Financial Material

On a unit basis, LCD TVs continued to move well both in Japan and overseas, with sales reaching 4.78 million units, up 28% over the same period last year. Unit sales increased 24% in Japan, 4% in Europe, 21% in North America, and 2.8 times in China. Though sales were modest in Europe, other major markets saw healthy unit sales increases. Sales on a monetary basis were 378.4 billion yen, a decrease of 1.2% over the same period last year due to price declines. The current worldwide economic crisis is dampening consumer confidence, which will negatively impact the year-end shopping seasons in the U.S. and Japan. Under these circumstances, we will continue to look ahead by introducing advanced, high-value-added products like LCD TVs with built-in Blu-ray Disc recorders, thus cultivating new markets with products that set us clearly apart from the competition. In order to effectively introduce products that make us competitive in both the industrialized and developing countries, we are developing global standard models that employ common designs, and rapidly lowering costs through shorter development lead-times and common, standardized components, thus giving ourselves the cost-competitiveness needed to overcome today’s severe market competition. We predict that these efforts will give us fiscal 2008 LCD TV sales of 11.00 million units, up 33% compared to the same period last year. Sales on a monetary basis, however, are estimated to increase 4.4% to 850.0 billion yen due to falling prices brought on by worsening market conditions. For LCD panels, manufacturers and fabricating companies adjusted inventory of large-size LCDs in response to lower market demand brought on by the sluggish world economy, and this has caused dramatic price drops mainly for LCD panels for PCs starting in summer 2008. Despite this, Sharp has enjoyed healthy sales mainly in large-size TV panels for internal use, with the Kameyama Plant, which underwent a production capacity boost in July 2008, operating at full capacity. Although the market will continue to look uncertain in the second half of the fiscal year, Sharp will provide cost-effective, high-value-added LCDs for internal use and its strategic partners, with the aim of achieving consistent plant operation and greater profits. In small- and medium-size LCDs, Sharp was affected by lower average selling prices for LCD panels for mobile phones. Sharp will strive to come out with high-value-added products utilizing one-of-a-kind LCD technology, while at the same time taking costs down further in order to boost profitability. We are aiming for fiscal 2008 sales of LCDs of 1,322.0 billion yen, up 7.1%, over the previous year.

Sales of mobile phones and wireless PDAs were 231.6 billion yen, down 31.2% compared to the same period last year. On a unit basis, sales were 5.42 million units, down 33%. In Japan, a change in the sales methods of mobile phone carriers and a weakening of consumer confidence combined to plunge sales and profits compared to the same period last year. Sharp will continue to create new handsets that stay ahead of competitors by equipping products with uniquely featured devices and proprietary technologies. We will also step up business overseas, including China. In Japan, however, consumers are waiting longer to upgrade to new phone models and this will prevent an early market recovery. We predict fiscal 2008 sales of 492.0 billion yen, down 24.5% compared to the previous year. Unit sales will also fall by 23% to 11.70 million units.

Sharp has been steadily producing silicon at its own facilities at the Toyama Site and has also expanded procurement from outside material manufacturers as planned. This helped Sharp achieve sales of 93.1 billion yen, up more than 30% over the same period of last year. Sharp’s Katsuragi Plant boosted annual production capacity for thin-film solar cells from 15 MW to 160 MW in October 2008 and is now running steadily. For thin-film solar cells, we expect to reap cost reductions from manufacturing economies of scale, as a drastic reduction in silicon usage is possible and the production process is shorter, compared to the crystalline type. We will be working to achieve high-efficiency production through the installation of production equipment incorporating Sharp’s proprietary know-how. We believe that these efforts will lead to the smooth start-up of the new plant in Sakai. We predict fiscal 2008 sales of solar cells of 205.0 billion yen, up 35.7% over the previous year. The manufacturing complex in Sakai is currently under construction and work on all plants is proceeding as planned. Sharp will continue to work with concerned companies and the local government to ensure the complex is ready to go on-stream as scheduled.