Happy New Year.

As of this past October, two years have passed since the integration that created Epson Toyocom (in October 2005). As we start the new year, I am reminded of how much I want 2008 to be a turning point for Epson Toyocom as we pursue our 3D Strategy for growth.

Commercialization of products with high added value

Since we integrated our businesses, we have continued to develop products with high added value combining Epson and Toyocom technology. In 2008, our plan is to fill out our lineup by launching products from compact, high-performance crystal devices that have QMEMS technology at their core. Module products, moreover, which are the vertical axis of the 3D Strategy, are also taking form.

I look forward to putting all our business lines on a growth trajectory by fostering products with high added value into the mainstay of our business.

Increasing production levels and efficiency

As our QMEMS products expand commercially, it is critical to secure enough production capacity so that we can offer a stable supply. Also, we are lifting production efficiency by realigning our production sites in accordance with the roles they perform.

New factories we are building in Thailand and China (Wuxi) are absolutely indispensable to raise production levels and efficiency. Although fixed costs will temporarily remain high until these new factories are ready to run, when they do begin operations in turn (this spring and into summer) they will start up with full attention paid to all aspects of QCD (quality, cost and delivery). Epson Toyocom's growth depends on using these new factories as instruments to achieve higher levels of production and efficiency.

Medium-range targets

We have set a target of 150 billion yen in sales and at least 15% ordinary income margin in FY2010. To get there, it is essential that we set benchmarks this year for commercializing products with high added value and for preparing a high efficiency production system.

In that sense too, 2008 is a very important year for setting Epson Toyocom on a path of growth.

A closing note

Finally, just on a personal note, 2008 is the Year of the Rat in the Chinese zodiac system, the same year in which I was born. They say that people born in the Year of the Rat are always vigorously moving around and can't sit still, but as we head into this new year, I feel inspired anew to keep moving and working vigorously to get Epson Toyocom's growth strategy on track.

I look forward to your continued understanding and support in the new year.

Kaname Miyazawa
President and Representative Director
Epson Toyocom Corporation