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Mid-Term Corporate Plan

Mid-Term Corporate Plan. June, 2006. Contents. 1. Earnings results for the year ended on March 31,2006 2. Mid-Term Management Planning. 1. Earnings Results for the year ended on March 31,2006. Earnings Results for year ended on March 31,2006. (Million of Yen).

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Mid-Term Corporate Plan

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  1. Mid-Term Corporate Plan June, 2006

  2. Contents 1. Earnings results for the year ended on March 31,2006 2. Mid-Term Management Planning

  3. 1. Earnings Results for the year ended on March 31,2006

  4. Earnings Results for year ended on March 31,2006 (Million of Yen)

  5. Main Reasons of the deficit financial report • By the Accounting for the impairment of Asset • Hovering Net Profit in the first half of the year • Depressed Results of TOWA-Intercon • Paper Loss of raw materials, goods in process, equipment for display and loaned equipment • Dealing Expense by withdrawing Wafer cleaning equipment and Bonding related equipment business • Reserve Fund, etc by reduction rearrangement of overseas manufacturing subsidiary companies

  6. 2. Mid-Term Management Planning

  7. Worlds Semiconductor Manufacturing Equipment Market Changes (Hundred Millions of US$) (Hundred Millions of US$) Overall Manufacturing Equipment 3 years Average Growth Rate 13.8 % Overall Equipment Assembly Equipment 3 years Average Growth Rate 12.4% Source:SEMI（2005.12Release）

  8. Mid-Term Management Guideline Back to our starting point of “Mold Die related technology” and “Manufacturing” as our Core Competence, establish earning structure and construct a new growth line by invest new products “PM series”, as beginning, into the world market

  9. 1. Re-establish Business Portfolio • Concentrate on Molding and Singulation field • 2. Develop Core Competence to the growth field , LED market as beginning • 3. Pioneer to the new business field by developing New Material, etc

  10. 2. Strengthening of Sales Strategy 1. Expand our market share by new products “PM Series” and convert to discrimination conversion competition Double-Layer Method * Mold Clamp Pressure1/2 * Foot Print30% less than Y series * Compound usage 20 - 30% less than current method Dramatically Reduced COO *Applicable for Green compound HighRelease mold die PM Series

  11. Develope Ceramics New Material for Mold material (Problem) Increased adhesion between compound and mold by using green compound, productivity is decreased by increased cleaning frequency Developed Ceramics New Material having High Release mold (Resistance value of mold release, 1/10 less than current material) - Cut down Cleaning process - Simplified mold die by E-pin less structure Loaded on “PM series” Ceramics New Material

  12. 2. Strengthen fencing sub-contractor, • target top 10 of world major IDM and Taiwan market • - Provide the latest packaging technology, SIP (System In Package), Multistage stack, Low-K, etc. • - Support Taiwan sub-contractor extending its business to China market • - Sales and Marketing of “PM series”

  13. FBGA Package Stack SO/TSOP CSP Packaging Road Map and TOWA’s Solution Compression Mold Multi-Plunger Method Wafer Level Integrated MAP 1 Line Frame Matrix Flame Single-Plunger Method PM Target Single Chip Chip Stack High density Stack Die PBGA Multi Plunger + Side Gate or Top Gate + FM Vacuum method QFN QFP DIP 1995 2005 2015 Year 0.15 0.2 Mold Thickness (mm) 1 0.5 0.4 0.3 0.1　・・・ 3 Mold Width (mm) 30 50 75 100 120 150　・・・ Number of stacked Chips 1 2 5 7　・・・ Wire Length (mm) 4 5 6 8 10　・・・ 25 20 18 15 12 10　・・・ Wire Dimention (μm)

  14. Net Sales Classified by Area (Consolidated) 3. Besides Taiwan Market, set up China Market and South East Market as Important area （Hundred Millions of Yen） Asia

  15. 4. Win Back Share of Singulation Equipment Field SBS INJ • Small Floor Space and High • Throughput by Integrated Dicer • and Handler • Available for Curve Liner Cut • which has not cut by blade method • Applicable for Composite Material • and Hard-cut Material like ceramic

  16. 5. Bring Equipment into the LED Market (Problem) High density LED need to use Silicone resin which is high cost for ultraviolet measures FFT Clear Resin Lens Clear Resin Compression Mold Method - Almost 100% Yield of Resin - Stable mold of Lens shape - Applicable to mass production Ceramic Silicone Resin (LED) Mold Products

  17. 6. Develop New Material to Business field of Existing equipment and General electronic parts Development of Electronic parts business field More than 50% Share of existing market New Products “PM series” & New Material

  18. 3. Optimization of QCD 1. VE (Value Engineering) of Existing products 2. Improvement of the operation rate for overseas manufacturing subsidiary companies 3. Cut down distribution expenses and Shorten the lead time by optimization of production system including overseas manufacturing subsidiary companies 4. Cut down material purchase expenses by increasing overseas material supply

  19. 4. Improvement of Financial structure 1. Capital stock increase by allocation of new share to a third party （Issued number of new stocks）　1,000,000 shares （Total issued price）　　 ８ hundred millions of yen （Allocate to）　 Kazuhiko Bandoh （Purpose）- Express the responsibility of Manager - Improvement of capital stock completeness and financial structure (Account of spending fund) - Research & Development of New material 5 hundred millions of yen - IT investment for business rationalization 3 hundred millions of yen

  20. 2. Repayment of Loan by selling real estate of overseas manufacturing subsidiary companies 3. Reducing inventories by reconsidering prior manufacturing method of platform base 4. Cutting down the collecting term of accounts receivable

  21. 5. Reduce Fixed Cost 1. Reducing 20% of total group member (1,000 people structure) 2. Cutting back on the number of staff by introducing an early stage retirement favorable system and loaning revolution register (Net 400 people structure) 3. Close down TOWA Singapore and selling the plant 4. Restructuring of TOWA-Intercon Reduce Total 2 billion yen of Fixed cost

  22. 6. Reconfirm Management Responsibilities • Demolishing reserve fund for executive retirement bonus and abolition this system • Returning total expenses of executive reward for chairman, CEO &COO and cut them down 10 to 20 % for all executives • Cutting down the salary of administrative position staff

  23. 7. Reformation of company cultures and structures 1. Perfect pursuit of CS(CustomerSatisfaction) 2. Enhancement of ES (Employee Satisfaction) 3. Simplification and Flat conversion of the structure 4. Labor–saving and reducing staff by IT introduction

  24. Management Target (Hundred Millions of Yen) (Hundred Millions of Yen)

  25. The 2006 Fiscal year TOWA Corporation whole company slogan 「Challenge 30!!」 Back to our starting Point and toward to the prideful TOWA

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