Financial Material

On a monetary basis, sales of LCD TVs for fiscal 2009 were 666.8 billion yen, down 8.6% from the previous year. Sales on a unit basis were 10.18 million sets, up 1.8%. For fiscal 2010, Sharp will work to increase sales through the early introduction of 3D LCD TVs equipped with UV2A photo-alignment technology, four-primary-color technology and other proprietary LCD technologies. In addition, Sharp will take proactive steps to globally expand sales of LED AQUOS featuring panels based on new technologies. Sharp will also be pursuing the creation of optimized production frameworks—from design to manufacturing—to meet the needs of markets including the U.S. and Europe, as well as China and other developing countries where demand is expanding rapidly. For fiscal 2010, Sharp anticipates sales of LCD TVs on a monetary basis of 820.0 billion yen, up 23.0% over the previous year, and on a unit basis, 15.00 million sets, up 47.2%. Regarding large-size LCDs, as in fiscal 2009, a favorable supply/demand balance for LCD panels is expected to continue in fiscal 2010. In addition, the growth in popularity of LED-backlit TVs and 3D TVs is accelerating, and this emerging new trend is expected to create a tight supply/demand balance for high-resolution, high-brightness LCD panels compatible with these new technologies. To respond to burgeoning demand for these high-performance panels, Sharp has moved up a planned doubling of production capacity (from an input capacity of 36,000 substrates to 72,000 substrates per month) at the LCD plant in Sakai, originally scheduled for October 2010, to July. The plant has an advantage in terms of manufacturing LCD panels based on Sharp’s proprietary technologies, such as UV2A and four-primary-color technologies. For small- and medium-size LCDs, adverse market conditions continued in fiscal 2009, including price drops and on-going commoditization of these devices. In response, Sharp acted to implement a drastic reorganization in the cost structures of its existing business. At the same time, we have moved to create new markets and pushed the development of new technologies to transform this product category into a high-value-added business. The recently announced 3D touchscreen LCD featuring the industry’s highest brightness is a high-resolution panel based on advanced CG-Silicon technology, one of Sharp’s competitive edges. Sharp will be working to expand sales and improve profitability in its small- and medium-size LCD business by emphasizing the design-in activities of these displays for game devices and digital cameras, and also for smartphones and eBooks, where 3D touchscreen LCDs are expected to spread. For fiscal 2010, Sharp expects sales of LCDs to be 1,030.0 billion yen, up 16.1% compared to the previous year.

In fiscal 2009, Sharp worked to further expand its market share mainly in Japan and China, by introducing distinctive products equipped with Sharp's proprietary devices such as high-quality CCD cameras and solar panels. As a result, for fiscal 2009, sales of mobile phones were 454.4 billion yen, up 3.9% over the previous year. On a unit basis, sales were 10.54 million units, up 6.3%. For fiscal 2010, to respond to the polarization of demand in the Japanese domestic market, Sharp will be introducing new products in the high-end handset market, including smartphones, as well as expanding its line-up of affordably-priced models. Overseas, in China, Sharp will be working to increase sales of 3G mobile phones, expand its sales network from major cities to include regional urban hubs, and introduce cost-competitive products tailored to local markets. Also, in the U.S. and Europe, Sharp will be taking proactive steps to introduce high-end handsets such as smartphones, and make an aggressive push to penetrate the market and build brand equity. Recently, we announced a smartphone developed by merging Sharp’s technologies and expertise for mobile phone development and LCD, with Microsoft’s cloud computing service and software technology. This represents the first of a series of strategic products designed for the U.S. and European markets. For fiscal 2010, Sharp anticipates sales of mobile phones to be 505.0 billion yen, up 11.1% over the previous year, with sales on a unit basis of 13.70 million units, up 29.9% compared to last year.

In fiscal 2009, demand in Europe, the major market for solar cells, were strong in the latter half of the year, despite the impact of a revamping of feed-in tariff schemes and the on-going financial crisis. Meanwhile, in Japan, in addition to offering subsidies for the installation of residential photovoltaic power generation systems, the government started a scheme for selling surplus solar-power electricity to utility companies. This has led to the rapid growth of the Japanese solar cell market, centered on residential use. As a result, sales for fiscal 2009 were 208.7 billion yen, up 32.8% over the previous year. Production volume was 792 MW, up approximately 90% over the previous fiscal year. For fiscal 2010, the solar cell market is expected to grow around the world, reflecting expanded environmental policy measures implemented by governments. In addition to Japan, where the government upgraded its subsidy programs, the U.S. government is set to implement a full-fledged Green New Deal policy, and the Chinese government is expected to institute measures to encourage the wider use of photovoltaic power generation systems. We will work to improve profitability and achieve grid parity as quickly as possible, using both crystalline and thin-film solar cells. This is to be achieved by building a production framework capable of accommodating demand that is growing extremely rapidly, and improving conversion efficiency through our proprietary technologies. In addition, Sharp is striving to expand its business by increasing sales of photovoltaic power generation systems for industrial use, and is pushing to expand and strengthen applications in areas other than residential and industrial use. In March 2010, Sharp began production of thin-film solar cells at its solar cell plant in Sakai and shipments to customers around the world started in April. For fiscal 2010, Sharp anticipates sales of solar cells of 250.0 billion yen, up 19.8% over the previous year, and a production volume of 1,200 MW, up approximately 50% over the previous fiscal year.