Financial Material

On a unit basis, sales of LCD TVs were 2.00 million sets, down 13.9% from the previous quarter. Sales on a monetary basis were 139.1 billion yen, down 4.6%. Unit sales increased in Japan, owing to the launch of new models with outstanding energy efficiency. The Japanese government’s introduction of a subsidy program, which awards “eco-points” for the purchase of environmentally-friendly consumer electronics, also had a positive effect. Meanwhile, unit sales declined overseas where difficult market conditions continue to prevail, as we put priority on securing profitability. Sharp's average selling price (the blended price for all sizes), however, increased in and outside of Japan compared to the previous quarter. Going forward, Sharp will continue to work to expand sales and improve profitability by achieving cost reductions through innovations in design and production, and even lower power consumption and higher image quality. We will also introduce products designed for specific markets, including the United States, Europe and emerging nations, particularly China. Demand for large-size LCDs is growing, centered primarily in China. In addition, reduced availability of raw materials such as glass substrates continues, resulting in the current tight supply/demand balance for large-size LCDs. In response, Sharp has been running the Kameyama No. 2 Plant at full capacity since April 2009, and beginning in August 2009, will boost the glass substrate input capacity at the Kameyama No. 2 Plant from 90,000 to 100,000 sheets per month. However, with the shutdown of the Kameyama No. 1 Plant, our production capacity of large-size LCDs decreased 15% from the same period last year, which is not enough to meet the current burgeoning demand. Therefore, we are proceeding with preparations for the new LCD panel plant in Sakai City, Osaka Prefecture, which is set to start operations in October 2009. Going forward, Sharp will be working to expand business and improve profitability with these two plants: the Kameyama No. 2 Plant, engaged in integrated production from LCD panels to finished TV sets, and the new plant in Sakai which will supply LCD panels to our strategic partners. On July 30, 2009, Sharp entered into an agreement (the “Joint Venture Agreement”) with Sony Corporation, to establish a joint venture company to produce and sell large-size LCD panels and modules. On July 1, 2009, Sharp split out its new LCD panel plant in Sakai, and transferred it to Sharp Display Products Corporation (“SDP”), its wholly-owned subsidiary. SDP is scheduled to commence operations in October 2009. On December 29, 2009, SDP will become a joint venture company of Sharp and Sony with third-party allocation, based on the Joint Venture Agreement concluded on July 30, 2009. This is the first step toward the final investment ratio of 66% by Sharp and 34% by Sony. Sony will make additional capital injections to SDP. For small- and medium-size LCDs, including models for in-vehicle use, adverse market conditions continue. In response, Sharp announced the introduction of notebook PCs that use optical-sensor LCDs and mobile phones equipped with memory LCDs. Sharp will be working to develop new markets by taking full advantage of such proprietary LCD technologies.

In Japan, the challenging market environment continues for mobile phones. Under these circumstances, Sharp has worked to create new markets by developing demand-generating products equipped with Sharp’s uniquely-featured devices such as high-resolution 10 mega-pixel CCD cameras, solar panels, and memory LCDs that deliver super-low power consumption and high visibility. For the first quarter of fiscal 2009, sales of mobile phones were 124.4 billion yen, up 37.8% over the previous quarter. On a unit basis, sales were 2.74 million units, up 37.6%. For fiscal 2008, Sharp retained the top share in the Japanese market for the fourth consecutive year. Sharp will be working to create new uniquely-featured products designed to match user needs, and internationally, will be working to further expand sales by aggressively introducing mobile phones in both the mid-range and more affordable price ranges, mainly for China.

In Europe, Sharp’s major market, our solar cell business suffered from exchange rate fluctuations and significant price drops. These were the result of the weak Euro and British pound, and the economic slowdown triggered by the global financial crisis. We anticipate that this bleak situation in the European market will continue throughout fiscal 2009. In Japan, however, the market is expected to grow substantially. The Japanese government reinstated subsidies for the installation of residential photovoltaic power generation systems and will introduce a new scheme of feed-in tariffs.