ACSL Ltd.

Nobuyuki Terayama, co-CEO of ACSL, a Japanese industrial drone maker, said the company has the technology and may develop interceptor drones for defense, where demand is growing. However, he noted that investor aversion to dual-use technologies remains strong in domestic fundraising, and the company plans to carefully consider drone applications. ACSL has supplied aerial photography drones for reconnaissance to the Ministry of Defense and aims to expand defense-related revenue to 1.5 billion yen by fiscal 2028. Terayama said drones, which have drawn attention in Russia's invasion of Ukraine and Middle East conflicts, are essential for defense, and expressed expectations for market growth. On the other hand, regarding demand expansion driven by increased defense spending by the Japanese government, he pointed out that the tide could change, and indicated a stance of pursuing both civilian and defense applications based on current industrial drones, rather than abruptly shifting to defense drone development and production. He also stressed that, given the prevalence of Chinese-made drones in the domestic market, it is crucial for information security that key components are made in Japan or outside China. Following ACSL's designation in June by China's Ministry of Commerce as an entity subject to export controls on dual-use items, he said the company must also consider replacing non-critical components with non-Chinese alternatives.