2Q FY2020 Tokuyama Corporation Investor Meeting
Q&A (Excerpts)

Date and time: October 28, 2020 (Wednesday) 18:00 – 19:00
Participants:

Hiroshi Yokota, Representative Director, President and Executive Officer
Hideo Sugimura, Director, Managing Executive Officer, General Manager,
Corporate Planning Div.

1.

Questions regarding 1H results and full fiscal year forecasts

Q1: You are not revising your full-year operating profit forecast, and I think it will go a littlehigher. Are you viewing the Life & Amenity Business Division in a conservativemanner?
A1: We have factored in a little leeway. The possibility of impact from a second wave ofCOVID-19 cannot be denied. If infections spread in Europe and the United States andthe situation becomes like it was in the spring of this year, the Life & Amenity Business
Division may be affected.

Q2: The price of coal has been rising recently. I would like to ask for your comments withregard to the procurement price of coal and an explanation of cement profit and losstrends.
A2: Coal prices temporarily rose in the first half of October, but are now stable. The cementbusiness tends to have high sales in the second half, however this year the constructionindustry is generally lacking in strength. Since the planned hotel-related projects in theregions are struggling due to the impact of COVID-19, we are maintaining a cautious
stance and estimate that we will be on par with the first half.

Q3: A question regarding the “Other fixed costs” in the increase/decrease analysis graph on
page 8 of the explanatory materials. It is explained that, at the beginning of the term, theannual amount was ¥10.4 billion, but since the progress in the first half is quite low, willthe ¥9 billion balance be generated in the second half?
A3: I don’t think we will use that much. Repair costs are almost as planned compared with
our plans at the beginning of the term, and since we are innovating and reducing theamount of investment by as much as possible, we are expecting our full-year
depreciation costs to be negative. As for R&D, since we are cutting costs for machineryand equipment, we think that “Other fixed costs” for the full year can be reduced byabout ¥2 billion from the beginning of the year forecast. In addition, as expense-relatedcosts, including business trips and entertainment expenses, have been reduced by about¥1 billion in the first half by teleworking, we would like this trend to continue.

2.

Questions regarding polycrystalline silicon applications for semiconductors

Q4: Please tell us about the status of orders received for polycrystalline silicon in the firsthalf and the movement toward the second half. From July to September, the volume ofwafer shipments seemed to be at a high level. Can you tell us how you see thepolycrystalline silicon business going forward?
A4: Quantitatively, we are receiving orders at a high level. The same applies to the second
half of the year, and we are almost receiving orders in line with those in fiscal 2018,
which were strong. Customers for a wafer diameter of 300 mm have high rates ofoperation and robust demand. On the other hand, overall demand for small-diameter
wafers may be weaker than that of 300 mm, but since we think that these will also
exhibit a boom when looked at over the medium to long term, we assess that we will bein a strong position in the coming years.

Q5: Did the first-half sales volume of polycrystalline silicon increase year on year? Will you
be able to raise prices next fiscal year?
A5: The volume has increased by about 25 percent. Improving quality to maintain a cuttingedge in the market requires a large amount of investment. We are strongly requesting
price increases from our customers.

3.

Question regarding efforts to reduce CO2 emissions

Q6: The use of biomass fuel is becoming more widespread as an initiative to reduce CO2emissions, but is it realistically possible to procure biomass fuel?
A6: The prices of biomass fuels, especially white pellets, are soaring, and it is difficult toprocure them without a long-term contract. Our goal is the use of biomass that is not yet
being utilized. We have a variety of ideas that we are currently considering.

4.

Question regarding A&T Corporation becoming a wholly owned subsidiary

Q7: Congratulations on making A&T a wholly owned subsidiary. The company had
remained in a half-owned state for a long time. I think its products are not bad, butcould you please tell us the reason why A&T’s performance was sluggish and what you,President Yokota, would like to achieve with the company in the years ahead.
A7: As you said, the situation had been dragging on without reaching a conclusion. To breakthe deadlock, A&T and Tokuyama identified the problems of group management andthe direction in which we should proceed. A&T needs to further enhance its
development capabilities. Up to now, the company had been conducting businessfocusing on electrolytes and glucose, but since the domestic market for these hasplateaued, they need to break into overseas markets. OEM supply in China and otherbusiness is getting on track, but when working overseas there are limits to what A&T
can do on its own. Also, recent infectious diseases and the ideal methods ofimmunodiagnostics that accompany them are being highlighted, but A&T has not yet
created such a lineup. In these fields, the search technology for functional peptides, forexample, will be material for immunodiagnostics in the future. I would like to focus on
research and development as a unit and also carry out technical development. I wouldalso like to make Group-wide efforts, such as by strengthening cooperation andincluding universities and research institutes as well as downstream manufacturers andopen innovation.