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4/9 Progress of PMI at Fujitsu Electronics

Next, I report on the PMI process after the acquisition of Fujitsu Electronics Inc. Regarding the initiatives for the EMS business, as I explained at the previous briefing, we established a sales team within Fujitsu Electronics specializing in EMS in April last year. This team cooperates with Kaga Electronics’ EMS Business Division and conducts sales activities with FEI’s major customers. During April and September, it approached 84 companies for business talks and obtained orders for development, trial production, and mass production from five of them. In the previous fiscal year, it approached 90 companies and obtained orders from four, so its performance in the six months was equivalent to the full-year result. Many of the orders will generate sales from FY2021. Among them, we look forward to a project for an onboard automotive product for a Tier 1 parts supplier because it is a big project, worth billions of JPY. The next important initiative is the third one, finding new products for sale. As we explained, FEI has lost major commercial rights in connection with Cypress Semiconductor of the US and other business partners and need new businesses to offset the loss. FEI has keenly been seeking new merchandise for five years. The Company has started transactions with 79 suppliers on a cumulative basis. For the current fiscal year, sales of the new merchandise are expected to total JPY15 billion, up 40% year on year. We look forward to further growth because there are four products whose sales are worth several billions of JPY. We are also working diligently to consolidate the sales bases and organizations of both companies. In Japan, we have already been integrating and transferring operations in Nagoya, Hiroshima, and Niigata, and we plan to transfer FEI’s sales office in Osaka by the end of the year. Overseas, we are in the process of integrating the US sales company toward the spring of next year. As the US is hit by the spread of COVID-19, we are moving ahead with safety first. Finally, the Company will change its name to Kaga FEI on December 29. The Company will start next year with the new name.