Company Briefing for Shareholders (Summary) March 25, 2023～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～
MEC's Past and Future～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～～
Date and time of the event：Saturday, March 25, 2023
Attendees：

MEC

CEO & President

Kazuo Maeda

MEC

Director & CFO andToshiko Nakagawa

Executive Operating Officer
MEC

Corporate

Yoshihiro Sakamoto

Communication Office Head
Overview of the Fiscal Year Ended December 2022
Regarding the business environment, amid declining demand worldwide, due in part toinventory adjustments of especially consumer PCs, smartphones, TVs, and otherproducts, demand for these products has declined considerably. Meanwhile, server
investment in data centers that support networks continued to be strong. However,servers also went through an adjustment phase around the fall. It is not a clear silicon
cycle as in the past, but such a period occurs about once every four years. In addition,
PCs and tablet PCs sold well during the roughly two years of the COVID-19 pandemic,
and replacement demand has declined.
In this environment, what contributed to the year-on-year increase in sales and profit
was the growth of the CZ series, the Company’s main products. The CZ series were used
for package (PKG) boards, centered on data centers. The weak yen also helped. The
performance started to deteriorate in the middle of the year, but the Company was able
to achieve an increase in sales and profit.
As for an overview of major products, the CZ series performed well. In terms of V-Bond(VB), EXE, and SF, the VB series of products did not grow because most of them are used
for electronic boards for automobiles and smartphones, especially those models sellingwell in China. The EXE series is mostly for TVs, and currently TVs are not selling well.
The SF series is for tablet PCs, and their demand has come full circle.
As a result, net sales were 16.3 billion yen and operating income was 4.0 billion yen, up
8.6% and up 1.6% compared with the previous period, respectively.
The Fiscal Year Ending December 2023: Consolidated Financial Forecasts
The Company forecasts net sales of 15.0 billion yen and operating income of 3.0 billion
yen, a decrease in revenue and profit compared with the previous period. For the firsthalf of the year, the Company expects net sales of 6.5 billion yen and operating income1Company Briefing for Shareholders (Summary) March 25, 2023

of 800 million yen. The Company sees the first half as an adjustment phase, followed bya recovery in the second half.
Shares and Shareholder Returns
Dividends were 45 yen for the year ended December 31, 2022, making for a payout ratioof 27.9%, and are expected to be 45 yen for the year ending December 31, 2023, for apayout ratio of 38.9%.
The Company’s dividend policy is to pay stable dividends with a consolidated payout
ratio of 30% in mind.
The Company has acquired treasury stock five times in the past.
With respect to shareholder benefits, shareholders with 100 or more shares receive a
Quo Card worth 1,000 yen and those with 1,000 or more shares receive one worth 2,000yen.
Outline of the Company
The head office is located in the city of Amagasaki in Hyogo Prefecture, where theresearch laboratory and the head office factory are found. It was established in 1969.
Company Motto and Management Principle
The company motto is "Enjoy your work." The management principle is "Visionary
Technology," "Reliable Quality," and "Meticulous Service." The Company adheres to thefollowing statement: The MEC group will contribute to the creation of a prosperous anddiverse society and sustainable environment, inspired by an unconventional approachbased on the principles of "Visionary Technology," "Reliable Quality," and "Meticulous
Service," thereby creating and fostering value at various interfaces through our global
activities.
In particular, regarding "Visionary Technology," the Company is promoting its businessactivities with an emphasis on pioneering new things. The company motto, "Enjoy yourwork," is one of the many company mottos adopted in recent years. However, it is said
that when the Company first established the motto, people said that it was a rather
unusual one. The Company regards this motto as very important.
The Company’s Business
The Company is engaged in developing, manufacturing, and selling chemicals for the
manufacture of electronic boards and components in a single, integrated manner. The
Company also has global operations. The chemicals melt the surface of metal and add

2Company Briefing for Shareholders (Summary) March 25, 2023

value. They are chemicals for manufacturing electronic boards, and the Company does
not manufacture electronic boards. The Company supplies chemicals to electronic board
manufacturers.
It is not a plating manufacturer. Plating adds a layer of metal, but the Company’s
chemicals are used to put something thin on top of the metal or melt the metal to add
value to the surface.
The Company is emphasizing research and development (R&D), with approximately 10%of consolidated net sales going to advance investment therein. About 80 employees, or
one-third of all personnel on a non-consolidated basis, are engaged in R&D.
In the manufacturing process of semiconductor-mounted organic PKG boards, the CZ
series has gained an exclusive market share as a copper surface treatment agent.
Trend of Net Sales since the Company’s Foundation
The Company has steadily grown by developing and selling what is needed in the world.
Today, 5G, the IoT, AI, and autonomous driving, digital transformation (DX), and green
transformation (GX) are keywords and drivers of the Company's growth.
Domestic Bases
There are three places now. The Company has its head office, R&D center, and factoryin Amagasaki, Hyogo Prefecture, a sales office in Tachikawa, Tokyo, and a massproduction factory in Nagaoka, Niigata Prefecture.
Global Bases
The Company has been operating overseas since 1990. MEC Taiwan, MEC Europe(Belgium), and MEC in Suzhou and Zhuhai in China. And in 2017, the Company set up
a factory in Ayutthaya, Thailand, which is currently working towards full operation.
South Korea is also a big market, and the Company operates through distributors. The
Company also sells through distributors in the United States.
The Company’s Product Flow
R&D is first conducted by compounding material on a small scale in beakers to test what
functions a substance may have. Once some functionality is recognized, the Company
scales it up.
In a factory, for example, raw materials are put into a 10-ton tank and agitated to makea product. Chemicals are packed in plastic containers and tanks and delivered tocustomers.

3Company Briefing for Shareholders (Summary) March 25, 2023

Areas Where the Company Can Play an Active Role
The Company’s chemicals are used to manufacture electronic boards and components,
especially in very high-value-added boards called organic PKG boards, upon whichsemiconductors are mounted. PKG boards are mounted in smartphones, PCs,
automobiles, and other devices that require semiconductors.
It is safe to assume that the Company’s technology is involved in the equipment used inalmost all aspects of daily life in one way or another.
Especially large applications are PCs and smartphones. Recently, they have also come to
be used in servers and base stations. Though they do not account for a large amount,
there are also applications in supercomputers, robots, and medical-related products. And
mobility, automobiles, and infrastructure are also very promising markets.
Keywords for areas where the Company can grow
5G, AI and the IoT. When these things become frequently used, more semiconductors
will be needed, and many PKG boards will be required. Then, many of the Company’s
chemicals will be in demand. And automobiles. The Company can contribute to driverassistance systems, autonomous driving, safety systems and connected cars.
The Company's Core Technologies
There are four major ones.
1. Improving adhesion to resin mechanically by roughening a copper surface
The main chemicals are the CZ and VB series. The CZ series is used especially for PKG
boards.
2. Forming wiring
Forming a wiring pattern. The main chemicals are the EXE series. More detailed wiring
can be made more accurately.
3. Selective etching
When two or more metals of different types are on the same board, this technology isused to leave only one type and melt and remove all the other metals.
4. Improving adhesion to resin chemically by processing a copper surface
The process of 1. creates unevenness on the metal surface, and the resin is pressed toadhere to the surface. However, 4. is a technology that does not create unevenness, andthe resin is pressed to adhere to the flat and smooth copper surface.
Primary Chemical Uses and End Product Examples
Key products include the CZ, VB, EXE, and SF series. The CZ series is mainly used for

4Company Briefing for Shareholders (Summary) March 25, 2023

PKG boards on which semiconductors are mounted. In end products, the CZ series isoften used in 5G, data centers, PCs, smartphones, etc. The VB series is used forautomobiles and smartphones. The EXE series is used for TVs, PC monitors, etc. The SF
series is used for tablet PCs.
They are widely used in various electronic devices.
Areas Where the Company Is Strong
There are various kinds of electronic boards. If production volume and technicaldifficulty are represented as a pyramid, the higher the technical difficulty, the higher
they are placed in the pyramid. The most difficult one is a PKG board. PKG boards areused for PCs, smartphones, data centers, etc. The Company has gained a high market
share in this area. A high density interconnect (HDI) is the motherboard of a smartphone.
High-density multilayer boards are used for supercomputers, for example. The Company
has a moderate market share in this area as well. The Company has a low market sharein multilayer boards. General uses of multilayer boards include digital cameras and car
navigation systems. A flexible board is a soft film-like board that can be folded and placedin a small device. Such functions are very important. The Company has recently
increased the market share in this area. Double-sided boards and single-sided boards
are widely used in white goods. However, the Company’s chemicals are rarely used there.
PKG Boards and CZ Series
In PKG board manufacturing, the CZ series is used almost 100% as a copper surface
treatment agent. It creates a unique roughened copper surface topography and iscrimped with resin. There is a problem that the heat generated by the semiconductor
causes the copper and resin to peel, and if they peel, the product will be defective. The
Company’s CZ series of products are always used because they do not peel even at hightemperatures and high pressures.
Evolution of PKG Boards
The simplest and most common structure is a single semiconductor on a single PKG
board. Recently, a new PKG board has emerged. Multiple semiconductors are mounted
on a single PKG board to increase the designed treatment speed for servers. This will
increase the dimensions of the PKG boards, mean there are more layers, and certainly
increase the amount of the Company’s CZ consumed.

5Company Briefing for Shareholders (Summary) March 25, 2023

CZ Series Roadmap
The current mainstay is CZ-8101. The next generation CZ-8201 roughens copper
surfaces more finely. The finer the roughened copper surface topography, the greater theadvantages, such as not interfering with electrical signal transmission. We are now at apoint of change. Make the roughened copper surface topography finer. Or, attach
insulated resin to the roughened copper surface topography while maintaining a flat andsmooth copper surface without roughening it. In this area, the Company is developing
technologies for the following purposes: exchange data faster or in larger volumes with
5G and beyond; have lower power consumption; and minimize the heat generated byelectrical signal transmission. This is the most important area the Company focuses on.
Aiming to Expand Business Areas
In addition to the fields related to electronic board manufacturing, where the Company
has the four core technologies introduced earlier, the Company is also expanding theapplication of these technologies to other fields. The Company also aims to create new
businesses.
Medium-term Management Plan
The first year is 2022, and the Company is working on a three-year plan for 2030. The
Company’s vision is to create new value with innovative technologies and take on thechallenge of realizing a sustainable society.
Corporate Image the Company Aims For"Become a truly global company that creates new value with visionary technology"“Continue to be an R&D-based company”“Present an image as a visionary AI company”
The Company espouses the above three goals. The Company is thinking about how the
Company can work with AI in the future and how the Company will apply it to its
business; these are especially important.
Numerical Targets of the Current Medium-term Plan
The Company aims to maintain an operating margin of at least 20% regardless of thebusiness environment. The same applies to ROE. This does not mean that this is the
final point. It is said that the amount of semiconductors will grow exponentially.
Therefore, the Company is also pursuing investment plans to ensure stable supply.

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Company Briefing for Shareholders (Summary) March 25, 2023

Q&A
Question 1: Is your company one that doesn't need so much capital investment?
President: Our company’s chemicals are basically made by placing some effective
elements into water or common acids. The equipment needed to make it is a relatively
minor investment. If you imagine it to be a beer factory, it becomes easy to understand,and it is like a much smaller one.
Question 2: Competitiveness and market share of chemicals
President: For example, very few our company’s chemicals are used to make asmartphone. However, if such chemicals do not perform well, the end item has no value
as a product. Attempting to maintain quality, manufacturers have come to adopt only
our chemicals. Therefore, the CZ series is used 100% as a copper surface treatment agent
in the manufacture of PKG boards. Our company’s products may be a little expensive.
But customers will use them. We have this kind of competitiveness.
Question 3: I think a 10% investment in R&D is amazing. Please tell me one thing you
are focusing on, or something that, if it works, will make you number one worldwide.
President: Naturally, it is difficult to produce chemicals without spending money on R&D.
Therefore, our investment target in R&D is about 10% of our consolidated net sales.
From the customer's point of view, the price of our products may be said to be expensive.
However, the cost includes the idea of making investments. We repeatedly carry out acycle: we ask our customers to recognize our product's value, earn a solid profit, andinvest it in R&D.
If we had to choose one thing, the technology to improve adhesion and be close to
semiconductors would be the most important. With it, the speed of the electrical signal
is increased. An electrical signal runs more smoothly on a flat and smooth copper surface
than on an uneven one. The most important thing is to hone the technology necessary
for that.
Question 4: Regarding CZ, the core of the company’s net sales, I would like to know theratio between Japan and overseas.
President: The CZ series accounts for about 60% of net sales. Exports are large, and theratio of Japan to overseas is roughly 1:2.

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Company Briefing for Shareholders (Summary) March 25, 2023

Question 5: I would like to know your sales strategy and how board manufacturers rateyou.
President: We ask our customers to use our chemicals and evaluate them. We
manufacture products according to the customer's roadmap, while customers evaluate
the products' technical aspects.
Question 6: Semiconductor manufacturers are making strong capital investments. Will
supply be sufficient?
President: The supply and demand of semiconductors was tight a while ago, but it has
eased slightly at the moment. Looking back, there has been such a period about once
every four years. In the future, more services will simply use AI and the IoT. The
calculation, linguistic analysis, and memory functions required for these services will
increase. We assume that the more you use something like ChatGPT, for example, themore information you process, and the supply and demand will be tight soon. Our
company is responsible for supplying products, so we are taking measures to cope withit.
Question 7: Who are your competitors?
President: We don’t have a competitor in the current PKG board market. There will besome competition for development in new areas in the future.
Question 8: Is the CZ series patented?
President: Yes, it is patented.
Question 9: Have counterfeit products ever been sold?
President: Yes, they have. However, no customer takes the risk of using them.
Question 10: Are your company’s chemicals always necessary for PKG boards? If so, can
we assume that the more PKG boards increase, the more your company’s market will
expand?
President: Our company’s chemicals are almost always used in PKG boards. We areinvesting in R&D to keep our position in the future.
Question 11: Do the U.S. export controls on China regarding semiconductors concern
your company?
President: So far, our company hasn't had a big impact yet. China is an important market

8Company Briefing for Shareholders (Summary) March 25, 2023

for our company, and we will deal with it properly. However, we think that in the future,
if anything deviates from the government's policies or our corporate ethics, we may needto withdraw from some businesses.
Question 12: What is the product life of your company’s chemicals?
President: It depends on the product, but usually it is several months. We try to set it aslong as possible.
Question 13: Please tell me about the exchange rate.
President: Most of our transactions are in Taiwanese dollars and Chinese yuan, and very
few in U.S. dollars.
Question 14: With global inflation, are there any increases in purchase prices? In thosecases, is it easy to raise the prices?
President: The purchase prices of raw materials have increased. We negotiated priceincreases from the summer to the fall of 2022, and our customers understood them.
Question 15: I believe that copper and resin adhesion improvers are the mainstay of yourcompany. Is there any possibility of substituting metals or other materials for copper inthe future, and are you researching such alternatives?
President: We are also researching metals other than copper, for example, nickel andstainless steel. However, copper is inexpensive and stable in terms of performance as aconductor and resource abundance. So it will undoubtedly continue to be used extensively.
Question 16: What are the business risks other than the silicon cycle?
President: Poor R&D performance and heavy reliance on boards. And since we havesubsidiaries in Taiwan and China, the so-called China Risk always follows us (a term
used in Japan to refer to various contradictions and imbalances in China such as politicalcorruption and opacity due to the one-party dictatorship of the Communist Party, income
disparity, infringement of intellectual property rights, and a flood of counterfeit products).

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