Financial Material

On a unit basis, LCD TVs continued to move well both in Japan and overseas, with sales reaching 2.05 million sets, up 32% compared to the same period last year. Unit sales increased 24% in Japan, 30% in North America, 6% in Europe and threefold in China compared to the same period last year, indicating slower growth in Europe but significant increases in other major markets. Sales on a monetary basis were 176.2 billion yen, an increase of 3.8% over the same period last year, due to price declines. Going forward, Sharp will continue to work to strengthen its capabilities to develop products that match the needs of individual markets, centering on high-value-added models. We are also working to further strengthen cost competitiveness by improving the efficiency of operations at overseas production bases such as new plants in Poland and Mexico, both of which became operational in 2007. In addition, Sharp is making efforts to strengthen and expand its LCD TV business by improving the brand image, through an increase in the number of TV commercials and by launching various advertising campaigns in China and other countries which are experiencing rapid growth. In this first quarter, demand for large-size LCDs continued to grow steadily, and the Kameyama Plant has been running at full capacity. Though the tight supply/demand situation is mitigating at present, demand is expected to increase toward the end of the year. Beginning in July 2008, Sharp has expanded the supply of large-size LCDs by boosting the glass substrate input capacity at the Kameyama No. 2 Plant from 60,000 to 90,000 sheets per month. Sharp will be working to further grow its LCD business and improve profitability by strengthening sales inside the company as well as to strategic partners.

Sales of mobile phones and wireless PDAs were 129.0 billion yen, down 38.1% over the same period in the previous year. On a unit basis, sales were 2.99 million units, down 39% compared to the same period last year. In the Japanese market, a weakening of consumer confidence coupled with worsening business sentiment led to the decline in handset demand, which was strongly evident across the entire mobile phone industry in Japan. Sharp, as the industry leader, was significantly affected by this change in the business environment. For the Japanese market, Sharp is moving forward to create new products that stay ahead of competitors by continuing to equip these products with its uniquely-featured devices and proprietary technologies. In addition, overseas, Sharp is taking steps to expand business by introducing high-value-added handsets that have proven popular in Japan into the Chinese market, thereby establishing Sharp as the brand of choice for sophisticated, high-end products.

Since 2007, Sharp has been producing silicon at its own facilities at the Toyama Site and has also expanded procurement from outside material manufacturers. Procurement of raw materials has been proceeding according to plan, and for this first quarter, sales exceeded the same period last year by around 40% accompanied by an on-going return to profitability. As for prospects for silicon procurement, we expect to secure the needed amounts, and we will continue to work to expand sales and increase profits. Also, Sharp is moving to boost annual production capacity for thin-film solar cells from the current level of 15 MW to 160 MW starting in October 2008. The amount of silicon used for thin-film solar cells is approximately one one-hundredth the amount required for crystalline solar cells, enabling a dramatic reduction in silicon usage. We also expect to reap cost reductions from manufacturing economies of scale from high-volume production, as the production processes are shorter. We will be working to build a high-efficiency production system through the installation of production equipment incorporating Sharp’s proprietary know-how. It is our desire that these efforts lead to the smooth start-up of the new plant in Sakai.