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Issues to be addressed

TAIYO YUDEN Group continues to push forward with measures to improve profitability. These measures are balanced structural improvements and growth strategies. As part of its growth strategies, the Companies will market their highly competitive super high-end products that satisfy customer needs for use in key growing markets, such as equipment, which includes smartphones and tablet devices. And, as part of their efforts to enhance corporate value, the Companies will also increase sales in key target markets, such as industrial equipment, automotive, healthcare and environmental energy as part of its efforts to enhance corporate value. The Companies are also undertaking continued efforts to improve their profitability and financial stability as well as enhance efficient use of their assets. Target management indicators focus on cash flow management and include positive free cash flow and net cash flow for the year ending March 31, 2016. Our consolidated return on equity target is to exceed eight percent, 8%.

1.Capacitors

The Companies will launch ultra small/low profile multilayer ceramic capacitors for high-growth devices like smartphones and tablet devices. And, the Companies will strengthen their technology position and introduce cutting edge super high-end products for the seizes required as part of our efforts to develop a production system that meets growing demand for super high-end capacitors types. Additionally, the Companies are working to expand the lineup of high quality and highly reliable products for the key target markets in automobiles, industrial equipment, healthcare, and environmental energy. The Companies will seek to promote expansion in the multilayer ceramic capacitor market by actively introducing new products with high-value 100μF and greater characteristics for the electrolytic capacitor market, with the goal to achieve further growth within the segment. And, as part of our efforts to achieve greater efficiencies as it relates to our production systems, the Companies will seek to maximize the utilization of their overseas sites by accelerating production of high-end products at those overseas locations, though until now they have manufactured super high-end products in Japan only.

2.Ferrite and applied products

The Companies will further expand their super high-end product line-up for multilayer chip inductors and wire-wound inductors that meet the needs of our customers and the market we serve. To this end, the Companies will undertake product development for super high-end power inductors "MCOILTM" that use new metallic materials capable of conducting even higher currents of electricity in a much smaller case sizes. The Companies will also enhance theirline-up of super compact 0402 size products for high frequency multilayer high-Q chip inductors and ultra small multilayer chip inductors. As with capacitors, the Companies are working to develop a production system that is more efficient and maximizes the utilization of their overseas production sites.

3.Integrated modules & devices

The Companies will further develop their presence in the high frequency business sector focusing on SAW/FBAR technologies. They will actively launch super high-end products that use their proprietarily developed embedded-parts multilayer wiring substrate "EOMINTM" and strengthen the power supply business, including regeneration systems for energy markets. The Companies are endeavoring to build a production system that addresses the increased demand and usage of SAW/FBAR devices for mobile communications in conjunction with the increases in technology advancements in LTE, the main platform for next-generation telecommunications.

4.Other electronic components

For the energy device segment, the Companies are working to develop applications that support cutting edge technology in the energy sector that will expand sales in this market. The Companies will bolster their products for back-up power supplies used for storage servers and smart meters, market which we see very high expectations for future growth. At the same time, the Companies continue to carry out marketing and promotion activities for large lithium ion capacitors mainly for markets demanding high reliability.

5.Optical media products

The Companies are moving forward with a shift in their business model to secure stable profits. In particular, the Companies are developing system solution proposals that leverage their strength in high quality products in order to create and develop opportunities in the archive (long-term storage) market.