BUSINESS REPORT
2024(from April 1, 2023 to March 31, 2024)

To Our Shareholders
It is my pleasure to report on the business results of SHINKO ELECTRIC
INDUSTRIES CO., LTD. (the Company) for fiscal year 2023 (April 1, 2023 toMarch 31, 2024), which marks our 89th business period.
The structures of the economy and society are being significantly changedby the advancement of information communication infrastructure that realizes
super high-speed and high-volume communication and the progression ofdigital transformation (DX) due to the increasing use of artificial intelligence(AI) and Internet of things (IoT). These technologies have the potential tocreate innovation on a different order of magnitude than ever before. It is
expected that the progress of semiconductors will continue as a key technology
for achieving this potential. Moreover, the markets for semiconductors are
expected to expand in the future, including in the automotive market, where technological developments such as
autonomous driving are accelerating as well as in the robotics market where application are expected to be
diverse. In addition, semiconductors’ needs are expected to become more sophisticated and diverse as key devices
that support the evolution of technologies that is essential for the realization of Green Transformation (GX).
The Shinko Group is committed to developing highly competitive products, based on our interconnection
technology that brings the marvelous features and benefits of semiconductor devices into people’s lives. We will
strive to provide products and services with high value for customers and to support their success. Through these
initiatives, we will pursue our own development and growth.
Furthermore, we are committed to the practice of the SHINKO Way, which embodies the Shinko Group’s
corporate philosophy and policies. Through the SHINKO Way, we pursue harmony with stakeholders while
promoting various sustainability efforts, including those for climate change.
Going forward, the implementation of the tender offer is planned for the company shares by the tender
offeror that is focused on JIC Capital, Ltd. In the semiconductor industry, where market conditions change rapidly,
we aim to privatize the company shares through the tender offer and the series of transactions, promoting thenext-generation semiconductor business and reinforcing the Company’s market competitiveness in nextgeneration products, aiming to enhance our corporate value in the medium- to long-term on a sustainable basis.
As we move forward, I ask for the kind understanding all our shareholders.
June 2024

Susumu Kurashima
Representative Director of Board, President

1

Business Report 2024

Review of Operations and Outlook
Business Results for the Fiscal Year Ended March 31, 2024
In the semiconductor industry, while this fiscal year’s market environment has
shown partial improvement due to increased demand in semiconductors for AI, a
severe business environment continued with prolonged market downturn due to thecontinuing stagnation in the PC and server markets, a drop in demand for

Net sales(Billions of yen)286

smartphones caused by longer replacement cycles, the impact of US Government

209

export restrictions on semiconductors to China, inventory adjustments and otherfactors.
In this environment, the Shinko Group focused on productivity improvements
and cost reductions and on winning orders to secure income, despite thesemiconductor market struggling to recover due to significant impact from the

2023

2024

(Years ended March 31)

stagnation in the PC and smartphone markets and from prolonged inventory
adjustments. Furthermore, regarding capital investments for these growing markets
that we have continuously pursued, we reviewed part of the plan due to the current
market situation. However, we continued to allocate management resources in
anticipation of medium- to long-term expansion in the semiconductor market andOrdinary profit/Profit*(Billions of yen)
Ordinary profit
Profit*Earnings per share (Yen)78

increasing demand for our products in the future. For our flip-chip type packages,
which meet the need for semiconductors with higher functionality and speed as well54

as power saving, we promoted efforts to enhance our production systems, including

403.3227

the construction of the building of the Chikuma Plant (Chikuma City, Nagano

18

Prefecture) as a new production site. Furthermore, a new capital investment plan

137.73for the Chikuma Plant regarding next-generation flip-chip type packages for
cutting-edge semiconductors has been certified as a “Supply Security Plan” based

2023

2024

(Years ended March 31)*Profit attributable to owners of parent

Business Report 20242

on the Economic Security Promotion Act, and subsidies have been granted. For
plastic BGA substrates, we started the construction of a new building for the Arai
Plant (Myoko City, Niigata Prefecture) to increase the production capacity.
As a result, net sales of flip-chip type packages decreased largely due toTotal assets / Net assets
Total assets
Net assets(Billions of yen)

386

393

251

264

2023

2024

delayed recovery in demand for PCs and servers, and other factors. Net sales ofceramic electrostatic chucks decreased significantly due to export restrictions on
semiconductors and the deterioration of the market. So, overall sales conditions
were affected by the market downdraft. As a result of these factors, net sales were
209,972 million yen (down 26.7% year on year). Profits were significantly affected(Years ended March 31)

Capital expenditure(Billions of yen)63

by the drop in sales. Ordinary profit was 27,257 million yen (down 65.4% year onyear). Profit attributable to the owners of the parent was 18,609 million yen (down
65.8% year on year).

Outlook

25

2023

2024

(Years ended March 31)

Going forward, the semiconductor industry could see demand recover, including the memory market, on the backof the rapid expansion of AI-based services and other factors. However, the slow recovery of PC, server andsmartphone markets and the inventory adjustments of semiconductors could continue even longer. Meanwhile,the importance of semiconductors is increasing as a key technology supporting the digitalization of society andthe economy due to the progress of DX and other factors, and the realization of GX, which will achieve both thetransition to a decarbonized society with sustainable growth and reduced power consumption due to thesignificant increase in information and communication traffic. At the same time, global competition is expected
to intensify, requiring setting up development and production systems that can adapt rapidly and flexibly toincreasingly sophisticated and diversifying market needs and changes in demand. Furthermore, in order to meet
3

Business Report 2024

Review of Operations and Outlook

the need for even greater higher performance and multi-functionality of semiconductors, the packaging process
in semiconductor manufacturing is becoming increasingly important. In particular, it is expected that there will be
an increasing demand for semiconductor packages, our main business, as core products that are indispensable forachieving even higher-performance, higher- speeds and greater power savings in semiconductors.
In this environment, the Shinko Group will develop our proactive sales drives to have consistent revenue,
further enhancing our sales structure and accurately grasping market environment change. At the same time, wewill work hard to improve productivity, efficiency and cut costs, etc. across the board. We have continued tofocus on allocating management resources in markets with high growth potential. We will continue our capital
investment, watching the market environment, judging the timing and detail appropriately as needed, setting oureyes on medium- to long-term market growth of our products. For our flip-chip type packages, we will arrange a
mass-production system at our Chikuma Plant (Chikuma City, Nagano Prefecture) which was constructed lastDecember. For plastic BGA substrates to meet the demand for semiconductor memory with higher-speeds andlarger- capacities, we are committed to completing the construction of the new building which has started at theArai Plant (Myoko City, Niigata Prefecture). Furthermore, we will promote the new capital investment plan at
the Chikuma Plant for next-generation flip-chip type packages for cutting-edge semiconductors, including“i-THOP®” that we have developed, to address the needs of the high-performance computing (HPC) market
which is set to grow significantly in the medium- to long-term. We will establish new products and newtechnologies that address market needs ahead of others, working on mass-production and aim for sustainablegrowth and development, applying the state-of-the-art semiconductor packaging technologies that we havedeveloped, including the development of photonics-electronics convergence devices that, as core devices forbuilding next-generation information communication infrastructures, will dramatically reduce power
consumption and achieve super high-speed data processing.
To achieve “Progress without Limits,” the Shinko Group will provide customers in semiconductor markets
where continued growth is expected with high-value products and services offering solid value and rooted incustomer requirements for function, performance, cost, and quality.

Business Report 2024

4

Summary of Operations by Product Segment
Plastic Packages
Net sales

127,752 million yen Down 27.8% year on year

Ordinary profit

11,828 million yen

Flip-Chip Type Package

Percentageof net sales

60.8%

Down 75.0% year on year

Plastic BGA Substrates

IC Assemblies

Net sales of flip-chip type packages decreased largely due to delayed recovery in demand for PCs and servers as a negativerebound from the special demand for COVID-19, intensified competition, and other factors. Net sales of plastic BGA
substrates decreased due to inventory adjustments in advanced memory, while net sales of IC assemblies also decreased due
to a drop in demand for high-end smartphone because of the smartphone market slowdown.
As a result, consolidated net sales in this segment were 127,752 million yen (down 27.8% year on year), and ordinary
profit was 11,828 million yen (down 75.0% year on year), due to the large impact of sales down.

Net sales (Millions of yen)

Ordinary profits (Millions of yen)

176,844
127,752

Main applications

47,331

PCs, servers, smartphones, automobiles,
consumer products, etc.
11,8282023

2024(Years ended March 31)

5

Business Report 2024

2023

2024

(Years ended March 31)

Metal Packages
Net sales

73,878 million yen Down 25.6% year on year

Ordinary profit

16,133 million yen

Stamped Leadframes

Percentageof net sales

35.2%

Down 48.3% year on year

Ceramic Electrostatic Chuck

Glass-to-Metal Seals

Heat Spreaders

Net sales of ceramic electrostatic chucks for semiconductor manufacturing equipment decreased largely due to the effects of
US Government export restrictions on semiconductors to China and the memory market deterioration, etc. Net sales ofleadframes decreased due to a drop in orders, reflecting the backdrop of inventory adjustments, etc. because of thedowndraft in the semiconductor market. Net sales of heat spreaders for CPUs decreased due to a large decline in demand for
PCs and servers, and other factors. Net sales of glass to metal seals decreased due to the sluggish sales for optical devices.
As a result, net sales in this segment were 73,878 million yen (down 25.6% year on year), and ordinary profit was 16,133
million yen (down 48.3% year on year), due to the large impact of sales down.

Net sales (Millions of yen)

Ordinary profits (Millions of yen)

99,28473,87831,224
16,1332023

2024(Years ended March 31)

2023

2024

(Years ended March 31)

Main applications
Automobiles, smartphones, PCs,consumer products,
semiconductor manufacturing equipment,
communications equipment, etc.

*Sales by segment refer to sales to external customers, and ordinary profit
is before making adjustments for transactions between segments.

Business Report 2024

6

Planned Commencement of Tender Offer for Company
Shares by JICC-04, Ltd.
The Company resolved at its Board of Directors meeting held on December 12, 2023 to express its opinion as of that date
that, if commenced, it will express an opinion to support the tender offer (the “Tender Offer”) for the Company’s commonshares (the “Company Shares”) to be conducted by JICC-04, Ltd. (the “Tender Offeror”) and recommend that its
shareholders tender their shares in the Tender Offer.
The Board of Directors resolution above was made on the assumption that the Tender Offeror intends to acquire all
Company Shares through the Tender Offer and a series of planned subsequent procedures and that the Company Shares will
be delisted.

Overview of Tender Offer
1) Period of the Tender Offer
Because the Tender Offer is expected to require a certain period of time for necessary procedures and actions based on
domestic and foreign competition laws and investment regulatory laws, etc., the commencement date of the Tender Offer
is expected to be in late August 2024 by the Tender Offeror, but the commencement date of the Tender Offer is affectedby the period required for procedures by foreign competition authorities and authorities having jurisdiction overinvestment regulatory laws, etc. The Tender Offer period is expected to be 20 business days.
2) Purchase Price, Etc. : 5,920 yen per common share3) The Number of Share Certificates, Etc. to Be Purchased

7

The number of shares to bepurchased

The minimum number of theshares to be purchased

The maximum number of theshares to be purchased

67,530,488 shares

22,491,400 shares– shares

No Dividends

Abolition of Shareholder Special Benefit Program

The Company previously positioned shareholder returns
as one of its most important management policies.
However, according to the Tender Offeror, the purchaseprice for the Tender Offer was determined on acomprehensive basis, based on the assumption that nodividends would be paid based on the base date ofMarch 31, 2024. Accordingly, the Company passed a
resolution at its Board of Directors meeting held on
December 12, 2023 to amend the dividend forecast for
the fiscal year ending in March 2024 and not to pay yearend dividends for the fiscal year ending in March 2024.

The Company is grateful to its shareholders for their
ongoing support, and had the shareholder special benefit
program in place with a base date of March 31 of eachyear with the intention to make investment in Company
Shares more attractive and to have more shareholders
hold Company Shares in the medium- to long-term.
However, in light of the plan to conduct the Tender
Offer for the Company Shares, the Company passed a
resolution at its Board of Directors meeting held on
December 12, 2023, to abolish the shareholder special
benefit program.

Business Report 2024

Q&A Regarding the Tender OfferQ

Why is the Tender Offer to be implemented?

A

While the Company was deliberating various management strategies to enhance its corporate value, the Company began
to have discussions with Fujitsu Limited (“Fujitsu”) in response to Fujitsu’s plan to sell its Company Shares. The
Company carefully deliberated various options, including maintaining its listing, and came to conclude that, byconducting the Tender Offer etc. for privatization with a Tender Offeror that is focused on JIC Capital, Ltd. (“JICC”) asa government-affiliated fund, which basically supports the Company’s business policy of focusing on capital investment
and technological development in growth markets, the Company will be able to promote initiatives that contribute toenhancing corporate value from a medium- to long-term perspective, without being swayed by short-term fluctuations inbusiness performance, as a partner for the Company to aim “Progress without Limits,” and since the Company isplanning to execute the Tender Offer etc. with JICC as a partner, the Company will be able to make decisions more
quickly than before, and promote measures such as the expansion of human capital, which is fundamental to thepromotion of the Company’s business, which will contribute to future enhancement of corporate value.

Q

When will the Tender Offer commence?

A

The Tender Offeror aims to commence the Tender Offer in or around late August 2024, but since it is difficult toaccurately estimate the amount of time required for the procedures involving foreign competition authorities and theauthorities having jurisdiction over investment control laws and regulations, the detailed schedule for the Tender
Offer will be promptly announced as soon as it is decided.

Q

When will the Company Shares will be delisted? How long can the Company Shares be sold in the stock market?

A

The timeline of delisting has not yet been decided. If the Tender Offer is successfully completed, the Company Shares
will be privatized, so the Company Shares will be delisted through the prescribed procedures. After delisting, theCompany Shares will no longer be tradable on the Prime Market of the Tokyo Stock Exchange.

Q

Tell us the details of the tender procedure.

A

According to the Tender Offeror, details of the tender procedure will be promptly announced as soon as it is decided.

Q

When will the procedure to tender the Tender Offer start?

A

Shareholders can tender their shares after the Tender Offer has commenced. The Company resolved at its Board of
Directors meeting held on December 12, 2023 to express its opinion as of that date that, if commenced, it will express
an opinion to support the Tender Offer and recommend that its shareholders tender their shares in the Tender Offer.
It also resolved that the Company will express its opinion again when the Tender Offer is commenced.

Please see the Company’s news release, “Notice Concerning Expression of Opinion to Support Commencement of Tender Offer
for Company Shares by JICC-04, Ltd. and Recommendation of Tender Thereto” for details of the Tender Offer.

Business Report 2024

8

Financial Statements (Consolidated)
Balance sheets

As of March 31(Thousands of
U.S. dollars)(Millions of yen)

2024

Assets2024

393,750

386,934

2,601,075

Current assets

184,459

226,075

1,218,520

Non-current assets

209,291

160,858

1,382,555

201,984

154,068

1,334,288

Intangible assets

1,175

876

7,761

Investments and other assets

6,131

5,912

40,505

393,750

386,934

2,601,075

128,773

135,919

850,663

126,946

133,545

838,595

1,826

2,374

12,067

264,977

251,0141,750,412

264,119

252,205

1,744,747

Share capital

24,22324,223160,014

Capital surplus

24,222

24,173160,009

Retained earnings

215,736

203,882

1,425,132

(61)

(74)

(408)

Accumulated other comprehensive income

857(1,190)5,664

Total liabilities and net assets

393,750

386,934

2,601,075

Property, plant and equipment

Total assets
Liabilities
Current liabilities
Non-current liabilities
Net assets
Shareholders' equity

Treasury shares

9

2023

Business Report 2024

Statements of income

Years ended March 31(Thousands of
U.S. dollars)(Millions of yen)

2024

2023

2024

Net sales

209,972

286,358

1,387,054

Cost of sales

171,070

194,664

1,130,072

Gross profit

38,902

91,693

256,982

Selling, general and administrative expenses

14,091

14,98093,085

Operating profit

24,81076,712

163,897

Non-operating income

2,530

2,142

16,718Non-operating expenses

83

99

552

27,25778,755

180,063

Extraordinary income

784

–

5,181

Extraordinary losses

2,126

1,295

14,048

Profit before income taxes

25,91577,460171,195

Income taxes - current

6,750

23,041

44,590

Income taxes - deferred

555

(69)

3,672

18,60954,488122,933

Ordinary profit

Profit attributable to owners of parent

Statements of cash flows

Years ended March 31(Thousands of
U.S. dollars)(Millions of yen)

2024

2023

2024

Cash flows from operating activities

45,464

118,223

300,334

Cash flows from investing activities(73,273)(65,199)(484,039)

Cash flows from financing activities(6,886)(7,197)(45,491)

Effect of exchange rate changes on cash and cash equivalents

1,578

1,006

10,429Net increase (decrease) in cash and cash equivalents(33,116)

46,833(218,767)

Cash and cash equivalents at beginning of period

115,592

68,758763,589

Cash and cash equivalents at end of period

82,475

115,592

544,822

Note: The U.S. dollar amounts represent translation of Japanese yen at the rate of ¥151.38 = U.S. $1.00 on March 31, 2024.

Business Report 2024

10

Corporate Data
(As of March 31, 2024)

Corporate nameSHINKO ELECTRIC INDUSTRIES CO., LTD.

Established

September 12, 1946

Head office

80, Oshimada-machi, Nagano-shi, Nagano 381-2287, Japan
Tel: 81 (26) 283-1000

Major business lines

Manufacturing and sales of plastic laminated packages (PLPs), leadframes,
glass-to-metal seals, heat spreaders, and ceramic electrostatic chucks
IC assembly

Number of employees 4,808 (Consolidated: 5,553)

11

Plants & facilities

Kohoku Plant
Wakaho Plant
Chikuma Plant
Takaoka Plant
Arai Plant
Kyogase Plant
SHINKO R&D Center
Kurita Sogo Center

Sales offices
Representative office

Tokyo, Osaka, Nagoya, Fukuoka
ManilaBusiness Report 2024

Global network

China

Shanghai
Wuxi
Shenzhen
ChengduSan Jose
Phoenix

Korea

Seoul
Suncheon

U.S.A.
BangkokThailandTaiwanPenangKuala Lumpur
Shah Alam
MelakaMalaysia

Philippines Manila

Taipei
Kaohsiung

Singapore
Sales offices

Burlington
DallasAustinSan Diego

Singapore

Representative office

Production sites

Board of Directors(As of June 26 2024)
Representative Director of Board, Chairperson

Masami Fujita

Representative Director of Board, President

Susumu Kurashima

Director of Board and Executive Managing Corporate Officer

Akihiko Ito

Director of Board and Managing Corporate Officer

Takashi Ozawa

Outside Director of Board

Jun Niimi

Director of Board, Standing Audit and Supervisory Committee Member

Toshiyasu Hirabayashi

Outside Directors of Board, Audit and Supervisory Committee Member

Namiko Araki

Outside Directors of Board, Audit and Supervisory Committee Member

Kunikazu Kobayashi

Business Report 202412

Shareholders’ Data
(As of March 31, 2024)

Total number of authorized shares
Total number of shares issued
Paid-in capital
Number of shareholders
Principal shareholders

540,000,000 shares
135,171,942 shares
24,223,020,480 yen
15,538
Number of shares held Percentage of shares held(Thousands)(%)

Shareholder’ s name
Fujitsu Limited

67,58750.02

The Master Trust Bank of Japan, Ltd. (Trust Account)

8,857

6.56

BNY GCM CLIENT ACCOUNT JPRD AC ISG (FE-AC)

3,613

2.67

Custody Bank of Japan, Ltd. (Trust Account)

3,257

2.41

JPLLC-CL JPY

2,304

1.71

JP JPMSE LUX RE CITIGROUP GLOBAL MARKETS L EQ CO

2,203

1.63

UBS AG LONDON A/C IPB SEGREGATED CLIENT ACCOUNT

2,170

1.61

JP JPMSE LUX RE BARCLAYS CAPITAL SEC LTD EQ CO

1,927

1.43

The Hachijuni Bank, Ltd.

1,836

1.36

JPLLC CLIENT ASSETS-SK J

1,806

1.34

Note: The percentage of shares held is calculated after exclusion of treasury shares holdings.

Distribution of shares by type of shareholder(As of March 31, 2024)
Japanese securities firms 2.04%

Treasury shares 0.04%

Japanese individuals and others 6.42%

Foreign corporations and individuals 28.29%

Japanese corporations 51.06%

Japanese financial institutions 12.15%

13

Business Report 2024

Shareholder information

Administrator of shareholders’ register and account management institution for special accounts(Contact)

Mitsubishi UFJ Trust and Banking Corporation
Corporate Agency Division
1-1, Nikko-cho, Fuchu-shi, Tokyo, Japan
Tel : 0120-232-711 (toll-free numbers in Japan, Japanese only)(Mailing address)

Mitsubishi UFJ Trust and Banking Corporation
Corporate Agency Division
Shin-TOKYO Post Office post office box No. 29, Tokyo 137-8081, Japan

Business year

From April 1 each year to March 31 of the following year

Record date

Record date for theordinary general meetingof shareholders

March 31 each year

Record date for dividends

March 31 each year and September 30 if an interim dividend shall be paid

Method of public noticeElectronic public noticeElectronic public notice shall be presented on our company website:
https://www.shinko.co.jp/ir/kk/
However, in case an accident or any other unavoidable circumstance that
precludes electronic notification arises, notices shall be posted in the
Nihon Keizai Shimbun.

Notes:
1.	To change a shareholder address, place a claim for purchase, or other requests, please contact the accountmanagement institution (such as a securities company) with which you have an account.
2.	For all matters relating to shares recorded in special accounts, the account management institution is Mitsubishi
UFJ Trust and Banking Corporation. Please contact the address above. Any branch of Mitsubishi UFJ Trust andBanking Corporation throughout Japan will also be able to assist you.
3.	If you have not yet received your dividend payment (excluding those for whom the period of exclusion has
expired), you can receive payment at any branch of Mitsubishi UFJ Trust and Banking Corporation.
4.	Contact for inquiries regarding the electronic response system for materials for the General Meeting of
Shareholders
Mitsubishi UFJ Trust and Banking Corporation Corporate Agency Division
Dedicated telephone number for the electronic response system
Tel : 0120-696-505 (toll-free numbers in Japan, Japanese only)
Front cover: Hakuba mountain range with snow caps and hydrangea (Hakuba Village, Nagano Prefecture)
Business Report 202414

80, Oshimada-machi, Nagano-shi, Nagano 381-2287, Japan
Tel: 81 (26) 283-1000 Fax: 81 (26) 284-8861
https://www.shinko.co.jp