The Year Business Results 2010 - Nihon Dempa Kogyo（Reference）Goldman Sachs Ⅱ. Approach tothe polarized needs GDP per capita（2010 ⇒ 2015） 0 10,000 20,000 30,000 40,000 50,000

1

Results for the year ended March 2010

2

Ⅰ．Results for the year ended March 2010Ⅱ. Approach to the polarized needs１．Approach to the “Volume Zone”２．Approach to the “High-value-added

markets”Ⅲ. New technologies & products developmentsⅤ. Issues on the year ended March 2011

Contents

3

Ⅰ. Results for the year ended March 2010

1. Net sales was ¥52.6 billion for the year ended March 20102. Recovered from the heavy loss incurred in the previous year and

realized ¥4.3 billion net income

Financial statements are prepared in accordance with IFRSs（NDK is the first company in Japan to apply IFRSs voluntarily）

IFRS IFRS IFRS IFRS IFRS

(Million yen)’06/3Result

’07/3Result

’08/3Result

’09/3Result

’10/3Result

Net sales 63,642 73,307 77,786 59,429 52,590Operating income/(loss) 3,747 7,503 8,442 ▲ 25,380 3,979Income before taxes 3,610 6,705 7,007 ▲ 24,358 4,303Net income/(loss) 3,485 4,484 5,246 ▲ 28,731 4,337Operating income ratio 5.9% 10.2% 10.9% ▲ 42.7% 7.6%

4,1499.3%

Japan Standard’10/3Result

52,6504,8954,002

63,642

73,307

52,590

59,430

77,786

0

20,000

40,000

60,000

80,000

▲ 15,000

▲ 10,000

▲ 5,000

0

5,000

10,000

Operating income/(loss)

Income before taxes

Net income/(loss)

Net sales

▲25,000

▲30,000

’07/3 ’08/3’09/3

’10/3’06/3

Net sales（\mil） Income（\mil）

4

■■Sales trend of main applicationsSales trend of main applicationsSales in main applications such as “Mobile Communications”, “Audiovisual / Office Automation” and “Automotive Electronics”hit the bottom at the 2nd half of FY2008.

Ⅰ. Results for the year ended March 2010

0

5,000

10,000

15,000

FY2007 1H

FY2007 2H

FY2008 1H

FY2008 2H

FY2009 1H

FY2009 2H

(Million yen )

（M obi le Com mun ic at i o n s）（Audiovisu al/Offi c e Au tomat ion）

（Fixe d Radio Com mun ic at i o n s）（Au tom ot ive Ele c t r on ic s）

（Othe r s）

（Million yen)

5

”Volume Zone”

Ⅱ. Approach to the polarized needs

Low-end products

”High-value-addedmarkets”

Highly-accurate highly-reliable

products

Flattening & digitalizing societyFlattening & digitalizing society

New targets in

emerging countries

Broadband

Ubiquitous Society

Polarized needs

6

GDP per capita （2010 ⇒ 2015）

0

5,000

10,000

15,000

20,000

India China Brazil Russia

（US＄

）

CY2010 CY2015

+92%

+114%+19%

+69%

■GDP per capita forecast for the emerging countries such as China, India shows large growth in 5 years

At over $5,000, consumption demand

rises largely

Business chance in countries such as China, India !

Business chance in newmarkets in advanced countries !

（Reference）Goldman Sachs


GDP per capita（2010 ⇒ 2015）

0

10,000

20,000

30,000

40,000

50,000

60,000

US Japan Germany UK

（US$

)

CY2010 CY2015

+18% +19% +28% +31%

7

■World economy is expecting about 4% annual growth toward year 2011. However, the speed of growth seems to polarize between emerging countries such as China, India etc. and advanced countries.

Real economic growth rate（2009－2011（forecast））


（Reference）IMF： World Economic Outlook （April 2010）

-6

-4

-2

0

2

4

6

8

10

12

W o r ld USA Eu ro Japan C h i n a In di a

(

%

)

CY2009

CY2010（forecast）

CY2011（forecast）

8

Approach to “Volume Zone”

Approach to “High-value-added” markets

Audiovisual (AV)Office Automation (OA)

Growing applications such as liquid crystal TV, notebook PCs, are the main targets


Mobile Phone

Infrastructurerelated

Automotive Electronics & GPS

Market volume will further increase due to increasing demand in emerging countries

Actively exploit telecommunications infrastructure market

Secure profits by providing highly-reliable and highly-accurate products

99999

Production volume of Audiovisual / Office Automation set devices (estimate)

Ⅱ.1 Approach to Volume Zone （AV/OA）

Reference：EM data, JP Morgan, Fuji chimera, Navian

Production area of Audiovisual /Office Automation devices

＜Trend in set devices＞＊Two-digit increase is expected from 2010＊68% of the world productions are from the China region (as of 2008)

＜Trend in set devices＞＊Two-digit increase is expected from 2010＊68% of the world productions are from the China region (as of 2008)

Reference：Fuji chimera

Asia, 14%

Europe, 7%

Japan, 4%

Latin America,4%

North America,2% Others, 1%

China・Taiwan･Hong Kong６８％

2,2362,483 2,532

2,841

3,284

3,748

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2007 2008 2009 2010 2011 2012

m i l u n i t s

Others

DVD/Blu-ray

Game

USB memory

Printer

DSC

DesktopPC

Portable audio

FlatTV

NotePC

HDD

W-LAN(WiFi)

1010101010

Number of Crystal devices used for PLL of mobile phone (NDK estimate)

Smart-phone share among total mobile phone

(NDK estimate)

＜Trend in mobile phone hand sets＞＊Further increase is expected in low-end model used at emerging countries＊The proportion of smart-phone is expected to increase rapidly

＜Trend in mobile phone hand sets＞＊Further increase is expected in low-end model used at emerging countries＊The proportion of smart-phone is expected to increase rapidly

Ⅱ.1 Approach to Volume Zone （Mobile Phone）

106 137 178 242 305 3681,009 1,033 9571,012

1,0491,094

1,1151,170 1,135

1,2531,353

1,462

9%12%

16%

19%23%

25%

0

200

400

600

800

1,000

1,200

1,400

1,600

2007 2008 2009 2010 2011 2012

mil units

0%

5%

10%

15%

20%

25%

30%normalhandset

smart-phone

share ofsmart-phone

623 698490 505 450 436

492472

640745 910 1,020

1,1151,170 1,130

1,2501,360

1,455

0

200

400

600

800

1,000

1,200

1,400

1,600

2007 2008 2009 2010 2011 2012

mil units

Crystal unit

TCXO

11

SuzhouFactory

MalaysiaFactory

Japan

・Utilize inexpensive labors・Reduce influence of exchange fluctuations

Overseas Overseas production ratioproduction ratio

Overseas Overseas factoriesfactories

FY09FY09２９％２９％

FYFY1010３６％３６％

Influence on operating profit

¥１ fluctuation⇒ approx.¥60 mil

Expected exchange rate for FY2010 （US$）：¥90

（FY2009 result average： ¥92.85）

Ⅱ.1 Approach to Volume Zone (Production)

■The production of the products demanded The production of the products demanded at at ““Volume ZoneVolume Zone”” shifts to Suzhou and shifts to Suzhou and MalaysiaMalaysia

12

0

200

400

600

800

1,000

1,200

1,400

2007 2008 2009 2010 2011 2012

(k units)

SONET/SDH

WDM

0

200

400

600

800

1,000

1,200

1,400

1,600

2007 2008 2009 2010 2011 2012

(k units)

WiMAX

LTE

TD-SCDMA

W-CDMA

CDMA2000

GSM

12121212

Market trend of mobile phone base stations

Market trend of optical communication devices

（shipment volume）

Reference： EJL

（shipment volume）

Reference： DellÒro

＜Overall trend＞Further increase of mobile handsets and rapid increase of communication traffics lead to stable growth of infrastructure related devices such as mobile phone base stations and optical communication devices

＜Overall trend＞Further increase of mobile handsets and rapid increase of communication traffics lead to stable growth of infrastructure related devices such as mobile phone base stations and optical communication devices

Ⅱ.2 Approach to high-value-added markets (Infrastructure）

1313131313

Manufacturers of mobile phone base stations

Manufacturers of optical communication devices（sales base）（sales base）

Reference ： DellÒro Reference ： DellÒro

＜Overall situation＞＊US, European and the Chinese have the overwhelming share＊Especially, Chinese manufacturers are rapidly emerging

＜Overall situation＞＊US, European and the Chinese have the overwhelming share＊Especially, Chinese manufacturers are rapidly emerging


year 2009

NOKIA SIEMENS6%FUJITSU

6%

ERICSSON6%

CIENA5%

ALCATELLUCENT

23%

HUAWEI16%

NORTEL8%

OTHERS25%

NEC5%

year 2009ALCATELLUCENT

8%

OTHERS7%

ZTE10%

NOKIASIEMENS

18%

ERICSSON29%

HUAWEI28%

14

37,000 staff, which is 43% of the total employee are working at 14 R&D centers located worldwideReference : Nikkei business daily (03.Aug 2009)

Received “Excellence Global Core Partner” prize from Huawei

2009 global core partner convention was held on November 5 and NDK has been selected as a core partner of Huawei. This award isgiven to the top 10 suppliers among approx. 2000 companies.

Huawei sales trend（04-09）

0

50

100

150

200

250

300

350

2004 2005 2006 2007 2008 2009

100 mil$


Huawei sales trend (2004－2009）

15

Realized frequency with temperature characteristic of ±1×10-9/-40～85℃

(37×28×H19(max)mm)

Tokyo

London

Developed super high precision OCXO in October 2009

⇒Even if external temperature fluctuates from -40 to85℃, frequency moves only ±1 billionth.

If “one billionth” is described in distance, it means you aim at a target set at London from Tokyo (about 10 thousand km) and the result is only 1 cm gap with the target.

NH37M28L seriesﾞ


16

2 .6%

4.2% 4 .6%

6 .6%7.2%

8 .6%9 .5%

10.2%

0

2,000

4,000

6,000

8,000

10,000

12,000

2008 2009 2010 2011 2012 2013 2014 2015

t e n th o u san du n i ts

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

car production

production ofHEV/PHEV/EV

share ofHEV/PHEV/EV

16161616

Worldwide sales volume forecast of hybrid/electronic cars

Reference ：CSN,NRI

Amount of crystal devices used at automotive by functions

(NDK estimate)

＜Trend in automotive market＞＊Sales at emerging countries such as China and India will lead the market to a stable growth from 2010＊New demands are expected at electronic cars, ITS, car navigations and car PCs

＜Trend in automotive market＞＊Sales at emerging countries such as China and India will lead the market to a stable growth from 2010＊New demands are expected at electronic cars, ITS, car navigations and car PCs

1,0631,013

818

962

1,1071,212

0

200

400

600

800

1,000

1,200

1,400

2007 2008 2009 2010 2011 2012

mil un its

ITS related

informationrelated

car controlrelated

Ⅱ.2 Approach to high-value-added markets (Automotive）

17

Ⅲ. New technologies & products development

At the “Laboratory ATOM”, highly skilled engineers are engaged in the cutting-edge R&D regarding next generation frequency control and selection devices

《Laboratory ATOM》

Started operation from May 8, 2009

Applied research of crystal/SAW

device

Pursue potentiality with new devices

18

◆Character＊ Immune reaction is automatically measured by easy pipetting operation！＊Micro scale sample can be measuredwith the newly developed micro fluid chip！（5μL：1/10 of our conventional product）

＊ Possesses high function of manual type, such as short time measurement（minimum 15 min： 1/5 of competitors’ conventional products）

◆To other applications・・・＊ immune reaction, biochemistry, molecular biology, clinic, food, material , environment, etc.

18

NAPiCOS １０A （Manual type）

NAPiCOS Auto ２０A （Auto type）

Newly developed！Micro fluid chip

New product ”NAPiCOS Auto” was released this April

Now selling to universities, institutes, etc

19mm


19

Poly-Si electrodeS-Disk

3µm

NDK is pursuing crystal device of small, high accuracy and advanNDK is pursuing crystal device of small, high accuracy and advanced function by ced function by combining three technologies. The three technologies are combining three technologies. The three technologies are the technology to develop the technology to develop crystal of high quality, the technology to process wafer, and thcrystal of high quality, the technology to process wafer, and the photolitho technologye photolitho technologywhich are essential for micro processing.which are essential for micro processing.

Technology to develop crystal of

high quality

Technology to process large

thin wafer

Photolithography technology

Creation of

new

technology

Silicon MEMS resonator

Distance between disc and electrode：100nm

（co-developed with TOHOKU university）


20

Ⅳ. Issues on the year ended March 2011

Secure income target by fully utilizing the existing resource

Focus on new product developmentcorresponding with the new

environment after the Lehman shock

New markets such as energy, environment, health, will also

be exploited

Focus on Profitability

Priority on

Quality

21

1. Capital investment will be at the same level as of the year ended March 2010 and allocated to new product developments

2. Increase of orders will be matched by fully utilizing the existing facility


（Million yen）’06/3actual

’07/3actual

’08/3actual

’09/3actual

’10/3actual

’11/3forecast

Operating cash① 9,145 14,700 13,979 6,371 4,008 5,100Investing cash② 6,021 11,501 12,347 11,768 3,871 3,400Free cash flow①-② 3,124 3,199 1,632 ▲ 5,397 137 1,700

-10,000

-5,000

0

5,000

10,000

15,000

20,000

Operating cash① Investing cash② Free cash flow①-②

22

Certain amounts of R&D expenses for new product development will be secured


(Million yen)’06/3actual

’07/3actual

’08/3actual

’09/3actual

’10/3actual

’11/3forecast

R&D expenses 2,336 2,189 2,310 2,531 2,241 2,225R&D expenses ratioagainst sales 3.7% 3.0% 3.0% 4.3% 4.3% 4.0%

2,1892,310

2,531

2,241 2,2252,336

0

500

1,000

1,500

2,000

2,500

3,000

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%R&D expenses R&D expenses ratio against sales

(Unit : millionyen)

Lowered approx. 200 million yen due to method change for depreciation from declining balance to straight line method

23

(Million yen)’09/3actual

’10/3actual

’11/3forecast

Net sales 59,429 52,590 55,000Operating income/(loss) ▲ 25,380 3,979 3,500Income before taxes ▲ 24,358 4,303 3,200Net income/(loss) ▲ 28,731 4,337 3,000Operating income ratio ▲ 42.7% 7.6% 6.4%

52,59059,42955,000

0

20,000

40,000

60,000

▲ 15,000

▲ 10,000

▲ 5,000

0

5,000

10,000

Operating income/(loss) Income before taxes

Net income/(loss) Net sales

▲25,000

▲30,000

’09/3

’10/3 ’11/3

Net sales:Million yen

Income:Million yen

NDK will secure income target along with new product developmentcorresponding with the new environment and make further progressas a leader of quartz crystal industry


IFRS IFRS IFRS

24

Global environmental changes

Finally

NDK aims to become a true global playerNDK aims to become a true global player

Emerging countriesEmerging countries

Volume zoneVolume zone

EuropeEurope

Aging worldAging world

TransformationTransformationof energy of energy

Population Population explosionexplosion

BroadbandBroadband

Still unstable era seems to continueStill unstable era seems to continue……

Global warmingGlobal warming

UbiquitousUbiquitous

In the year ending March 2011, NDK In the year ending March 2011, NDK will accumulate sufficient strength and will accumulate sufficient strength and technology by carefully watching the technology by carefully watching the future environmental changesfuture environmental changes

USUS

Shift to new playersShift to new players

Smart GridSmart Grid

JapanJapan

25

Thank you for your attention.Thank you for your attention.We are grateful for your continuous support.We are grateful for your continuous support.

【Note】Statements made in this presentation with respect to our current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about our future performance. These statements are based on management’s assumptions and beliefs in light of information currently available to it. We caution that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue reliance on them. You also should not rely on the belief that it is our obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Risks and uncertainties that might affect us include, but are not limited to; fluctuation of currency exchange rates, overall supply and customer demand in the industry, product development and production capacities, performance of affiliated companies, and other risks and uncertainties.

Documents

The Year Business Results 2010 - Nihon Dempa Kogyo（Reference）Goldman Sachs Ⅱ. Approach tothe polarized needs GDP per capita（2010 ⇒ 2015） 0 10,000 20,000 30,000 40,000 50,000