Kyocera Corporation Financial Presentation Corporation Financial Presentation (Year ended March 31, 2003) May 9, 2003 Kyocera Corporation. Forward-Looking Statements ... ・High-speed

Kyocera Corporation Financial PresentationKyocera Corporation Financial Presentation(Year ended March 31, 2003)(Year ended March 31, 2003)

May 9, 2003Kyocera Corporation

ForwardForward--Looking StatementsLooking Statements

Certain of the statements made in this document are forward-looking statements (within the meaning of Section 21E of the U.S. Securities and Exchange Act of 1934), which are based on our current assumptions and beliefs in light of the information currently available to us. These forward-looking statements involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors include, but are not limited to: general economic conditions in our markets, which are primarily Japan, North America, Europe, and Asia, including in particular China; changes in exchange rates, particularly between the yen and the U.S. dollar and Euro, respectively, in which we make significant sales; our ability to launch innovative products and otherwise meet the advancing technical requirements of our customers, particularly in the highly competitive markets for ceramics, semiconductor parts and electronic components; and the extent and pace of future growth or contraction in information technology-related markets around the world, including those for communications and personal computers. Such risks, uncertainties and other factors may cause our actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements included in this document.

1

Business Environment ForecastBusiness Environment Forecast－－Year Ending March 31, 2004Year Ending March 31, 2004－－

With respect to the information on this page, please refer to the accompanying note on page 1. 2

■ Economy: - Expected negative impact of Iraqi war on U.S. economy and continued economic uncertainty in Japan.

Mobile handsets: Global shipment volume by all manufacturers predicted to total 440-450 million units in CY2003 (approx. 10-12% increase compared with CY2002)

■ Component prices: - Expect annual price cuts of approx. 10% compared with FY2003- Expect slight improvement in degree of price erosion compared with FY2003

■ IT industries: - Moderate increase in PC demand- Increase in replacement demand for mobile handsets with color displays and built-in cameras

- Continued growth in demand for mobile handsets in China

PCs: Projected CY2003 shipment volume between 142-145 million units (approx. 7-11% increase compared with CY2002)

(Source: Company’s estimate based on Pak Rim Research and IDC Research)

Average exchange rates:

- 6.94.447,2683.944,000R&D expenses-16.96.164,9884.754,000Depreciation

1.03.840,6143.641,000Capital expenditures

Year ended March 31, 2003Year ending March 31, 2004

121

122

220.8641,165

76,037

83,388

1,069,770

Amount

121

115

279.0052,000

92,000

89,000

1,140,000

Amount

–

–

–3.8

7.1

7.8

100.0

% to net sales

% to net sales

––Euro (Yen)

––U.S. dollar (Yen)

26.3–EPS (Diluted-yen)26.34.6Net income

21.08.1Pre-tax income

6.77.8Profit from operations

6.6100.0Net sales

Percentagechange

3

Consolidated Financial ForecastConsolidated Financial Forecast－－Year Ending March 31, 2004Year Ending March 31, 2004－－

With respect to the information on this page, please refer to the accompanying note on page 1.

（Unit: Millions of yen)

Ｐ．３０

3/020

300

150

0

12

6

252.9 238.920.1 18.8

3/03

0

300

150

0

8

4

1.9

234.9 228.0

10.0

4.4

3/020

30

15

3/03

8.48.0

3/02 3/03 3/02 3/030

20

10

250.5

235.0

21.07.9

11.8 5.2 4.3

Operatingprofit ratio


(Unit: Billions of yen)


Net Sales

Net Sales



Operating Profit

Operating Profit

(Unit: %)

(Unit: %)

Fine Ceramics Group

Electronic Device Group

Commencing in the f iscal y ear ended March 31, 2003, basic R&D expenses of the Company itself, previously included within “Others,” hav e been charged to the respective operating segments. Accordingly, the Company has also reclassified previously published operating profit of such operating segments f or the f iscal y ear ended March 31, 2002.

3/04 (Forecast) 3/04 (Forecast)


4

Forecast by Operating Segment (1)Forecast by Operating Segment (1)


0

600

300

0

10

5

478.3529.8

24.4

40.0

0

100

50

0

10

5

7.98.695.5

86.17.4 7.2

0

50

25

0

10

5

576.0

86.2

48.0

8.4





Net Sales

Net Sales



Operating Profit

Operating Profit

(Unit: %)

(Unit: %)

Equipment Group

Others

Commencing in the f iscal y ear ended March 31, 2003, basic R&D expenses of the Company itself, previously included within “Others,” hav e been charged to the respective operating segments. Accordingly, the Company has also reclassified previously published operating profit of such operating segments f or the f iscal y ear ended March 31, 2002.

5

5.1

7.6 8.3

3/02 3/03 3/02 3/03

3/02 3/03 3/02 3/03



Forecast by Operating Segment (2)Forecast by Operating Segment (2)


7.5

6

Introduction of Executive Officer SystemIntroduction of Executive Officer System

Strengthen Consolidated Group Management・Select the top 8 executives of group companies as directors of Kyocera

Separate Decision-Making and Supervision of Management Functions from Execution of Business・Board of Directors → Decision making and supervision of management

・Executives Officers → Execution of business

Develop Managers Who Can Lead the Next Generation・Aggressively promote young personnel who have outstanding human qualities

and management capabilities


Kyocera Group Business ChallengesKyocera Group Business Challenges

7

Promote High-Value-Added Diversification

Equipment Group: Expand Sales and Profitability・Telecom Equipment: Seek market leadership

- Establish worldwide CDMA business- Enhance solutions business through PHS systems- Expand PDCA business

・ Information Equipment: Enhance Profitability- Establish a trusted brand by strengthening sales channels and product dominance

Components Business: Rapidly Enhance Profitability

・ Gain market share in areas of comparative strength

・ Create and develop new, valuable markets

・ Pursue comprehensive cost reduction

Create New Markets in China

Attain Pre-Tax Profit Ratio of 15%

Clear Criteria and Imperatives for High-Value-Added-Businesses

■Criteria for Continuing Businesses・ Strong market demand ・ Company has or can attain technologies

necessary to meet market needs

■ Imperatives for High-Value-Added businesses・ Maximize synergies between businesses・ Operate each business based on universal principles・ Create a unique management control system


8

Inte

grat

ion

of D

iver

se T

echn

olog

ies

Kyocera CorporationMaterials technologies, devices and thin film circuitry designtechnologies

Kyocera Elco CorporationHigh value-added connector technologies, includingfine-pitch connectors

Kyocera Chemical CorporationFine chemical technologies using organic materials

Kinseki, Ltd.Crystal technologies

Expa

nsio

n of

Bus

ines

s To

war

d a

Ubi

quito

us N

etw

ork

Focu

s on

Hig

h-G

row

th M

arke

t

Telecommunications EquipmentMobile phones, camera modules, etc.

Information EquipmentPCs, HDDs, optical pickups, etc.

Digital AVDVDs, DSCs, etc.

AutomotiveECUs, car navigation systems, sensors, etc.

Market Strategy: Electronic Device BusinessMarket Strategy: Electronic Device Business

AVX CorporationMaterials technologies for low inductance and electrolytic capacitors


Electronic Device Group:Electronic Device Group:Electronic Device Business Conditions and StrategyElectronic Device Business Conditions and Strategy

9

Make Electronic Device Group Highly Profitable

Fiscal March 2003Sales by Product Enhance profitability of timing

devices, thin-film products and connectors business

Rapidly boost profitability of capacitor business

Capacitor Sales Trend(Consolidated)

92100

195

118

100

50

100

150

200

250 Capacitors

52%

Timing devicesThin-film productsConnectorsOthers

48%

Compared with a 3/99 baseline of 100Compared with a 3/99 baseline of 100

Non-Capacitors Sales Trend(Consolidated)

107

96

131

107

100

50

100

150

200

250

3/99 3/00 3/01 3/02 3/03 3/99 3/00 3/01 3/02 3/03


Enhancement of Capacitors Business Enhancement of Capacitors Business

10

Improve Profitability Immediately

・ Expanding Production in China

Target for FY 2004:【Expand local production ratio 20％→30％】【Reduce costs 25％→30％】

(Compared to Japanese production)

・ Expanding Sales in ChinaCultivate new markets and customers through a new sales subsidiary

・ Optimize Production Structure

・ Concentrate Development Resources;Strengthen production process technology to improve production yield

・ Pursue Group SynergiesMarket niobium oxide capacitors

・ Develop Key MarketsTelecom: Small and high-capacitance capacitorsComputer-related (Servers, Storage) : Large and ultra-high-capacitance capacitors

Kyocera’s Advantages Kyocera’s Challenges


Expansion of Capacitors BusinessExpansion of Capacitors Business

11

Develop larger-capacitance tantalum and ceramic capacitors

Tantalum

1μF 10μF 100μF 1,000μF

Ceramic

Niobium Oxide

Expand Capacitors Product Line

Market niobium oxide chip capacitors (Made by AVX) in Japan

Target by March 2006


Niobium oxide chip capacitors:

Features・Reduced burn out on over load・Lead free

Target market・Mobile phones, DSCs, PDAs, PCs

Business Advantages・Material supply chain stability・Use of existing production line of

tantalum capacitors

Road Map of Principal Ceramic Capacitor Products Road Map of Principal Ceramic Capacitor Products (B characteristic items)(B characteristic items)

12

High

MiniatureSize

Cap

acita

nce

Key technology for small and high capacitancecapacitors, large and ultra-high capacitance capacitors:

・ Higher lamination・ Thinner layers・ High-speed lamination

～～

3216 100μF

1005 4.7μF

1005 1μF

1608 10μF

2012 22μF

2012 10μF

3216 22μF

3225 47μF

4532 100μF

0603 0.1μF

3216 47μF

3225 100μF

2012 47μF

～～


Mass producedCY2003CY2004 and after

Timing Device Business Strategy (1)Timing Device Business Strategy (1)ーー Develop New Products for Telecommunications Equipment Market Develop New Products for Telecommunications Equipment Market ーー

13

Telecommunications Equipment Market

Market Trends Key Components March 2004 Target Market

Share

Business StrategyComponent Requirements

Highspeed

40％

Release small, low profile ASM 30％

TCXO

Introduce 3.2×2.5 miniature products

Advanced, multi-functional

SAW filterLaunch world’s smallest CSP type SAW filter

Over 10％

Antenna Switch Module(ASM)

Zero IFSAW filter

Launch world’s smallest CSP type SAW filter

Over 10％

MiniaturizationModularization


Reduced number of components

Miniaturization

Timing Device Business Strategy (2)Timing Device Business Strategy (2)ーー Create New Market Create New Market ーー

With respect to the information on this page, please refer to the accompany ing note on page 1. 14

PC MarketMarket Trends Key Components March 2004

Target MarketShare

Business StrategyComponent Requirements

Multi-functional

Leverage substrate / packaging technology

Crystal Oscillator

High demand for DSCs and DVDs

Ceramic Chip Resonator

Create small, low profile products through crystal elements, electrode design, crystal mounting technology and direct attachment technology

Engine ControlElectronics

More electronic components ECU

Utilize optical technology

Digital AV Market

Automotive Market

Multi-functional

Equipped with camera module

Camera Modules

5%

Over 10%

20%

40%

MiniaturizationTight toreranceLow profile

Timing Device Business Strategy (3)Timing Device Business Strategy (3)ーー Pursue synergy effects with KINSEKI, LTD. Pursue synergy effects with KINSEKI, LTD. ーー


SMD packages, electronic componentsSell to

KINSEKI, LTD.

“Pure” crystalCrystal growth technology

Technology Exchange Ideal packagingPackaging technology

Optimum manufacturing lineOscillator production technology

Optical components for DSCs

TCXOs and SAW filters for telecommunications equipment

Crystal units and blanks for TCXOs

Buy from KINSEKI,

LTD.

Subject/Product PhotosItem

Optical low pass filters

SAW filterTCXOs

Crystal elementsCX-96F

SMD package

Printing Device Business StrategyPrinting Device Business Strategy

16

★ High-speed, resolution, durability and long-term reliability

★ Small, high-resolution, high-speed;Dynamic drive technology reduces number of drive chips

★ GaAs on Si LED Array

★ Bolster lineup in all applications★ Employ face-down bonding

Market Size LargeSmallLow

High

Mar

ket S

hare LED Printheads

Amorphous Silicon Photoconductive Drums

Thermal Printheads

Develop new users

・ Develop color printer market・ Develop high-speed, large-size printer market

・Develop markets related to photoprinters, card printers and printersfor medical use

・Replace dot-impact printers

Target area or strategy

Kyocera’s advantage


LCD Business StrategyLCD Business Strategy


・ Expand sales and share outside Japan・ Develop Chinese markets

★ Kyocera Color Filters★ Release low-priced V-series products★ Introduce high-value-added modules with touch panels and user interface★ Enhance design for industrial display products

(Replaceable backlight, high-luminance products etc.)

Market Size LargeSmallLow

High

Mar

ket S

hare

・ Increase share within existing customers・ Exploit demand associated with shift from monochrome to color LCDs・ Develop new applications

LCDs for Industrial Applications

LCDs for Mobile PhonesTarget Area or strategy

Kyocera’s Advantage

★ Kyocera’s Unique Transflective Cell Structure★ Develop metal process suitable for one-chip IC design★ Large-size substrates (420x530mm) product line

Connector Business StrategyConnector Business Strategy

18

Aim for Minimum 10% Market Share by Strengthening New Product Development in Digital AVs, PC/Peripherals and OA Equipment

New market development: Automotive (audio, car navigation systemNew market development: Automotive (audio, car navigation systems, sensors)s, sensors)

TelecommunicationsTelecommunications--related: mobile handsets, LCD modules, lenses, RF unitsrelated: mobile handsets, LCD modules, lenses, RF units

PC/peripheral: disk drives, monitors, optical pickup modulesPC/peripheral: disk drives, monitors, optical pickup modules

AVAV--related equipmentrelated equipment：：digital AV equipment digital AV equipment (DVD players, recorders,(DVD players, recorders,PDPs, LCD TVs, DSPDPs, LCD TVs, DSCs, DVCs)Cs, DVCs)

OAOA--related equipmentrelated equipment：：printersprinters

Focus on Miniaturization and Accelerate Development of Fine Pitch Connectors

Establish Comprehensive Manufacturing Line in Japan and Mass-Production in China

Bolster Share in Key Markets by Utilizing Project Teams in and Leveraging Worldwide Sales Network

Computer-related equipment

21%

AV-related equipment

17%

OA-related equipment

10%

Others6%

Electronic Equipment4%

Industry/Factory-Use Equipment

5%

Year ended March 03 Sales by Market

Telecommunications-relat ed

equipment37%


Commence Micro Device BusinessCommence Micro Device Business

19

Reduce Lead-time between Development and Mass-Production by Creating a Specialized Manufacturing Line for Wafers for Thin-Film Products

• Commence production at Shiga Yohkaichi Plant in July 2003• Establish integrated production line for various products by standardizing wafer size and

sharing facilities to the extent possible• Initial capital investment: approx. ¥2 billion

Decoupling Devices SAW Filters LED Chips

• Essential in high-frequency MPUs

• Devices cut power supply noise above 1GHz

• Mini, multi-band capable products for mobile phones

• Develop world’s smallest SAW filter (1.6mm×1.4mm)

• Use in compact, lightweight LED printheads

• Develop world’s first GaAs on Si device


Electronic Device Business StrategyElectronic Device Business Strategy

20

Focus on high-growth products by utilizing group-wide technology resources ranging from materials and devices to circuit design

Make Electronic Device Group Highly Profitable

・Cultivate new markets through originaltechnologies(Telecom, PCs, digital AV, automotive markets)

・Expand market share by strengthening newproduct development(Focus: telecom, PC/peripheral, digital AV andOA equipment)

・Cultivate new market (automotive)

・Increase market share by strengthening new product development (LCD)

・Cultivate new markets and customers(Focus: amorphous sillicon photoconductive drums,thermal printheads, LED printheads for digital AV,PC/peripheral and OA equipment)

・Expand production and sales in China・Reduce costs (Optimize production structure,

improve production yield throughstrengthening production process technology)

・Create new markets(Focus: small and high-capacitance capacitors,large and ultra-high capacitance capacitors)

Capacitors

Timing Devices

Thin-film Products

Connectors


Mobile and Wireless Network

Internet

HomeHome

OfficeOffice

CarCar

OutsideOutside

MobileMobile

Handset best suitable to a ubiquitous network

（PocketCosmo)

Handset best suitable to Handset best suitable to a ubiquitous networka ubiquitous network

（（PocketCosmoPocketCosmo))

Expand PHS System-related

Business

Expand Expand PHS SystemPHS System--relatedrelated

BusinessBusiness

Establish Global CDMA

Business

Establish Establish Global CDMA Global CDMA

BusinessBusiness


Expand Telecommunications Equipment Business Expand Telecommunications Equipment Business Toward a Ubiquitous NetworkToward a Ubiquitous Network

Breakdown of the Corporate Communication Breakdown of the Corporate Communication Systems Equipment DivisionSystems Equipment Division

22

Wireless LAN Wireless LAN SystemsSystems

PDCAsPDCAs

Mobile PHS Mobile PHS SystemsSystems WLL SystemsWLL Systems

PHS Core PHS Core TechnologiesTechnologies

1x EV1x EV--DODO SystemsSystems

Wireless Wireless Internet SystemsInternet Systems

Building a Stable, Unchallenged Position in the TelecommunicationSystems Market Under the Keywords of “Mobile & IP”


Develop PHS System BusinessDevelop PHS System Business

Fixed Wireless Network

Mobility

Tran

smis

sion

Spe

ed

Wireless Internet

Wireless Internet SystemWireless Internet System

WLL SystemWLL System

Mobile Network

Mobile PHS SystemMobile PHS System・High voice quality

(32 kbps ADPCM)・High-speed data transmission

64 kbps (PIAFS), 128kbps (Packet communication)

・Low-output handset(Average 10mW)

・ Approx. 3,400 householdsreceive phone service from one base station

・ High traffic capacity: Max. 155 channels/base station

・ Broad coverage:Line of sight up to max. 15 km

・ Downlink: Max. 1Mbps・ Bandwidth 8 channels (5/10MHz)・ Portability・ Always-on connection・ IP based network connection

23

KyoceraKyocera’’s PHS Base Station s PHS Base Station TechnologyTechnology

・Adaptive Array Antenna・Space Division Multiple Access

(SDMA)・Frame Synchronization

by GPS

PHS StandardPHS Standard（（RCRRCR--STD28)STD28)


Mobile PHS System Business (1) Mobile PHS System Business (1) －－Expand PHS Market OverseasExpand PHS Market Overseas－－

Provide Leading-Edge Technologies and Services■ Adaptive Array Antenna Technology ■ Space Division Multiple Access■ Frame Synchronization by GPS ■ Packet Service

・Increase number of customers using multiple phone for separatepurposes (PHS for calling, mobile phone for receiving)

・Promote use of PHS systems in homes・Boost demand for data communications (Packet Service)

Expand Sales in Existing MarketsDevelop New Markets

India, Vietnam, etc.

Aim for Sales of ¥60 billion by Expanding PHS Market Outside Japan


Mobile PHS System Business (2) Mobile PHS System Business (2) －－Expand Operations in ChinaExpand Operations in China－－

開封 Kaifeng

福州 Fuzhou泉州 Quanzhou

恵州 Huizhou北海 Beihai

柳州 Liuzhou

延吉 Yanji

白山 Baishan

遼源 Liaoｙuan

松原 Songｙuan

煙台 YantaiChangzhou

黄華 Huanghua任丘 Renqiu

石家庄 Shijiazhuang

台北 Taipei

武漢 Wuhan

宣昌 Yichang

西峰 Xifeng

白銀 Baiyin

天水 Tianshui

蘭州 Lanzhou

武威 Wuwei

西寧 Xining

酒泉 Jiuｑuan

嘉浴関 Jiayuguan

玉門 Yumen

敦皇 Dunhuang

張掖 Zhangye

都匂 Duyun恵水 Huishui

六盤水 Liupanshui

枇節 Bijie

拉薩 Lhasa

綿陽 Mianyang

双流 Shuangliu

涼山 Liangshan 眉山 Meishan

信陽 Xinyang南陽 Nanyang

許昌 Xuchang

Luo河 Luohe南充 Nanchong

安陽 Anyang三門峡 Sanmenxia平頂山 Pingdingshan

周口 Zhoukou

黄石 Huangshi

咸寧 Xianning

襃樊 Xiangfan

刑門 Jingmen

刑州 Jingzhou

孝感 Xiaogan

仙桃 Xiantao

Weifang

河池 Hechi

百色 Bose

陽江 Yangjiang

河源 Heyuan

広安 Guang’an

興義 Xingyi

達州 Dazhou

沾州 Luzhou

西昌 Xichang

通化 Tonghua

Xinzhou

Xiangfen

唐山 Tangshan

厦門 Chinmen

寧徳 Ningde

三明 Sanming

戊岩 Longyan

定西 Dingxi

庄阻 Qingyang

洛庁 Luoningi

Cities Using Mobile PHS System: Over 300Mobile PHS Lines Available: Over 15 millionNumber of Users: Over 13 million

Aim to add 10-13 million new users during CY03


(As of the end of CY02)

25

Multi Channel Base Station

PHS Packet Server

Brow ser TerminalImage of Base Station

Installation

Mobile PHS System Business (3) Mobile PHS System Business (3) －－Synergies between Equipment and Components BusinessSynergies between Equipment and Components Business －－

With respect to the information on this page, please refer to the accompanying note on page 1. 26Custom ICs

TCXO SAW FilterCapacitors

SMS Terminal

Browser Terminal

Use Kyocera Components

Incorporated into PHS Products

Base StationTerminal

Create High Quality, Low Cost Infrastructure

Provide Terminal and Base Station

Develop WLL System Business (1)Develop WLL System Business (1)

27With respect to the information on this page, please refer to the accompanying note on page 1.

Telephone Exchange Office

Subscriber

Develop WLL System Business (2) Develop WLL System Business (2) －－Expand Outside JapanExpand Outside Japan－－

Global Fixed Phone Penetration (As of December 31, 1999)Thailand: 8.5％ Philippines: 3.9% Vietnam: 2.6% India: 2.6%

Opportunities Wherever Fixed Phone Services are not Expanding


EthiopiaService Began: June 2000Base Station Shipments: 4Terminal Shipments: 5,100

UAEService Began: Dec. 1999Base Station Shipments: 15Terminal Shipments: 2,078

PhilippinesService Began: Aug. 1998Base Station Shipments: 2Terminal Shipments: 2,279

ThailandService Began: Oct. 2002Base Station Shipments: 202Terminal Shipments: 192,000

Develop Wireless Internet System Business (1)Develop Wireless Internet System Business (1)

ISDNISDN

Analog LineAnalog Line

Mobile Phones (2G/2.5G)Mobile Phones (2G/2.5G)

PHSPHS

Wireless LANWireless LAN802.11802.11b/ab/a

Third Generation Mobile PhonesThird Generation Mobile PhonesCDMA2000 1xCDMA2000 1x WW--CDMACDMA

1xEV1xEV--DODO

Wireless Wireless Internet Internet SystemSystem

High-Speed Wireless Internet Access System

Portability

“Always-on” Connection

Low Investment Network

High

Low

MobilityLow High

FTTHFTTHCATVCATVADSLADSL

Tran

sfer

Spe

ed


Develop Wireless Internet System Business (2)Develop Wireless Internet System Business (2)－－Business Developments Outside JapanBusiness Developments Outside Japan－－


China

Base Station

EMS PCMCIA Card < Image of Base Station Installation >

Australia

U.S.A

Korea

Planned

Develop Wireless Internet System Business (3)Develop Wireless Internet System Business (3)－－Demonstration at KT Corporation in Korea, March 2003Demonstration at KT Corporation in Korea, March 2003－－

31

1x EV-DO: 380kbps (average)

Wireless Internet System: 980kbps

(average)

PHS System Business Sales TargetPHS System Business Sales Target

• Anticipate future communications needs

• Provide more confortable and convenient

communications solution

Increase Sales by 100%Increase Sales by 100%

(Billions of yen)

32

50

75

100

0

25

FY02 FY03 FY06(Target)


Kyocera Corporation

Documents

Kyocera Corporation Financial Presentation Corporation Financial Presentation (Year ended March 31, 2003) May 9, 2003 Kyocera Corporation. Forward-Looking Statements ... ・High-speed