Press Release

March 17, 2006

Epson Toyocom Makes 3-Billion Yen Capital Investment
in Miyazaki Plant

Epson Toyocom Corporation (Takeo Kagami, President) held a ground-breaking ceremony at 10:00 AM today (March 17) at the company's Miyazaki Plant (Kiyotake-cho, Miyazaki-gun, Miyazaki-ken) to celebrate the forthcoming installation of tuning-fork crystal unit (*1) production equipment and water equipment on the site.

Approximately 30 people attending the ceremony, which included a traditional Japanese ritual to pray that building projects are completed safely and without incident.

Crystal units and other timing devices are Epson Toyocom's major products, accounting for about 90% of sales company-wide. Within this product group, Epson Toyocom's share of the world market for tuning-fork crystal units for mobile phones is more than 60%, according to company studies. With expanding production of mobile phones and the profusion of digital information equipment such as digital cameras and PCs, the demand for tuning-fork crystal units used as clock devices on such electronic devices is forecast to grow year by year. Epson Toyocom has recently chosen to install tuning-fork crystal unit production equipment at its Miyazaki Plant to ensure a stable supply of products in increasingly high demand.

The total investment for the new equipment being built at Miyazaki Plant will come to about 3 billion yen. Production equipment installation will be complete in June of this year, as will facilities for manufacturing water and treating wastewater. Production is scheduled to begin in July. Once the equipment is in operation, the tuning-fork crystal unit production capacity for Epson Toyocom as a whole will reach approximately 200 million/ month, a level 30% greater than at present.

As a result, in addition to its current role as Epson Toyocom's main production site for synthetic crystal quartz (the raw material used in quartz devices) and optical devices, the Miyazaki Plant will become Epson Toyocom's major plant in Japan for timing devices, producing tuning-fork crystal units with photo-etching technology (*2), capable of efficient, large-scale production of small, high-precision crystal units.

Overview of capacity-building investment

Investment target:

Epson Toyocom Corporation Miyazaki Plant

Address: 1860 Hei, Imaizumi, Kiyotake-cho, Miyazaki-gun, Miyazaki-ken, Japan

Investment details:

(1) Crystal chip production equipment

Crystal chip for tuning-fork crystal unit production equipment with photo-etching technology

(2) Water manufacturing and wastewater treatment system (including new building construction)

Installation of equipment to manufacture water for cleaning crystals processed by photo-etching technology, to treat and neutralize wastewater

Period of construction:

March - June 2006 (scheduled)

Completion:

June 2006 (scheduled)

Start of production:

July 2006 (scheduled)

Total investment:

Approximately 3 billion yen

Overview of new equipment and facilities

(1) Production equipment

Products:

Crystal chips for kHz band tuning-fork crystal unit crystals such as 32.768kHz for clock functions

Equipment details:

Production equipment that uses photo-etching technology to machine crystal units into U-shaped tuning forks and attach electrodes to them

Production capacity:

Once in operation, Epson Toyocom's total monthly production of tuning-fork crystal units will be about 200 million units

Installation site:

Miyazaki Plant No. 3 Factory, part of second floor (*3)

Total floor area:

About 1,500m²

Design and construction:

Shimizu Corporation Fukuoka Branch

(2) Water manufacturing and waste water treatment system, building

Facilities detail:

Eco-friendly closed-loop water manufacturing and waste water treatment equipment (*4) consisting of three systems under one roof: a water production system for manufacturing the deionized water used to clean crystal chips, a waste water system and a neutralizing system.

Construction site:

Building expansion at side of Miyazaki Plant No. 3 Factory

Design and construction:

(Building) Shimizu Corporation Fukuoka Branch
(Water manufacturing and waste water treatment equipment) Kurita Water Industries Ltd. Kyushu Office

Overview of building:

(Number of floors): 2 above ground
(Dimensions) Height: 12m; length: 25m; depth: 20m
(Total floor area): 1,000m²
(Building area): 500m²
(Structure) First floor: ferroconcrete; second floor: steel-frame construction
(Finish) Exterior: Boltless insulated sandwich panel wall;
Roof: Galvalume steel plate single folded plate roofing

*1 Tuning-fork crystal units

Crystal chips for tuning-fork crystal unit and structure

*2 Photo-etching technology

A processing method in which chemicals are used to remove materials from a thin sheet of crystal plate or metal layer. Primarily used in the fabrication of U-shaped tuning-fork crystals and electrodes, photo-etching has the following advantages over mechanical processing, which was used before photo-etching was developed.

(1) Because this is the same process as that used to form integrated circuits, it can make compact, high precision units with exacting dimensions.

(2) Photo-etching is a high-throughput process that provides uniform quality because several hundred crystals can be simultaneously fabricated from a single crystal plate.

(3) Crystal chips have no distortion and therefore provide years of stable frequency.

*3 Installation site for crystal chip production equipment

*4 Structure of closed-loop water manufacturing and waste water treatment equipment

(1) Treats industrial water to make deionized water.

(2) Crystals processed by photo-etching are cleaned with deionized water.

(3) Impurities / chemicals are removed from the waste water resulting from cleaning of crystals, and the water is reused as recycled deionized water.

(4) Impurities and chemicals are neutralized and solidified by drying.

(5) Solidified impurities are recycled (scheduled to start during FY2006).