Tokyo - Shares of Nidec Corp plunged on Wednesday after the motor and drive systems manufacturer confirmed it had uncovered suspected improper conduct connected to quality inspection processes.
Nidec stock dropped as much as 18% to 2,329.0 yen, diverging from the Nikkei 225 index which posted modest gains during the same trading session.
In a formal statement, the company said it identified "suspected improper conduct" affecting certain products. The irregularities cited include alterations to materials, changes to processes and modifications to designs that were carried out without obtaining approval from customers.
Nidec emphasized that, based on its initial findings, it had not detected any problems that would immediately compromise product functionality or safety. The company also said it is considering establishing an investigation committee to look into the matter further.
The companys announcement followed a report from Nikkei Asia that said the firm engaged in quality tampering in more than 1,000 cases. That account added a new operational concern for Nidec at a time when the company is already managing fallout from accounting issues.
Last month Nidec disclosed accounting revisions that are expected to reduce net profit by 160.7 billion yen for the period from 2020 through 2025, a figure the company presented as the impact of prior accounting adjustments. Until now, the misconduct allegations had focused on accounting practices rather than manufacturing operations.
While the companys recent statement indicates no immediate functional or safety failures tied to the suspected inspection misconduct, the report of potential tampering raises fresh questions about oversight of Nidecs core manufacturing processes. The companys potential formation of an investigation committee suggests it intends to probe the scope and causes of the suspected improper conduct.
Market context
Nidecs share move was substantial relative to the broader Japanese equity market, where the Nikkei 225 registered only mild gains on the same day. The divergence highlights the company-specific nature of the news and its immediate effect on investor sentiment toward Nidec.