NewYear Greeting

Happy New Year.

Thanks to all of you, Epson Toyocom has safely made it through its first full year in business since the integration. Our customers also recognize and appreciate how smoothly integration has progressed. I think that over the past year we have been able to lay a solid foundation on which to build trust as a company. Such trust will give us leverage for deploying two main actions in 2007, a year in which we will get on track toward further growth.

First, we will continue to invest in plant and equipment so as to ensure a stable supply of products and disperse production risk.
The crystal device market continues to exhibit robust growth, and many customers are very concerned about supply stability. In response, we will efficiently invest in plant and equipment while determining the right balance between production volume and market movements. This fiscal year, in fact, we had planned to invest 10 billion yen in plant and equipment. However, with product demand growing and a need for greater plant and process efficiency, we decided to act more quickly to reinforce our ability to provide a stable supply of products and have thus revised this figure upward to 11.5 billion yen.

Second, we will expand and enhance our QMEMS products, as announced last year.
A QMEMS is any high added value quartz device that exploits the characteristics of quartz crystal material but that is produced using MEMS (micro-electro-mechanical system) processing technology.
Market needs are advancing faster than previously imagined toward smaller, more stable crystal products, but we will stay ahead of the curve by rolling out products that exceed market speed and quality requirements. For example, we want to further accelerate the 3D strategy by further expanding and upgrading our line of AT crystal units. In addition to our traditional line of micromachined crystal units, we will apply the photolithographic process that we developed for tuning-fork crystal units to bolster our line of highly compact and stable "photo AT" crystal units.

The growth of a business relies on a recurrent cycle in which profits from operations are reinvested in capital equipment and R&D, which, in turn, are designed to drive growth in both revenue and income.
At the same time, a company cannot hope to survive without the trust of society, including its customers. Behaving in a socially responsible manner so as not to lose the trust that society has placed in it is also a fundamental of business management.
By behaving in a socially responsible manner and by increasing our revenue and income by implementing the actions outlined above, Epson Toyocom will continue to grow.
I ask for your understanding, support and cooperation.

Takeo Kagami
President
Epson Toyocom Corporation