PT. SUMCO INDONESIA

I am deeply grateful to you, our shareholders and investors, for your ongoing support of SUMCO.

Now that our financial results have been announced for the second quarter of 2016, I would like to present a brief overview of the market environment for the Company.

As the Internet of Things and social networking services grow in popularity around the world, smartphone functions continue to advance and mobile devices are used more widely than ever. The emergence of “mid-high-range” smartphones is a sign of how conventional mid-range models have gained functionality that compares favorably with high-end products. Underpinning these advances in functions and convenience are cloud services and data centers.

In this market environment, continued strong demand is forecast for 300 mm polished wafers used for memory devices.

Strong demand for 300 mm epitaxial wafers for logic is also expected. Now that the smartphone inventory adjustment has ended and new models for fall and after are starting to appear, demand should increase for these and a wide range of other products.

Demand for 200 mm wafers is recovering rapidly, as they are used for a growing array of semiconductors and electronic components. Automobiles, which depend increasingly on electronics for features like automated driving, and wearable devices are among the applications areas.

We expect the market for semiconductor silicon wafers to continue recovering in the third quarter, but there are concerns that a further rise in the current yen exchange rate will have a major impact on our Group performance with its high ratio of exports.

In this market environment, in line with the policies of the SUMCO Vision, our Group will continue to raise our profile with customers through cutting-edge technology development aimed at producing distinctive products. At the same time we will strive to improve our break-even point through cost reduction.