March-7-2006

Strengthening of JAE Shinshu in preparation for future expansion of private-sector demand in the field of aerospace operations following efforts in the connector operations field

In the past two years, we have been proactively investing for the medium to long term, focusing on connector operations. Our objective is to reinforce the integrated production system from raw materials to finished products at our domestic and overseas production bases.

This year, in continuation of such efforts in the field of aerospace operations – one of the pillars of Japan Aviation Electronics Industry – we will enhance and strengthen our subsidiary production company JAE Shinshu (Matsukawa-machi, Shimoina-gun, Nagano Prefecture, President Kazunori Takamune) in preparation for the future expansion of private-sector demand, and will strive to commence operations at JAE Shinshu by September 2006.

The uncertain outlook on the future course of official demand – a major source of orders – has triggered our initiatives in the operations domain of motion sensing and control that utilizes the aviation technologies cultivated in the aerospace field. We have aggressively striven to develop private-sector demand focused on sensors and modules for industrial equipment such as semiconductor manufacturing devices and oilrigs. As a result of such efforts, in the past few years sales to the private sector have maintained a remarkable growth rate of more than 10% per year, and the share of sales to the private sector has expanded to more than 40% of all sales.

We project future expansion of demand for vibration-suppression devices and linear motors in the field of semiconductor manufacturing devices that will undergo further miniaturization, and we also project expanded demand for acceleration sensors and modules in the field of oilrigs that will experience growing requirements triggered by efforts to secure oil resources. Furthermore, we are nurturing additional opportunities for business development in the automotive field – a market of great potential – and the field of humanoid robots, and intend to make investments taking into consideration the medium to long term prospects in these fields.

Overview of production system enhancements at JAE Shinshu

• Building an annex of 2,500 m² on the existing plant (total floor area 5,868 m²)
• Commencement of construction work in April 2006, and launch of operations in September 2006.
• Investment plan in line with the efforts to enhance the production system: Approximately 800 million yen in FY2006 (to be invested in buildings and production facilities)

• JAE Hirosaki (Hirosaki City, Aomori Prefecture): Commencement of operations at a stamping plant (3,400 m²) in October 2005
• JAE Yamagata (Shinjo City, Yamagata Prefecture): Planned commencement of operations at a new stamping plant (10,000 m²) in April 2006
• JAE WX (Wuxi City, China): Planned commencement of operations at a new plant (17,000 m²) in April 2006