[ Financial Results for Fiscal 2008 Performance Briefing ]HDD Head Business Outlook

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

I'm Atsuo Kobayashi, General Manager of TDK's HDD head business. I would like to report on this group's sales for fiscal 2008 and forecasts for fiscal 2009.

Let's start with fiscal 2008 sales. We reported sales of ¥156.9 billion in the first half and ¥177.8 billion in the second half, for an annual total of ¥334.7 billion. Full-year sales represented a 10% year-on-year increase. As was reported earlier, this was the result of higher sales volume outweighing the negative effects of exchange rate movements and sales price discounts. For fiscal 2009, we are projecting sales of ¥329.1 billion, ¥158.7 billion in the first half and ¥170.4 billion in the second half. The full-year fiscal 2009 forecast is thus down about 2% from fiscal 2008. While we expect further growth in sales volume, this forecast also reflects a large impact from forex movements, as well as the impact of sales price discounts. However, we are determined to grow volumes to counter these negative factors.

Next, I would like to look at total HDD head demand and TDK's market share. Total HDD demand in fiscal 2008 was 513 million units, up 17% year on year. The number of heads per HDD was 3.1, higher than we had expected due to an increase in high-capacity HDDs as a percentage of the overall market. As a result, we estimate that our market share was 31%.

For fiscal 2009, we are forecasting steady growth in HDD demand of around 11% to roughly 569 million units. The number of heads per HDD might drop below 3.0 due to a slight decrease caused by higher areal recording density in HDDs. We hope to expand our market share to 33%.

My final subject is the schedule for introducing new HDD heads. All companies have started mass producing 334GB/P products for 3.5-inch HDDs. Efforts are now being made to qualify 500GB/P products with a view to the commencement of mass production. In products for 2.5-inch HDDs, 160GB/P products are now being mass produced by all companies, so the market's focus will likely shift to 250GB/P products. We expect to begin mass production in the latter half of 2008 and be in full swing next year. Regarding products for 1.8-inch HDDs, we expect a shift from 80GB/P products to 120GB/P products.

That concludes my presentation. Thank you for your attention.