Shares in Mitsubishi Materials plunged more than eight percent on Friday after it admitted to falsifying product data, the latest major Japanese firm to acknowledge problems with quality control.
Stock in the Nikkei-225-listed firm was down 8.06 percent, or 330 yen, to close at 3,760 yen ($33.7), with the wider market fractionally in the green.
Company boss Akira Takeuchi apologised for the scandal that could affect more than 250 clients, including Chinese, Taiwanese and US firms.
"We deeply apologise for causing a lot of troubles to our clients, shareholders and a lot of people," Takeuchi told reporters with a deep bow.
But he refuted suggestions he would step down or cut his salary, insisting that his duty was to identify the cause of the scandal and take preventive measures.
The firm has said the affected products included rubber sealing materials used for packing and gaskets, often used to prevent leaks of liquid or gas from pipes in a wide variety of industries, including aerospace and automobiles.
The scandal also affected brass strip products for cars and other products, it said.
Mitsubishi Materials said its subsidiaries falsified specification data before shipping some of its products to clients, while the company is working with affected clients to ensure the safety of their products.
The clients included the defence ministry, which has used the affected products for its military planes and ships.
Defence Minister Itsunori Onodera expressed "extreme regret," demanding the firm immediately report the potential impact of the case on defence equipment and specify the cause of the trouble.
The scandal is the latest in a string of quality control and governance lapses at major Japanese firms including Kobe Steel, Nissan and Subaru.
Kobe Steel has admitted falsifying strength and quality data for a string of products shipped to hundreds of clients, from automakers to plane manufacturers.
Nissan recalled some 1.2 million vehicles after admitting in October that staff without proper authorisation had conducted final inspections on some vehicles intended for the domestic market before they were shipped to dealers.
Subaru also recalled nearly 400,000 vehicles from its domestic market after admitting that it also allowed uncertified staff to conduct vehicle inspections.