R&D Center /The Information Storage Products Division and Magneto-Optical Discs /Custom-Order Sales of Precision Optical Components IEntering the Energy Generation Field through Custom-Made Equipment

D. Advanced Application of Computers..........317Improved Administration & Operation System I The Introduction of CAD/CAM Systems

E. Company-Wide Promotion of the Nikon Corporate Identity..........319The Start of NCI Initiatives / Ramping Up Activities Throughout the Company / Creating a New Corporate Philosophy / Determining Fields of Business

Section 4. Responding to Structural Changes in the Camera Market........324

A. The Changing Camera Market..........324The Sudden Rise of Compact Cameras / The Second Oil Shock and Yen Appreciation IPerformance Trends and Responding to Structural Changes

B. SLR Product Lines and Technological Innovation..........328Development of the Flagship Nikon F3 / Launch of the First Entry-Level Model Nikon EM /Development of the High-Speed Shutter / Multi-Pattern Metering / Development of Autofocus SLR Cameras I Shift of Interchangeable Lenses to Zoom and Auto Focus / Development of the Nikonos IV and V / The F3 and NASA Models

C. Entering the Compact Camera Market......... 336Development of the First Compact Camera / Creation of the L35AF Series

D. Improving the Photo Products Division Structure..........338The Reconstruction Plan and the S Plan / Improvement of Production Methods and Technology

E. Development of Electronic Imaging......... 340From the Release of the Video Camera to Electronic Imaging /Development of an Image Transmission System for News Organizations /Development of Electronic Cameras, Scanners, and Printers

Section 5. Development of the Instrument and Ophthalmic Products Business........344A. Development of the Instrument Business..........344

Overseas Expansion and the Rise of Optoelectronics I Biological Microscopes / Industrial Microscopes / Measuring Instruments / Transfer of Encoders to the Instruments Division / Surveying Instruments

B. New Developments in the Ophthalmic Products Business......... 353Operating Under Intense Market Competition / Ophthalmic Lenses I Ophthalmic Frames IOphthalmological and Optometry Instruments / Expanding the Customer Base of our Telescope Business

Chapter The Shift from Nippon Kogaku to Nikon Corporation 5. (1988 to 1999)

Section 1. Company Name Change and the Development of a New Management........362A. CI Initiatives and the Company-Wide Six-Year Framework..........362

The Birth of Nikon / The Nikon Image / Announcement of the "Company-Wide Six-Year Framework" /The "Comprehensive Base Plan" and the Establishment of the Mito Plant

B. Management Based on the Company-Wide Six-Year Framework and the First EmergencyManagement Measures..........367Collapse of the Bubble Economy and Yen Appreciation /The Precision Equipment Peak, and the Continuing Camera Slump / Continuing to Nurture New Forms of Business / Continuing to Shift Management Resources to the IC & LCD Equipment Division / Expansion of Overseas Sales Bases / Establishment of the Emergency Management Committee

C. Expansion and Reorganization of Corporate-Wide Development Department..........375Dissolution of the Headquarters to Aid Business Development /The R&D Theme of the Research & Development Headquarters I Lens Processing for Precision Equipment /Camera Lens Processing Efforts

D. Innovation Campaigns to Strengthen the Company..........381Production Innovation Campaign and the TP Prize IThe Corporate-Wide Development Innovation Campaign to Uncover New Business IInnovation Campaign for the Design and Development Department that Set Numerical Targets /The Administrative Innovation Campaign

E. The Management Measures Committee and the Management Innovation Campaign..........Shuffling ofTop Management and the Establishment of the Management Measures Committee /The Management Innovation Campaign for Company-Wide Deployment

E Efforts to Transform Business Administration..........388Our Vision for Human Resources with an Emphasis on Achievements and Autonomy IConstruction and Adoption of a Full-Fledged Consolidated Management Structure /Integrated Reform of Management and Information Systems /ISO9001 Introduction and Improving Environmental Management

G. "Selection and Concentration" and Further Downturns in Performance..........393Establishment of "TOP Project System" Under the Direct Control of the President IOrganizational Restructuring through "Selection and Concentration" IA Further Downturn and Emergency Management Measures

Section 2. The Arrival of the Lithography Equipment Era........ 398

A. Our Top Business..........398Overcoming the Two Silicon Cycles / Separation of the Customized Equipment Business IIntroduction of the Business Headquarters System / The New NRCA R&D Base

B. Diversification of Semiconductor Lithography Equipment..........403Instability in the Japanese Semiconductor Industry / Higher NA and Shorter Wavelength Light Sources / Approaches to Achieve Miniaturization / Improvements in Productivity IIntroduction our Wavefront Aberration Measuring System

C. The Development of Scanners..........409Proposal of a New Exposure Method I The Birth of the NSR-S201AI Further Development of Scanners

D. Taking on the LCD Lithography Business..........412The Evolution of LCDs / The First Model NSR-L7501G LCD Lithography Equipment / The Introduction of the FX Series

E. The Development of Measurement and Inspection Equipment..........415Wide-Ranging Product Groups / Abolishment of the Measurement and Inspection Equipment Division

F. Establishing a Production System..........416The Expanding Kumagaya Plant / Shifting Toward Lithography Equipment Business at Production Subsidiaries

G. Improving the Sales and Service System..........421Improving the Service System for Korean and Taiwanese Manufacturers / Improvements to Sales and Service Company Bases

Section 3. Camera Business Struggles........ 424

A. Pressure due to Drastic Market Changes and Yen Appreciation..........424Turning Points in the Japanese Camera Industry7 / The Yen Appreciation Crisis IFrom Cost Reductions to Strengthening and Improving Our Fundamental Structure / Restructuring of US Bases

B. Overseas Production and Procurement.......... 430Overseas Production in Thailand / Overseas Procurement Centered on Southern China

C. Development of the Sales System..........433Direct Sales in Japan / Development of Emerging Markets and a Global Four-Unit Structure

D. Continual Introduction of New Products to Recover Business Performance..........435Challenging our Competition with a Full-Fledged AF SLR I New Models to Counter Market Maturity I Evolutions in Interchangeable Lenses / Compact Cameras Facing Appreciation of the Yen

385

E. New Initiatives with the APS Camera......... 441Developing New Standards Jointly with Leading Film and Camera Manufacturers /The Pronea SLR and the Nuvis Compact Camera I The Spread and Eventual Demise of APS

Section 4. Preparing for the Digital Image Age........444

A. Promoting the Electronic Imaging Business..........444Establishment of the Electronic Image Engineering Division / Introducing Competitive Film Scanners IReorganization to Create the Electronic Imaging Division

B. Pushing Our Way Into the Digital Camera Market..........448The Rise of the Digital Camera Market / Sales of Digital Cameras for Business Applications /Introducing the Coolpix to the General Consumer Market

C. Initiating Our TOP Project..........451Accelerated Development of Digital Cameras under the Direct Control of the President I The Birth of the COOLPIX 900

D. Birth of a New Division and the Coming of the Digital Camera Age..........454Merging of the Photo Products and Electronic Imaging divisions / Entering the Digital Camera Era

Section 5. Applying "Selection and Concentration" to the Instruments Business........456

A. Enforcing Structural Reform and the Breakup of "Instruments" ........... 456Measures to Improve Profitability / A Prelude to the Breakup of the Instruments Division ISeparation of the Surveying Instruments Business and Launch of the Micro Science Division

B. Striving for New Businesses..........460Active Development of New Products and Businesses / Telepathology Systems to Aid Medical Treatment IEntering the Scanning Probe Microscope Market through a US Partnership /Shifting Three-Dimensional Coordinate Measuring Machines to In-House Development /Cervical Cancer Screening Device Using Al

C. Trends of Conventional Products..........466Microscopes: Confocal Microscopy and Infinity Optics I Measuring Instruments: The Nexiv Video Measuring System / Surveying Instruments: System Development and GPS Surveying ! The Start of Microscope Production in China / Measurement and Inspection Equipment: Expansion Based on the OPTISTATION

Section 6. Applying "Selection and Concentration" to All Businesses........472

A. The Continual Struggle for the Ophthalmic Products Business..........472Poor Performance failing in shift to Direct Sales / The Adoption of Plastic Eyeglass Lenses /Overseas Brands to Enhance Our Frames and Sunglasses Business /Ophthalmological and Ophthalmic Instrument Product Groups /Restructuring and Separation to Make Independent Businesses

B. Accelerated Overseas Deployment for the Binoculars Business..........479A Downturn in the Stagnant Domestic Market / Establishment of the Binocular & Telescope Products Division and Revitalization of Business / Popularity of the Fieldmicroscope

C. The Specialized Machinery Business New Incarnation as an Independent Division..........483Independence from the Industrial Supplies & Equipment Division / Full-Scale Entry Into the Space Business / Active Product Development

Chapter Rapid Growth Triggered by the Rush of New Digital6. Technology (1999 to 2008)

Section 1. Introduction of the In-House Company System and Creating a Global Organization (1999 to 2003)...........490

A. Globalization and New Digital Technology.......... 490Accelerating Globalization of the Economy / Fluctuating Business Performance and the IT Bubble

B. Organizational Restructuring Upon the Introduction of the In-House Company System.......... 492Five Keywords for a Global Company /Introduction of the In-House Company System co Make Business Operations More Autonomous and Agile / Management Structure and its Revision Under the In-House Company System / The "Vision Nikon 21" Vision Statement / Business Restructuring into Separate Companies and the Reorganization of Group Companies /Establishment of the Customized Products Division

C. Preparing Systems to Become a Global Organization.......... 499Establishment of a Consolidated Management Structure I Development of IR Activities /Full-Scale Utilization of the Internet

D. Drastic Changes to the Personnel System.......... 503New Personnel System Aiming for an Autonomous Professional Group /A Performance-Oriented Human Resources System I Introduction of the Free Agent and Open Recruitment Systems / Severance Pay and Retirement Pension Systems Affected by Global Accounting Standards IThe Fellow System to Recognize Our World-Class Engineers I Establishment of the Nikon Staff Service Corporation / Establishment of Nikon Tsubasa Inc. / Establishment of the Post-Retirement Reemployment System

E. A New President and the IT Recession.......... 509The CEO and COO Systems for a New Management Structure /Emergency Management Measures Upon the Collapse of the IT Bubble / Measures to Drastically Reduce Personnel

Section 2. Achieving Maximum Profit through Rapid Growth(2003 to 2008).......... 512

A. Dramatic Improvements in Business Performance.......... 512The Long-Term Boom in the World Economy IThe Accelerated Use of Digital Technology Due to the Popularization of the Internet IThe Potential for One Trillion Yen in Sales with the Sharp Recovery in Business Performance

B. The End of Tough Reforms.......... 514Creating a New Brand Symbol I Completion of the Oi West Building

C. Operating Under the New Vision.......... 515Reshuffling of Top Management and the Concentration of Decision-Making /A Weekly Reports to Speed up the Sharing of Information / Improving Development and Productivity I Formulation of a New Vision to Reform Corporate Culture

D. Structural Reforms to Management.........520External Announcement of our Medium-Term Management Plan / CSR Initiatives: Compliance and Social Contributions I Improving Corporate Governance /Reforms to the In-House Company System Making the Head Office Departments under the Direct Control of the President

E. Corporate-Wide Development Departments to Cultivate New Business..........524Research and Development under the In-House Company System /Utilizing the Business Development Center as an Incubator for New Business /Business Development at the Core Technology Center I Development of Large Image Sensors IInnovating Our Lens Technology

E Reorganization of the Sagamihara Plant and the Development of Lens Materials.......... 528Reorganization of Glass Production and Lens Processing Departments and Closer Cooperation with Hikari Glass / The Development of Optical Glass for Lithography Systems / The Development of Fused Silica Glass and Fluorite / The Development of Environmentally-Friendly Glass / The Development of Glass for Molds /The Establishment of the Glass Division

G. Constantly Striving for New Business..........532Promotion of our CMP Business / Optical Engines for Projection Displays IStarting Production of Substrate Glass for Photomasks

Section 3. The Rapid Growth in Digital Cameras.........536

A. The Debut of the Nikon DI ..........536Launch of the Nikon DI: The Start of the Digital Age I Delivering High Specifications to Satisfy Professionals / Favorable Evaluations Advancing Us to the Forefront of the Competition

B. The Shift from Film to Digital..........539Advances in Digital Cameras beyond Industry Expectations /The Entry of Electronics Manufacturers and the Withdrawal of Some Camera Manufacturers /Digital Cameras Redefining the Concept of Photographs

C. Rapidly Improving Business Performance and Business Management Reforms..........544More than Quadrupling the Scale of Business in Three Steps /Factors Related to Rapid Improvements in Business Performance / Organizational Reforms and Faster Business Operations / Production, Procurement, Sales Innovation, and Information Infrastructure Improvements /Development of a Marketing Strategy / Halting the Development of New Film Cameras

D. The Evolution of the Development of Digital Camera Products..........551Responding to the Sharply Increasing Number of Models in Development / Product Development Focusing on Design / Digital SLRs Lineup by Grade Segmentation / Interchangeable Lenses and Accessories /Compact Digital Cameras Assuming Penetration of the Nikon Brand IVarious Advanced Technologies to Improve Image Quality

E. Responding to the Sharp Increase in Production Volume and Shifting Overseas..........559Expanding Overseas Bases in Response to Yen Appreciation and Sudden Increases in Production Volume /Developing Nikon Thailand as the Main Factory /The Establishment of Nikon Imaging (China) Co., Ltd. as a Chinese Production Base /The Introduction of an SCM System to Minimize Inventory / Further Advancement of Overseas Procurement

E Systems and Structural Reforms to Deal with Rapid Increases in Sales Volume..........563Shifting to a Five-Base Structure / Consolidation of Service Bases /Integration of Domestic Sales and Services and Contributions to Photography Culture /Operation of the Yokohama Logistics Center / Consolidation of US Logistics Bases /Drastic Reforms to the European Sales Structure for a Unified Market /Improving the Sales Networks of Emerging Countries

Section 4. A Turning Point in the Precision Equipment Business........570

A. Overcoming the Collapse of the IT Bubble and Returning to Growth..........570Slowdown of the Semiconductor Lithography System Business and Expansion of the Liquid Crystal Lithography System Business I Organizational Restructuring to Streamline Operations I Nikon's Largest Ever Patent Dispute

B. Semiconductor Lithography System BusinessFacing Business Environment Degradation..........575The Semiconductor Market Encountering the Rise of the US, Korea, and Taiwan /From Steppers to Scanners, and KrF to ArF /The Development of Immersion Lithography Systems to Satisfy Higher Market Needs IStriving Toward the Next Generation of Lithography System / Bolstering our Non-Critical Layer Lithography System I Adding Network Functionality to the NSR Series

C. Continuous Expansion of the Liquid Crystal Lithography System Business..........581The Rising LCD Panel Market I The Development of Multi-Lens Array Systems I Responding to Plate Enlargement I Increasing the Resolution of Small to Medium LCDs I Logistics Initiatives IImproved Business Results by Expanding Scanner Sales

D. Improvements to Production Bases to Increase Production Capacity..........587Expansions to the Kumagaya Plant and Opening of the Yokosuka Branch IBoosting the Capacity of Production Subsidiaries /Combining our Machining Workshops and the “One Company, One Business” Initiative

E. Boosting the Sales and Service System..........590Entering the Refurbished Equipment Business / Improving Services in Asia and China IUniform Management of Repair Parts

Section 5. The Instruments Business with Increasing Stability........592

A. Reforms Driven by the Instruments Company..........592Firm Business Performance and the Push toward Direct Sales and Digitization /The Organizational Structure of the Instruments Company

B. Gradual Renewal of our Domestic and Overseas Sales and Service System..........595The Establishment of a Three-Region System of the US, Europe, and Asia /Enhancing Direct Sales in the Domestic Market /Establishing New Sales and Service Bases in the US, China, and South Korea /Opening the Nikon Imaging Center in Cooperation with Universities and Research Institutions

C. Major Product Group Trends..........600Microscopes: Satisfying Demands for the Recording and Analysis of Digital Images IMeasuring Instruments: Strengthening the NEXIV Lineup /Measurement and Inspection Equipment: Focusing on Auto Macro Inspection Systems

Section 6. Business Growth through Creating Business Divisions and Separate Companies........604

A. Nurturing Customized and Governmental Orders..........604Establishment of the Customized Products Division / Expansion of the Space Business

B. Improving the Eyeglass Lens Business and Withdrawing from the Frame Business..........A Joint Venture to Create Nikon-Essilor / Favorable Business Performance Driven by Nikon-Essilor /High Technical Capabilities to Develop Eyeglass Lenses / The Development and Ultimate Demise of the Frame Business

606

C. Revival of our Surveying Instruments Business through a Partnership.......... 611Integration of Business into Nikon Geotecs /The Establishment of Nikon-Trimble through a Joint Venture with a Leading Company /The Resurrection of the Surveying Instruments Business I The Development of Total Stations

D. Our Rapidly Growing Telescope Business as a Separate Business Entity.......... 615The Birth of Nikon Vision / Hit Products Producing Favorable Business Results

Chapter Overcoming the Lehman Shock and New Challenges7. (2008 to 2017)

Section 1. Overcoming the Crisis and the Path toward a New Corporation......... 620

A. Entering a New Age..........620The Lehman Shock and Increasing Global Instability / The Rapid Popularization of Smartphones (Struggles and Rapid Recovery after the Lehman Shock

B. Overcoming the Lehman Shock by Preparing for Harsh Conditions..........623Detecting Market Variation and Establishing the Management Reform Committee ISwift Measures after the Lehman Shock / Streamlining the Precision Equipment Company /The Acquisition of Metris NV I Improving the Corporate Governance System

C. Achieving Sales of One Trillion Yen..........627Shuffling of Top Management and the Further Concentration of Decision-Making /Announcement and Achievement of a Medium-Term Plan / Establishing a Base for the Next Generation /Selecting the Health and Medical Field as a New Business Target /The Creation of the President's Award to Honor Employees in All Areas I Promoting Global Human Resource Utilization / Redevelopment of Information Systems to Strengthen IT Governance / Responding to Large-Scale Natural Disasters I Extensive Expansion of CSR Activities

D. The Organization and New Technology ofthe Corporate-Wide Development Department..........638Restructuring Our Research and Development Organization / Contributing to the Evolution of Each Business Field

E. Management Reforms to Progress to the Next Generation..........640New Presidents and a Shift to the Business Unit System /The "Next 100 - Transform to Grow” Medium-Term Management Plan / Active Promotion of M&A and Alliances I Suspension of the Medium-Term Plan and Promotion of Structural Reforms / Organizational Restructuring

Section 2. Switching the Focus of the Imaging Products Business to Profitability.........652

A. Rapid Changes to the Digital Camera Market..........652Market Decline Started by Compact Cameras I Factors leading to Market Contraction

B. From Acquiring the No.l Position to Fortifying our Defenses..........655Aiming to be No.l in the Imaging Products Business / Shifting to a Business with Stable Earnings

C. Products and Technology that Responded to Changes in the Market..........658Excellent Reception of the Nikon D3 and the Development of the D4 and D5 Models / The FX Format SLR Series / The DX Format SLR Series / The Advanced Camera with Interchangeable Lens System Nikon 1 /A Large Variety of Interchangeable Lenses in All Three Formats / Developing a Wide Variety of Compact Cameras /Various New Functions for Compact Models / Imaging-Related Businesses

D. Acceleration of the Shift to Overseas Production..........670Expansion of the Two Overseas Production Bases and Overseas Procurement IResponding to the Great East Japan Earthquake and the Thailand Floods I Strengthening of Cost Competitiveness

E. Sales and Service Expansions to Increase Market Share..........675Successful Development of Sales in Europe and the US IThe Strengthening and Establishment of Sales Bases to Develop Emerging Markets IThe European "I AM NIKON" Advertising Campaign I The Important Role of NPS Supporting the Professional Market I Receiving Awards for our Services

Section 3. A Change in Our Profit Structure ofthe Precision Equipment Business........682

A. Distinct Trends in the FPD and Semiconductor System Businesses..........682Changes to the Business Structure / The Largest Deficit in Our History I Reorganizing and Reforming our Business Bases I Clarification of Business Execution Responsibilities I Increasing the Production Capacity for FPD Lithography Systems

B. The Semiconductor Lithography System Business Pushing the Limits of Miniaturization..........689The Increased Importance of Single-Unit Sales / Prolonging the Service Life of ArF Immersion Scanners /The Development of a New Platform / Introducing New Models in Succession /Development of the World's First 450 mm Wafer Equipment

C. Development of the After Sales Business..........694The Semiconductor Lithography system Service and Resale Business /Recovery Activities in the Event of a Major Earthquake

D. The FPD Lithography System Business: The World's Largest Precision Equipment..........696Changes in the Demand for FPDs I Shipment of 10th Generation Equipment I Support for High-Definition Smartphones / Entering the Chinese Market I Receiving the Prime Minister's Prize at the Monodzukuri Nippon Grand Awards

Section 4. The Instruments Business that was Expected as the Growth Areas........702

A. Expanding Business through Active Investment......... 702Moving from Stagnation to Further Growth / Changes to the Organizational Structure /The Promotion of Alliances and the Rearrangement of Nikon Metrology NV Bases

B. The Evolution of Bioscience-Related Businesses......... 706Upright Microscopes-Releasing the ECLIPSE Ni/Ci Series /Inverted and Confocal Microscopes—Compatibility with Advanced Live Cell Research /Super-Resolution Microscopes-Overcoming the Limit of Conventional Optical Microscopes /Full-Fledged Efforts in the Cell Culture Business

C. The Industrial Metrology Business Expanding the Lineup with Non-Contact and 3DTechnologies..........711Securing Earnings through the Strengthening of Existing Products /Three-Dimensional Coordinate Measuring Machines Leading the Measurement Inspection Market ILarge-Volume Non-Contact Measuring Systems for Large Test Objects IX-Ray Inspection Equipment for Non-Destructive Inspection

Section 5. Sprouting New Business........716

A. Rapid Progress by the Customized Products Division..........716The Independence of Our Customized Products Business /Development of Space Probe Optical Components and Primary Mirror /The Development of a Solid-State Laser / Full-Scale Development of- the Solid-State Laser Business

B. The Establishment of the Encoder Business Unit.......... 720Excellent Evaluations of Our Compact Absolute Encoders /The Birth of a New Main Product and Automatic Production Efforts / Restarting as an Entity under Our Direct Control

C. Advancing into the Health and Medical Field.......... 723Uncovering of New Fields by the Business Development Headquarters / The Establishment of the Healthcare Business Unit

A Century at Nikon 726

Tradition and Innovation 730

Index......... 734

References......... 755

Special Thanks......... 756

Editorial Notes......... 757

ExplanatoryNotes

English Translation Notes1. This compilation is an edited translation of the Japanese versions of " 100 Years of Nikon Vol. 1 " (— 71 > 1 OO^fÈ I)

and "100 Years of Nikon Vol. 2" (— 3 2^1 II). However, some revisions have been made when necessary,

specifically to the contents of ”100 Years of Nikon Vol. 2".

2. The English translations of proper nouns such as product description and organization designation are, as far as

possible, written using the English translations and writing conventions that were used at that time.

1. This compilation is made up of two volumes consisting of "100 Years of Nikon Vol. 1" and "100 Years of Nikon Vol. 2".

2. Volume 1 describes our 100-year history in seven chapters covering various periods of time. Volume 2 consists of corporate-related information in Section 1, business-related information in Section 2, and a general chronology in Section

3. This compilation includes information up to FY2017. (It includes financial information up to the fiscal year ended

March 31, 2017)4. Names of individuals may have been abbreviated in accordance with the customs of each historical period.5. In general, corporate status such as "Co., Ltd." is abbreviated except when describing the establishment of our company,

subsidiaries, or affiliates.