Notice Regarding Implementation of Structural Reforms
November 8, 2019

Company Name
Representative

Nihon Dempa Kogyo Co., Ltd.
Hiromi Katoh, Representative Director and President(Code 6779 Tokyo Stock Exchange, 1st Section)

Person in charge
Michio Aoyama, Corporate Officer and General Manager of Administration Division
for inquiries(Phone: +81-3-5453-6709)
Nihon Dempa Kogyo Co., Ltd. (hereinafter "NDK") has been implementing structural reforms by restructuring theproduction system since FY 2018( April 1,2018 to March 31, 2019). However, since the management environment isdeteriorating, NDK has resolved at the Board of Directors meeting held on November 8, 2019 to implement further
fundamental structural reforms as follows.
1. Background to the implementation of fundamental structural reforms
Regarding the environment surrounding crystal device business, sales price has been decreasing significantly due
to intensifying competition and it is considered that harsh management environment is going to continue. This has
moved NDK to commence structural reforms mainly by restructuring the production system which has started in FY
2018. Since then, NDK has been reducing fixed costs by implementing structural reform by restructuring mass
production lines at factories in Japan. However, the continuing China-US trade friction is one of the reasons that arepushing down the sales unexpectedly that makes NDK difficult to secure profit for FY 2019.
On the other hand, in the medium and long term perspective, 5G (next-generation high-speed communicationstandard) market is expected to go into full scale operations. 5G system requires higher frequency and it is expectedthat demand for higher-accuracy crystal devices will steadily increase. NDK also expects growing demands forcrystal devices equipped per vehicle due to the expected increase of ADAS (Advanced Driver Assistance Systems)
equipped on vehicles.
Under such management environment, NDK will clarify its policy to inject its resources more heavily on the upstream process where NDK has competitive advantages that includes from cultivating high quality synthetic quartz
crystals to processing wafer using microfabrication technology. NDK will also consolidate its cost-competitivenessby improving productivity in down-stream process (assembly). Moreover, in order to establish strong managementstructure that secures stable profit even under the current sales level, NDK has decided that it is indispensable toexercise a drastic reduction at fixed costs which has been the heavy burden on NDK. In order to achieve this cost
reduction, NDK will implement structural reforms as follows.
2. Overview of Fundamental Structural Reforms(1)Workforce reduction at the non-consolidated company (hereafter the “Parent company”)
In addition to improving the efficiency of operation, fixed cost is planned to be reduced by offering voluntary
early retirement of approximately 100 employees at the Parent company.
<Offering of voluntary early retirement >① Number of employees :② Individuals eligible forvoluntary early retirement :③ Early retirement
application period :④ Retirement date :⑤ Other :Approximately 100
Permanent employees enrolled in the Parent company who is 45 years old or older
as of the date of retirement, and contract employees enrolled in the Parent
company from 60 years old to the age of below 65.
November 25, 2019 to December 24, 2019 (plan)
March 15, 2020 (plan)
Individuals taking early retirement will receive prescribed retirement packages
and will also receive special retirement benefits. Further, those wishing early
retirement will receive reemployment support.

(2)Restructuring of global production system
NDK has been implementing the restructuring of production system since FY 2018 to cut fixed costs andimprove cost-competitiveness. However, NDK recognized the necessity of taking a further step to restructure theproduction system in addition to the structural reforms currently in progress. NDK will carry out the necessary
structural reforms including collaboration with other companies.
3. Outlook
NDK is expected to post approximately 700 million yen for costs such as special retirement benefits incurred byoffering voluntary early retirement at the Parent company as other operating expenses for the year ended March 31,
2020. However, details such as the number of applicants of voluntary early retirement are uncertain at present. The
results and details of the offering of voluntary early retirement will be announced as soon as the details are fixed.
Further, as announced on October 23, 2019 (Notice Regarding the Establishment of a New Company), NDK has
determined to move its factory in Suzhou City, Jiangsu Province, China, to another location in the same city andestablish a new subsidiary which will have the function to manage sales subsidiaries in China region. NDK isexpected to post approximately 2 billion yen of expense incurred by factory relocation as other operating expenses
for the year ended March 31, 2020. However, NDK will receive subsidy income from Suzhou City government nextyear as part of the expense paid this year, and will be posted as an income.
The impact on NDK’s consolidated financial results for the year ending March 31, 2020 is referred at the“ NoticeRegarding Posting of Other Operating Expenses, Difference between Consolidated Financial Forecasts and Results
for the Six Months Ended September 30, 2019, and Revision of Consolidated Financial Forecasts for the Year Ended
March 31, 2020 and Revision of Dividends Payment Forecasts” announced today.
END