Taiyo Yuden : Summary of Q&A for the Earnings Release Conference for the 1st Quarter(148KB)

TAIYO YUDEN CO., LTD.

Earnings Release Conference for the 1st Quarter of the Fiscal Year Ending

March 31, 2022, Summary of Q&A

(Held August 5, 2021)

Financial Results

Q1. What were the trends for multilayer ceramic capacitor (MLCC) orders and sales by market sector in the first quarter?

A1. In April, orders received fell back slightly from the all-time high recorded in March. There was also a slight decline in May due to the Golden Week holiday. In June, orders returned from a flat level to an upward trend compared to May. Market sectors with strong sales were products for use in information equipment, communication equipment, and automobiles.

Q2. Demand for products for use in industrial equipment and automobiles is becoming stronger. In which market sectors is demand for MLCCs increasing, and how does this affect earnings and price trends?

A2. Demand for high value-added,high-end MLCCs has increased, and there has been growth in small size, high capacitance products. On the other hand, demand for large size products has also exceeded initial expectations. TAIYO YUDEN mainly handles high value-added products used in base station communication equipment and servers.

Future Outlook

Q3. You have upwardly revised first half operating income. What are the factors for increase or decrease compared to the initial forecast?

A3. The main factors for increase are the impact of exchange rates due depreciation in the value of the yen, restrained price reductions, and higher inventory.

Q4. At the beginning of the fiscal year, you expected adjustments in automobiles and industrial equipment in the second half. Do you see any such adjustments now? Also, what is your view of smartphone trends in the second and third quarters?

A4. Current orders remain high, and customers seem to be shifting toward increasing inventory levels. Consequently, we believe that the second half of the fiscal year will not see as much adjustment as we had expected at the beginning of the fiscal year, or that the timing of adjustment will be a little later. Furthermore, although we are expecting adjustments for customers in some regions from the first quarter through the second quarter for smartphones, the smartphone market overall remains strong, and we expect it will continue to grow.

Q5. The MLCC order backlog has increased, but sales have remained almost flat in dollar terms since the second quarter of the previous fiscal year. Although it looks like you have been unable to increase production sufficiently, why do you forecast a 15% Q/Q increase in sales for the second quarter?

A5. We have calculated that we will be able to increase production sufficiently in the second quarter by boosting production capacity and increasing capacity utilization. We also expect to benefit from changes in the product mix due to an increase in high-end and high-reliability products.

Q6. You forecast 15% Q/Q growth in MLCC sales in the second quarter. What market sectors will contribute to the increase in sales?

A6. We expect sales will increase in many market sectors, including sales for use in communication equipment, such as smartphones, sales for use in automobiles, and sales for use in information equipment.

Q7. Are there any signs of a marked slowdown in MLCC orders in July and August?

A7. There are no signs of a slowdown in demand in the second quarter. We expect demand will increase overall, including demand for products for use in communication equipment, such as smartphones, for use in information equipment, and for use in automobiles.

Q8. Compared with the first quarter, what factors for increase or decrease in operating income are you assuming in the second quarter?

A8. The main negative impact will be the 2.5 billion yen increase in fixed costs associated with the increase in production. On the other hand, we assume sales will grow by 7.3 billion yen, and this will contribute to an increase in operating income. As a result, we expect operating income will increase by 2.7 billion yen.

Q9. How much do you plan to increase inventory at the end of the second quarter compared with the end of the first quarter? Also, what is your inventory plan for the second half?

A9. We plan to increase inventory by approximately 3.0 billion yen in the second quarter. We have yet to revise the earnings forecast and inventory plan for the second half, but we would like to increase inventory further if possible to prepare for future growth in demand.

Q10. What assumptions have you made about price reductions in the second quarter and the second half?

A10. We have assumed that price reductions in the second quarter will continue to be relatively moderate as they were in the first quarter. Although we are yet to revise the earnings forecast

and price changes for the second half, we believe there will be a certain level of price reductions in the second half.

Impact of COVID-19

Q11. What was the impact of the constraints on operations at the MLCC plant in Malaysia in the first quarter? Also what is your production plan for the second quarter?

A11. There was a 9-day unplanned shutdown of production at the Malaysia plant in the first quarter due to COVID-19. The impact from this was a slight decline in overall MLCC capacity utilization in the first quarter to around 90 - 95%, compared with the assumption of 95% at the beginning of the fiscal year. We believe there will be no impact on production in the second quarter, and we forecast overall MLCC capacity utilization will be around 95%.

• This document contains information about the plans, business results, and strategies of TAIYO YUDEN CO., LTD. and the TAIYO YUDEN Group. These forward-looking statements other than historical facts represent judgments made by the Company based on information available at present and are inherently subject to a variety of uncertainties. TAIYO YUDEN cannot provide any guarantee as to the attainment of certain figures in the future. The Company's actual activities and business results could differ significantly due to changes including, but not limited to, changes in the electronics market in which the Company's business activities are centered. Readers should not overly rely on the information contained in this document.