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[ 1st Half of fiscal 2007 Performance Briefing ]HDD Head Business Outlook

Mr. Atsuo Kobayashi Deputy General Manager Data Storage & Thin Film   Technology Components Business Group

Mr. Atsuo Kobayashi
Deputy General Manager
Data Storage & Thin Film Technology Components Business Group

I'm Atsuo Kobayashi, Deputy General Manager of TDK's HDD head business. I would like to briefly report on this business.

Let me start with fiscal 2007 interim sales and our sales forecast for the second half. Sales in the first half were ¥154.0 billion, 4% up on our previous forecast. This increase was due to higher volumes driven by strong demand from the IT and consumer electronics sectors. For the second half, we are now forecasting sales of ¥139.0 billion, down on our previous forecast of ¥141.2 billion. While we expect sales volume to increase by around 8%, there is expected to be a drop in sales prices. For the full year, however, we are forecasting sales of ¥293.0 billion, compared with our previous forecast of ¥289.0 billion.

Next, I'd like to look at HDD head demand and TDK's market share. Previously, we forecast HDD head demand of 435 million units. There has been no change to this forecast. However, we have raised our projection for the average number of heads per HDD by 0.1 point from 2.8 previously to 2.9. This forecast is based on the fact that a relatively large number of low-priced 80GB/P heads are used for 3.5-inch drives, as well as the fact that the portion of multi-disc drives is increasing in 2.5-inch mobile drive segment. At this time, we are projecting a market share for fiscal 2007 of 31%.

Finally, I'd like to look at the schedule for launching new products, particularly for 3.5-inch and 2.5-inch HDDs. Mass production of 160GB/P products for 3.5-inch HDDs has already begun and production is steady. With regard to 250GB/P TMR heads based on perpendicular magnetic recording technology that the president talked about earlier, we expect to begin mass production in the second quarter of the 2007 calendar year. Regarding products for 2.5-inch HDDs, mass production of 80GB/P heads is already underway. Mass production of 120GB/P products is projected to begin from the start of next year.

That concludes my presentation. Thank you.