SHARP Business Strategy 2004 President Katsuhiko Machida February 18, 2004 Integrated LCD TV Plant Goes On Line Jan. 2004 Kameyama Plant TV technology 1953: Japan’s first TV 2 LCD technology 1973: World’s first calculator with an LCD display 3 I.I. Business Business Strategy Strategy 4 Product Product Business Business 1. LCD TVs 5 (Industry) Worldwide LCD TV Demand Thousands of units 7,500 8,000 overseas 6,000 4,500 4,000 3,000 2,000 0 1,340 630 710 FY2002 domestic 1,500 3,000 1,500 FY2003 (Forecast) FY2004 (Forecast) 7 LCD TV Sales as % of Sharp’s Total Overseas TV Sales 100% 75% 50% CRT TVs 25% LCD TVs 0% 1st Half/2002 2nd Half/2002 1st Half/2003 2nd Half/2003 (Production value) 7 LCD TV Sales as % of Sharp’s Total Domestic TV Sales 100% 75% CRT TVs 50% 25% LCD TVs 0% 1st Half/2002 2nd Half/2002 1st Half/2003 2nd Half/2003 (Production value) 8 Sharp’s LCD TV Unit Sales Thousands of units 4,000 3,000 3,000 2,000 1,000 1,500 890 0 FY2002 FY2003 (Forecast) FY2004 (Target) 9 Wide-screen LCD TV over 22 inches as % of Sharp’s Total LCD TV Sales Thousands of units 3,000 2,000 45% 1,000 25% 9% 0 FY2002 FY2003 (Forecast) FY2004 (Target) 10 Sharp’s LCD TV Cost Competitiveness 6th generation mother glass (1,500 x 1,800mm) Simplify manufacturing process at the unified production site (from LCD panels to TV sets) Reduce panel transportation costs at the unified production site Develop image processing LSI for LCD TVs 11 Sharp’s Overseas LCD TV Production Spain (Barcelona) China from Jun. 2002 (Nanjing) from Feb. 2001 Mexico (Rosarito) from May. 2003 12 2. Mobile Phones 13 (Industry) Worldwide Mobile Phone Demand Millions of units 600 500 490 520 430 400 300 200 100 0 FY2002 FY2003 (Forecast) FY2004 (Forecast) 14 (Industry) Mobile Phone Subscribers* by System In Japan In millions 100 80 3G % of total: 25% 3G 60 40 2G 40% 20 0 2001 2002 *Accumulating total 2003 2004 2005 2006 Source: Sharp estimate 15 Sharp’s Mobile Phone Unit Sales Thousands of units 12,000 10,000 10,000 8,000 8,000 6,000 6,330 4,000 2,000 0 FY2002 FY2003 (Forecast) FY2004 (Target) 16 Sharp’s New 3G Mobile Phones NTT DoCoMo Vodafone SH900i V801SH Compatible with FOMA, which offers users a variety of contents Customers can easily send off Megapixel pictures 2.02 Megapixel CCD camera W-CDMA/GSM-compatible Sharp’s ‘Spiral Strategy’ to Create Unique Mobile Phones 17 Flash memory CCD camera modules PDA-style mobile phones LCDs Next-generation Mobile Phones Image processing LSI LCD TVs PDAs 18 Evolution of Mobile Phones Enhanced AV function Improved camera function E-Cash function 19 Expanding Overseas Business North America Europe Asia 20 3. Home Appliances 21 (Industry) Domestic Home Appliance Demand Trillions of yen 3.0 2.3 2.2 2.2 2.0 1.0 0.0 FY2002 FY2003 (Forecast) FY2004 (Forecast) 22 Sharp’s Products incorporating Plasmacluster Ion Technology Air conditioners Air purifiers Core Device (Plasmacluster Ion generating unit) Kerosene heaters Humidifiers Dehumidifiers Ceramic fan heaters 23 Plasmacluster Ion Technology at Work in Numerous Industries INAX Lavatory FUJITEC Elevator DENSO In-vehicle ion generator MAX Bathroom dryer Rinnai Gas heater DENSO ACE 24-hour ventilation system NISSAN In-vehicle air conditioner Plasmacluster Ion generating unit 24 Sharp’s Unique Electronic Devices Air-conditioners Plasmacluster Ions + Washing machines Ag Ions Kitchen appliances Health conscious technology platform Refrigerators Environmental conscious technology platform 25 Device Device Business Business 4. LCDs 26 (Industry) Worldwide LCD Demand Trillions of yen 5.0 4.5 4.0 3.3 3.0 2.7 2.0 1.0 0.0 FY2002 FY2003 (Forecast) FY2004 (Forecast) 27 Sharp’s LCD Sales Billions of yen 800 730.0 600 400 525.0 425.2 Largesize 200 0 Small- and mediumsize FY2002 FY2003 (Forecast) FY2004 (Target) 28 Sales of LCD Panels for TVs as % of Sharp’s Total Large-size LCD Sales FY2003 (Forecast) FY2004 (Target) 37% for LCD TVs 70% for LCD TVs (Production value) 29 Large-size LCDs 30 Kameyama Plant Production Capacity Thousands of units/month Mother Glass Input 45 50 3 times 40 27 30 20 15 10 0 Jan. 2004 Aug. 2004 2005 31 Kameyama Plant 1st phase 2nd phase 3rd phase Start of operations Jan. 2004 Aug. 2004 2005 Mother glass input (accumulated) 15K sheets/month 27K sheets/month 45K sheets/month Amount of investment Mother glass size 100 Billion yen 1,500 x 1,800 mm 50 billion yen 32 Small- and medium-size LCDs 33 (Industry) Worldwide Demand for Color Screen Mobile Phones as % of Total Demand of Mobile Phones Millions of units 600 500 400 Increase of 140 million units 300 200 % of Color units 75% 50% 100 25% 0 FY2002 FY2003 (Forecast) FY2004 (Forecast) 34 High Electron Mobility of Sharp’s System LCDs CG-Si CG-Si a-Si a-Si p-Si p-Si (Amorphous-Silicon) (Amorphous-Silicon) (Poly-Silicon) (Poly-Silicon) (Continuous (Continuous Grain-Silicon) Grain-Silicon) No crystal-grain Crystal-grain with wall Big crystal-grain with continuous wall Approx. 3 times Electron mobility (cm2/Vs) 120~140 ~0.7 Approx. 500 times 250~350 Integration of peripheral ICs “Amorphous Silicon” 35 “System LCDs” Driver ICs Peripheral circuits on glass substrate Integration … Peripheral circuits Driver IC Controller circuit Power supply circuit RAM Signal Peripheral circuitry CPU •Thin, •Thin, light light weight weight •One •One side side input, input, narrow narrow flame flame •Reduction •Reduction of of components components •High •High reliability reliability 36 Sharp’s System LCD Plants Tenri Plant Tenri Plant Mie No.3 Plant Mie No.3 Plant 1st phase 2nd phase Start of operations Oct. 2002 Jun. 2003 Mar. 2004 Production capacity* (accumulated) 2.5 million units/month 6.5 million units/month 12.2 million units/month Amount of investment 46 billion yen 50 billion yen 42 billion yen Mother glass size 620 x 750 mm 730 x 920 mm *2-inch equivalent panels 37 Sharp’s System LCD Production Capacity Millions of units/month 14 12.2 12 Approx. 10 2 times 8 6.5 6 4 2.5 2 Tenri Plant 0 Mie No.3 Plant 2nd phase Oct.2002 Mie No.3 Plant 1st phase Jun.2003 Mar.2004 (2-inch equivalent panels) 38 Sharp’s System LCD Sales Billions of yen 250 200.0 200 150 100.0 100 50 0 4.3 FY2002 FY2003 (Forecast) FY2004 (Target) 39 5. Photovoltaic Power System 40 (Industry) Worldwide Solar Cell Demand MW 1,000 860 800 600 700 560 400 200 0 FY2002 FY2003 (Forecast) FY2004 (Forecast) Source: Sharp estimate based on PV NEWS (May 2003) 41 Sharp’s Solar Cell Sales Billions of yen 100 90.0 80 70.0 60 45.1 40 20 0 FY2002 FY2003 (Forecast) FY2004 (Target) 42 Sharp’s Advantage World Largest Production Capacity MW/year Shinjo Plant Production Capacity 300 300 248 250 200 200 150 Most Advanced Technology 148 Module Conversion Efficiency 100 World Highest* 50 17.4% 0 Jul. 2002 Feb. 2003 Nov. 2003 Mid-2004 *As of November 1, 2003 43 6. ICs 44 (Industry) Worldwide IC Demand Trillion yen 25.0 19.4 20.0 15.0 15.0 16.7 10.0 5.0 0.0 FY2002 FY2003 (Forecast) FY2004 (Forecast) (Industry) Worldwide Demand for Camera-equipped Mobile Phones as % of Total Demand of Mobile Phones 45 Millions of units 600 500 400 300 200 % of Camera-equipped mobile phones 100 0 5% FY2002 20% FY2003 (Forecast) 40% FY2004 (Forecast) 46 Sharp’s CCD/CMOS Imager Production Capacity Thousands of units/month 8,000 7,000 6,000 6,000 4,000 2,000 0 Sep. 2002 Jun. 2003 Oct. 2003 2nd Half of 2004 47 Sharp’s CCD/CMOS Imager Sales Billions of yen 120 100.0 100 80.0 80 60 40 30.4 20 0 FY2002 FY2003(Forecast) FY2004 (Target) 48 II. II. Capital Capital Investment Investment (Forecast) (Forecast) Billions of yen 250 220.0 220.0 200 150 FY2004 146.2 LCDs 130 billion yen Large-size LCDs: 100 billion yen 100 Small- and medium-size LCDs: 30 billion yen 50 0 FY2002 FY2003 FY2004 (Forecast) (Forecast) 49 Notes Regarding Future Plans and Estimates: This report contains statements describing future plans, strategies, and estimated performance. These descriptions are not based on past facts, but on the management’s assumptions and beliefs in light of the information currently available. These plans, strategies, and performance estimates are subject to a certain amount of risk and uncertainty due to such factors as economic changes, supply-demand fluctuations, increased competition, currency exchange rates, and changes in tax laws. Please understand that actual business results may vary from our estimates.