Date: June 19, 2020
Company Name: Nihon Dempa Kogyo Co., Ltd.
Representative: Hiromi Katoh, Representative Directorand President
Code: 6779, First Section of the Tokyo
Contact:

Tel:

Stock Exchange
Michio Aoyama, Corporate Officer andGeneral Manager of Administration
Division
03-5453-6711

Notice concerning NDK’s Mid-Term Management Plan
Nihon Dempa Kogyo Co., Ltd. (“NDK” or “we”) today announced its Mid-Term
Management Plan that covers the period from the fiscal year ending March 31, 2021 tothe fiscal year ending March 31, 2023. Brief details are presented as follows.

1. Background to the Mid-Term Management Plan
The NDK group companies (the “Group”) specialize in the manufacturing ofquartz crystal devices, and has been supporting the development of the electronics
industry from within since its establishment. The Group has made customer
satisfaction its fundamental management policy, and has been leading the industry
through the development, manufacturing, and sale of highly reliable products.
However, the intensifying price competition in recent years has resulted in asignificant decline in sales prices, and, as a result of the production capacity
expansion in the past in line with the management plan in place, the Groupexperienced the difficult management environment, such as increasing costs andsignificant deterioration in profitability. Consequently, we were obliged to recognize
a net loss of more than 10 billion yen for the fiscal year ended March 31, 2018.
In order to continue its business steadily and maintain a stable management evenunder these circumstances, it is indispensable to conduct cost reduction centering on

fixed costs, therefore, NDK started restructuring the production system from thefiscal year ended March 31, 2019, and steadily implemented structural reforms to
improve the high-cost structure of the Group in the fiscal year ended March 31, 2020,
taking measures such as reducing fixed costs by offering voluntary early retirement
to 129 employees of NDK.
More recently, a difficult business environment has continued to surround NDK
resulting from the global economic stagnation caused by the continuing China-US
trade friction and the worldwide outbreak of the COVID-19. Consequently, also in
the fiscal year ended March 31, 2020, regretfully, we recorded a significant net loss,
even after excluding the one-time costs associated with the implementation of thevoluntary early retirement program mentioned above. On the other hand, with thefull-scale increase in demand for the next-generation high-speed communication
standard “5G”, and growing demands in the automotive market, where NDK holds
an overwhelming share, for crystal devices relating to ADAS (Advanced DriverAssistance Systems) equipped in vehicles, in addition to compact-size devices,demand for highly accurate and highly reliable crystal device products, which are astrength of NDK, is expected to increase even more in the future. In light of thesecircumstances, in order to establish a stable management structure that ensures stableprofit, NDK formulated the Mid-Term Management Plan for the three (3) years
commencing in the fiscal year ending March 31, 2021, with the aim to continuing toreduce costs through structural reforms and simultaneously reaping benefits fromfuture business opportunities.
2. Outline of the Mid-Term Management Plan
1) Period
From the fiscal year ending March 31, 2021 to the fiscal year ending March 31,2023
2) Top priorities and measuresi) Selective injection of resources in the upstream process· In order to meet the needs for crystal devices that are more compact and havehigher frequency and accuracy, NDK clarified its policy to invest its resources
more heavily in the upstream process ranging from cultivating high quality
synthetic quartz crystals to processing wafer using microfabrication
technology, where NDK has competitive advantages.
ii) Improving productivity in the down-stream process

· In the down-stream process (assembly), NDK will focus on improving
productivity and strengthening cost-competitiveness by accelerating theintroduction of high speed/high accuracy equipment.
iii) Continuation of structural reform and drastic reduction of fixed costs· In light of the uncertain economic and competitive environment, we willcontinue to implement structural reforms and drastically reduce fixed costs inorder to establish a business structure that ensures stable profit even at thecurrent sales level.
iv) Review sales mix of existing products and business portfolio· We will improve the “quality of sales” by expanding sales through increasing
the sales ratio of products that leverage the technological superiority of NDK,
such as 5G-related products and compact, high frequency/high accuracy
crystal units using photolithographic technology while strategicallydiscontinuing commodity products that had previously been sold for thepurpose of recovering fixed costs.
· We will review our business portfolios based on the current businessenvironment and future growth potential, such as the establishment of a joint
venture related to the SAW filter businessv) Improve NDK’s financial position
・Every effort will be made to restore NDK’s shareholders’ equity by steadily
securing profits.
・NDK will issue the Class A Shares to quickly stabilize NDK’s financial
position, thereby that NDK secures the growth investment source above which
does not rely on the interest-bearing liabilities.
3) Targets to be achieved by the final fiscal year (the fiscal year ending March 31, 2023)of the Mid-Term Management Plan
Net sales: 42 billion yen
Operating income rate
: 7%
Basic earnings per share (EPS):
50 yen (In consideration of dilution due to issuance ofCapital ratio[Assumption]
Exchange rate:

the Class A Shares)
20% or more:

107 yen/US$

Dilution rate:98.4 %* Dilution rate estimated in the case where all of the Class A Shares to be issued toJapan Industrial Solutions Fund II, as announced in “Re: Issuance of Class Sharesthrough Third-Party Allotment, Reduction of Amounts of Capital Stock and Legal
Capital Surplus, Appropriation of Surplus, Partial Amendment to the Articles ofIncorporation, and Reduction of Amounts of Capital Stock and Legal Capital Surplus on
Issuance of Class Shares” as of today, are converted into common shares.
EndThis translation is provided only to assist our English-speaking stakeholders in better
understanding of our original press release. Since this might include slight variation inmeaning due to translation, please referhttps://www.ndk.com/jp/news/2020/1191105_j.pdf

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