Business Strategy

Aero engines must operate under extreme conditions of high temperature, high pressure, and high rotational speed in order to generate powerful propulsion. This requires the sophisticated integration of a wide range of technologies into a single system, including aerodynamics, combustion, materials, structures, cooling, and control. The Group has participated in numerous international joint engine development programs as a partner responsible for the design and manufacture of critical engine modules that have a significant impact on engine performance, durability, and reliability. This ability to provide value based on a deep understanding of the overall engine system and its operating environment is what makes the Group a trusted development partner, rather than merely a component supplier.

Furthermore, ensuring the safety and reliability of aero engines requires the ability to manufacture them with consistently high quality. The Group has established a monozukuri foundation, which means a comprehensive manufacturing foundation, as one of its core competitive strengths. It encompasses a broad range of capabilities, including forging, casting, and composite molding technology; processing technologies such as machining, joining, and surface treatment; and the expertise required to integrate and assure manufacturing processes, including process design, non-destructive inspection, and quality control. This integrated capability enables the Group to reliably supply technologically advanced engine components, including major structural parts, rotating components, and high-temperature-resistant parts.

As demands for improved fuel efficiency and reduced environmental impact continue to grow, weight reduction and heat-resistant technologies have become critical areas of competition for next-generation engines. Leveraging a strong technological foundation, the IHI Group is able to integrate the development of materials, structures, manufacturing processes, and quality assurance—including in the fields of composite materials and next-generation heat-resistant materials—thereby contributing to improved overall engine performance. The Group also takes a medium- to long-term perspective on technologies related to composite materials and next-generation heat-resistant materials and has continuously and strategically filed patent applications for more than 20 years. In particular, it has established a patent portfolio covering material properties, structural design, manufacturing processes, and quality assurance, thereby strengthening the protection of the technological foundation described above.

The Group's human capital and organizational capabilities have sustained these technological strengths over the long term. In the civil aero engine business, supply and maintenance support must be provided continuously for decades after an engine enters service. The IHI Group has cultivated specialized talent who understand the entire engine program, including design, manufacturing, MRO, procurement, and quality and schedule management, and who are capable of handling certification as well as technical discussions with OEMs. As this expertise is shared and passed on throughout the organization, it forms the foundation for maintaining competitiveness across generations.

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A defining characteristic of the civil aero engine business is that it extends beyond supplying new engine hardware to encompass services throughout engines’ long operational lives. Engines typically remain in service for more than 20 years, generating ongoing business opportunities in maintenance, repair, and parts replacement. The IHI Group collectively refers to these business opportunities as its “lifecycle business”.

In recent years, the IHI Group has recognized the lifecycle business as an important business opportunity and has worked to strengthen its MRO operations and spare parts supply capabilities. Through maintenance facilities equipped with state-of-the-art equipment and efficient maintenance systems leveraging digital technologies, the Group will establish a stable and highly profitable business model.

Revenue Model: Civil Aero Engine Business

Participating in future new engine programs is also directly linked to the growth in future aftermarket revenue. Through participation in international joint development programs and the expansion of its technical responsibilities, the IHI Group aims to steadily build long-term revenue opportunities. The Group is already participating in multiple major global engine programs, expanding revenue opportunities in both component supply and the aftermarket. In the civil aero engine business, the Group aims to achieve revenue of approximately ¥600 billion by 2030 and will pursue sustainable growth in this attractive, highly profitable market with high barriers to entry.

While the civil aero engine business offers significant growth opportunities, it is also one in which the impact can be substantial if risks such as demand fluctuations, quality issues, or supply chain uncertainties materialize. To minimize these impacts, the Group has strengthened its quality assurance and risk management systems, and has established organizations and processes capable of detecting and responding to issues at an early stage. In addition, by combining this business with technologically compatible businesses such as the defense and space businesses, the Group is strengthening the resilience of its overall business portfolio.

IHI Group Participation Modules/Components Responsible and Share for Major Engine Programs

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The value provided by the IHI Group's civil aero engine business extends beyond the supply of components. For airlines, the Group contributes to safe flight operations and lower operating costs by delivering highly reliable, high-performance, durable engines and improving maintenance efficiency. Improvements in engine performance and weight reduction also lead to better fuel efficiency and lower CO₂ emissions, supporting the environmental sustainability of the aviation industry as a whole.

For society, the Group supports the movement of people and goods and contributes to economic vitality by serving as a foundation for safe and efficient air transportation infrastructure. In addition, the creation of value through dual-use applications — by applying technologies developed in the defense and space fields to commercial businesses and, conversely, transferring technologies refined in commercial businesses to the security sector — is another distinctive strength of the IHI Group.

Through its civil aero engine business, the IHI Group will continue to support safe and secure air transportation and contribute to the sustainable development of air transport.

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Under these characteristics of the defense industry, the core of the IHI Group's competitive advantage lies in its technological capabilities in “propulsion”. In defense equipment, factors such as range, time to target, flight profile, and survivability directly determine defense capability, and these factors are determined by propulsion systems such as aero engines and rocket motors.

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  Characteristics and conditions of flight, including trajectory, altitude, speed, and flight distance.

In the fields of defense aero engines and solid rocket motors, the IHI Group has been responsible for critical components requiring exceptional reliability under extreme operating conditions, including rotating components, turbines, and shaft systems, for many years. In addition to achieving the required design performance, these components must be capable of minimizing quality variation in mass production and consistently reproducing the same level of quality throughout their operational life.

The people and organizational capabilities supporting the defense business are also key sources of competitiveness. The capabilities required to operate under stringent quality requirements and strict confidentiality, and to complete long-term projects, cannot be developed in a short period of time. The IHI Group develops and accumulates talent capable of consistently managing every stage from design and manufacturing to quality and supply, while preserving and passing on the expertise built through many years of experience.

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Demand is expected to continue growing in the areas where the IHI Group’s strength in propulsion-related technologies can be leveraged, driven by efforts to strengthen defense capabilities and advance next-generation defense equipment. The IHI Group will focus its management resources on the Japanese government's priority areas, including stand-off defense capabilities, integrated air and missile defense, and unmanned assets, to capture these growth opportunities.

At the same time, defense equipment frequently requires specification changes or increased production in response to changes in the operating environment and national security requirements. The IHI Group is building a supply system capable of responding flexibly to these changes by strengthening production capacity, reinforcing procurement systems for critical materials and components, and enhancing manufacturing processes and quality management.

During periods of expanding demand, factors such as dependence on specific materials and geopolitical risks can become business risks. The IHI Group is strengthening dual-use technologies and production infrastructure shared between commercial and defense applications while diversifying procurement sources and reinforcing supply chain resilience to achieve both stable supply and business continuity.

From a profitability perspective, the Group is leveraging these changes in the external environment to operate the business with higher profit margins than in the past. Through the medium- to long-term growth of the defense business, the IHI Group aims to achieve revenue of approximately ¥300 billion by 2030.

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The defense business is not merely about supplying defense equipment; it is about providing the reliability and technology that support operations over the long term. Going forward, the IHI Group will continue to contribute to Japan’s security foundation through the provision of defense equipment and technologies, helping to realize a safe and secure society.

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In the field of launch systems, IHI Aerospace is responsible for the development of the rocket system and the manufacture of the launch vehicle for Epsilon, a solid-fuel rocket that forms a key part of Japan’s flagship launch vehicle program. Since the launch of the demonstration vehicle in 2013, the company has contributed to five successful launches. It is currently developing the enhanced Epsilon S rocket to meet growing demand for small satellite launches.

For liquid-fuel rocket engines, the IHI Group has jointly developed liquid oxygen and liquid hydrogen turbopumps with JAXA for the engines of the H3 and is working to deliver high reliability and performance through mass production. In addition, the Group has conducted research and development on liquid-methane-fueled rocket engines for approximately 30 years.

In satellite operations, the IHI Group is one of the few companies in Japan with experience operating its own satellites. Through the IHI-SAT nanosatellite launched in 2021 and the IHI-SAT-2 nanosatellite launched in 2025, the Group has accumulated expertise in data acquisition and analysis from hands-on operations. In the field of satellite applications and services, the Group provides maritime surveillance services and is developing satellite data-based services for applications such as forest monitoring and infrastructure monitoring.

Furthermore, the Group aims to build and operate a satellite constellation combining multiple types of sensors, including optical, SAR*, and hyperspectral sensors, as infrastructure for acquiring and generating satellite data. Both operating multiple types of satellites simultaneously and analyzing and providing the data obtained in an integrated manner require advanced capabilities, and only a limited number of operators are capable of establishing such a system.

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  SAR (Synthetic Aperture Radar): A radar for acquiring image information on the shape and characteristics of the Earth's surface by transmitting radio waves from an antenna mounted on a satellite or aircraft toward the ground and capturing the reflected signals from the Earth's surface.

The IHI Group will acquire the technologies required to develop and operate satellite constellations and take the lead in their deployment. Furthermore, the Group will leverage the business foundations it has built across the land, maritime, air, and space domains to collect information from multiple sources. By analyzing and providing the collected information in line with client needs, the Group will contribute to realizing a safe and secure society.

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In the rocket launch business, the IHI Group will provide highly reliable launch services centered on solid-fuel rockets to serve the growing launch market for small and microsatellites. While meeting government and national security demand, the Group will also seek to steadily capture demand by supporting the deployment of commercial Earth observation satellites and communications constellations.

The Epsilon S, currently under development, is a small launch vehicle with the capability to launch approximately 1.2 tonnes of satellite payload. It can carry multiple small and microsatellites and targets the market segment between large and micro launch vehicles. By providing low-cost, flexible launches of multiple satellites, it will support the development of next-generation space infrastructure.

In the satellite data services business, the Group is creating services that address both defense and security needs and civilian demand under its dual-use strategy. In creating these services, the Group is strengthening its organizational competitiveness by flexibly incorporating cutting-edge technologies through collaboration with overseas companies, including ICEYE, and domestic startups. Through its SAR satellite constellation being developed in collaboration with ICEYE, the Group aims to contribute to disaster response and defense and security by providing high-frequency, high-resolution observation data. At the same time, it is expanding civilian services that address social challenges, including forest management, environmental monitoring, infrastructure inspection, water resource management, and agricultural land management.

Meanwhile, the space business is characterized by stringent reliability requirements and long development and operational cycles, giving rise to risks such as supply constraints, procurement of critical materials, quality assurance, and regulatory compliance. The IHI Group will continue to strengthen its business foundation through strategic investments and organizational enhancements, while pursuing both effective risk management and sustainable business growth.

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The IHI Group will continue to provide safe and reliable means of space transportation and to use observational information from space, thereby creating equipment and services that contribute to the development of a safer, more secure, and more convenient society. At the same time, the Group will continue to create opportunities for the utilization of space that contribute to the sustainable development of space transportation and to a safer, more secure, and more convenient society.

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The IHI Group is working to further enhance the performance of ARMUT®, its commercially available ultrasonic flaw detector for nuclear power equipment, with the aim of improving inspection reliability in maintenance operations. To support this development, the Group is leveraging a broad range of information, including intellectual property data, and taking a multifaceted approach to product development.

In the waste treatment and nuclear fuel cycle fields, the IHI Group possesses vitrification technology that solidifies and manages high-level radioactive liquid waste in a stable form. Even on a global scale, only a limited number of companies are capable of providing this technology, making it a key enabling technology for the final disposal of radioactive waste.

Remote handling is essential at facilities that process high-level radioactive liquid waste. The reliable operation and maintenance of equipment and facilities in high-radiation environments require advanced technical capabilities and specialized expertise. By applying these technologies to the decommissioning of the Fukushima Daiichi Nuclear Power Station, the IHI Group contributes to accelerating the process.

The IHI Group is also involved in the field of small modular reactors (SMRs*). SMRs feature designs that enhance safety through their smaller generating capacity, the adoption of passive safety systems, and a reduced number of components. The IHI Group has been involved from the stage of defining design requirements, and in 2025 manufactured a full-scale mock-up of the steel module for the reactor building of an SMR project in Romania. Through these activities, the Group ensures quality and on-time delivery while accumulating expertise for future mass production and other projects.

Small Modular Reactor (SMR)

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  A nuclear reactor designed with a smaller power output per reactor unit, making reactor cooling easier and enhancing safety.

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The IHI Group views its nuclear energy business as encompassing not only plant construction but also maintenance and equipment upgrades throughout a plant's operating life, as well as its eventual decommissioning. In the domestic market, the Group is responding to demand for safety enhancement work associated with reactor restarts and equipment upgrades, while securing ongoing business opportunities through improvement projects carried out during plant operation. Overseas, in addition to large-scale reactors, the Group anticipates growing demand for equipment for SMRs.

To meet this demand, the Group is strengthening the production capabilities of its Yokohama Works and Aioi Works while expanding its workforce responsible for design, manufacture, quality assurance, and on-site operations.

The Group is also working to pass down the expertise required for the construction of new nuclear facilities. In addition to design expertise that takes construction and operation into account, capabilities in regulatory compliance and the establishment of robust quality assurance systems are also essential. By actively involving junior engineers in active projects and providing them with hands-on experience, the Group is advancing both human capital development and the transfer of technical expertise.

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The value the IHI Group's nuclear energy business provides to society lies in helping achieve both a stable energy supply and decarbonization. Nuclear energy can serve as a viable energy source only when maintenance, equipment upgrades, and eventual decommissioning are carried out reliably throughout the plant lifecycle.

The IHI Group provides equipment and technologies that support the safe operation of nuclear power plants while delivering practical solutions throughout their entire lifecycle, including plant upgrades during operation and waste treatment. In doing so, the Group provides tangible support for the safety and reliability that are indispensable to the use of nuclear energy. By helping societies that use nuclear energy maintain the safety and public trust on which its use depends, the IHI Group's nuclear energy business fulfills an essential role. Building on these initiatives, the Group aims to expand revenue from its nuclear energy business to approximately ¥100 billion in the 2030s and achieve further growth in the 2040s.

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1. Strengths in Ammonia Combustion Technology

Ammonia consists of hydrogen and nitrogen. One of the challenges associated with its use is that incomplete combustion can generate nitrogen oxides (NOx), which contribute to air pollution, as well as nitrous oxide (N₂O), a potent greenhouse gas. Drawing on combustion technologies developed through decades of experience in thermal power generation, the IHI Group has established technologies that ensure the complete combustion of ammonia while minimizing these emissions. These technologies are applicable not only in the power sector but also across a wide range of fields, including industrial facilities and marine vessels.

2. Strengths in Technologies That Leverage Existing Facilities

The IHI Group's strength lies in technologies that enable fuel conversion while minimizing clients’ capital investment requirements. For example, in the power generation sector, these technologies enable coal and ammonia to be co-fired using existing coal-fired power generation facilities. This supports a smooth transition to clean fuels that emit no CO₂ during combustion. In addition, plants can switch back to coal in the event of an emergency, providing greater operational flexibility.

3. Strengths in Development and Supply Capabilities for Ammonia Receiving and Storage Facilities Cultivated Through the LNG Business

The IHI Group holds a market share of approximately 70% in Japan's ammonia storage tank market. The cost of fuel ammonia is determined by production and distribution costs. If receiving hubs and supply infrastructure are not in place, ammonia must be transported and delivered separately for each client, increasing logistics costs.

By establishing distribution hubs centered on large-scale receiving terminals, ammonia can be imported in large volumes through consolidated shipments, thereby reducing distribution costs.
In addition to the technologies and engineering capabilities cultivated through its LNG business, the IHI Group has an established track record backed by its high domestic market share, and is well positioned to lead the development of large-scale receiving and storage infrastructure and thereby help reduce distribution costs. Furthermore, by participating not only in the development of these facilities but also in their operation, the Group can secure opportunities for recurring revenue.

Because ammonia is toxic, ensuring safety throughout every stage of production, storage, transportation, and utilization is essential. Drawing on its expertise in safety design, construction management, and operation and maintenance developed through its experience in the power generation and industrial plant sectors, the IHI Group provides integrated engineering that ensures the safety of entire facilities. This enables the Group to establish viable ammonia businesses by addressing safety alongside technology, economics, and supply chains.

Among the IHI Group's recent development milestones, it conducted a large-scale demonstration of fuel conversion to ammonia in a power generation boiler in April 2024, using ammonia at a 20% heat input ratio, and achieved favorable results. In June 2026, the Group also completed technical verification toward the commercialization of an ammonia-only burner for boilers, advancing the establishment of the technologies required for fuel conversion. In the gas turbine sector, the Group successfully achieved 100% ammonia combustion in a 2 MW-class small- to medium-sized gas turbine in June 2022. Furthermore, in March 2026, it successfully conducted a 100% ammonia combustion test using the combustor of a GE Vernova large-scale gas turbine.

Ammonia Gas Turbines

While ammonia co-firing (20 to 60%) in coal-fired power plants serves as an important transitional step toward decarbonization, 100% ammonia firing represents one option for achieving further reductions in CO₂ emissions. This, in turn, depends on the successful development of 100% ammonia combustion technology for large-scale gas turbines suitable for utility-scale power generation. The IHI Group is therefore steadily advancing development in accordance with the Group’s roadmap to commercialize 100% ammonia-fired gas turbines by 2030.

In parallel with these demonstration tests, the IHI Group has continuously filed patent applications since 2015 for technologies that are critical to commercialization. Among the IHI Group’s patented ammonia combustion technologies are innovations that have received high external recognition, including the Invention Award at the FY2025 National Commendation for Invention, presented by the Japan Institute of Invention and Innovation. The IHI Group is also advancing international standardization initiatives, including the publication of ISO/TS 21343, a technical specification for large power generation boilers using fuel ammonia. Together, these demonstration achievements, the IHI Group’s intellectual property portfolio, and its international standardization initiatives have helped secure the Group’s competitive advantage while strengthening the prospects for future commercialization and revenue generation.

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The IHI Group is building its ammonia value chain business across production, storage and transportation, and utilization through collaboration with partner companies and government agencies that possess specialized expertise.

In India, the IHI Group is collaborating with ACME, one of the country's leading renewable energy companies, on a green ammonia production and sales project, aimed at producing ammonia in India and exporting it to Japan. The two companies are jointly advancing development of an ammonia production facility in India, with plans to produce approximately 400,000 tonnes of green ammonia annually by around 2030 for export to the Japanese market. In June 2026, the project was approved by Japan’s Minister of Economy, Trade and Industry and Minister of Land, Infrastructure, Transport and Tourism for support under the Contract for Difference Support Scheme*¹ established pursuant to the Hydrogen Society Promotion Act*². Obtaining this approval represents an important milestone in the development and expansion of the ammonia value chain in Japan.

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  A support scheme administered by the Agency for Natural Resources and Energy of the Ministry of Economy, Trade and Industry (METI) that provides support to bridge the price gap between low-carbon hydrogen and its derivatives, including low-carbon ammonia, and existing fuels and feedstocks, with the aim of establishing supply chains for low-carbon hydrogen and related products.
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  Act on Promotion of Supply and Utilization of Low-Carbon Hydrogen and its Derivatives for Smooth Transition to a Decarbonized, Growth-Oriented Economic Structure.

Steady progress is also being made in developing ammonia supply hubs to store imported ammonia. In collaboration with Hokkaido Electric Power Co., Inc., Mitsui & Co., Ltd., and Tomakomai Futo Co., Ltd., the Group is advancing studies on an ammonia supply hub centered in the Tomakomai area of Hokkaido. In March 2026, the project received certification under the Hub Development Support Program*³ from the Minister of Economy, Trade and Industry and the Minister of Land, Infrastructure, Transport and Tourism.

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  A program administered by the Agency for Natural Resources and Energy of the Ministry of Economy, Trade and Industry to support the development of infrastructure required for the transportation and storage of low-carbon hydrogen and its derivatives with the aim of accelerating supply and utilization.

Furthermore, to establish a safe and stable ammonia supply system, the IHI Group signed a joint development agreement with Vopak, one of the world's leading terminal operators based in the Netherlands, for the development and operation of ammonia terminals in Japan. The Group is also collaborating with Yara, the world's largest fertilizer producer based in Norway, to optimize ammonia shipping and establish a mutually complementary supply system capable of responding flexibly to fluctuations in supply volumes. Through these initiatives, the IHI Group will leverage the expertise of specialist companies in each field to achieve both safety and economic efficiency.

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The IHI Group supports clients in achieving stable and cost-effective decarbonization by curbing CO₂ emissions across the entire ammonia value chain, from production through utilization, while providing an environment in which ammonia can be used safely.

To achieve this, the IHI Group is building an integrated business across the entire ammonia value chain. In addition to producing and supplying fuel ammonia, the IHI Group will provide storage infrastructure, ammonia utilization equipment, and comprehensive operation, maintenance, and parts services. Through these efforts, the IHI Group aims to generate approximately ¥900 billion in revenue by 2050.

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The IHI Group will leverage the expertise gained through maintaining bridges, water gates, tunnels, and other urban and social infrastructure to optimize renewal planning, execute renewal projects in challenging locations, and enable more labor-efficient and autonomous operations. By expanding the value created through maintenance, the Group aims to ensure that urban and social infrastructure continues to function reliably under both normal and emergency conditions.
Within this framework, the Group has identified the following three priorities for future business expansion:

• Leveraging maintenance data and expertise to create value across the entire asset lifecycle, from maintenance through renewal and operations.
• Improving the efficiency of the movement of people and goods in space-constrained metropolitan areas.
• Supporting next-generation high-specification roads and automated logistics systems to enhance mobility and logistics across society.

Maintenance is not merely an after-sales service, but a foundation for understanding clients’ needs and delivering value throughout the asset lifecycle.

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The value provided by the IHI Group extends beyond the delivery of structures and equipment to their renewal and operation. The Group delivers infrastructure that minimizes disruption and functions reliably. In the bridge business, the Group renews and upgrades infrastructure that supports the movement of people and goods, contributing to the continuity of urban activities. In the water gates business, the Group reliably maintains infrastructure that supports flood control and water resource management, including the enhancement of operational capabilities. In the shield systems business, the Group builds underground infrastructure, contributing to the resilience of society.

Furthermore, advancing next-generation mobility and logistics will require the technologies and operational expertise needed to support automated cargo handling and the sharing of arrival information at the interfaces between roads and logistics hubs. Leveraging the expertise and capabilities it has developed through its businesses, the IHI Group is conducting pilot projects to support the deployment of the Autoflow Road. The Group will continue promoting initiatives that integrate road infrastructure with logistics hub operations, enabling logistics to function as an integrated social system.

Going forward, the IHI Group will combine engineering capabilities for highly challenging social infrastructure projects with advances in operation and control enabled by digital technologies. Through these two strengths, the Group will secure a competitive advantage in the market for the renewal and upgrading of urban and social infrastructure, contribute to a safe, secure, and comfortable society, and generate cash on a sustained basis.

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