Presentation Q&A

Q: What are your forecasts for capacity utilization?

A: In Q2, the utilization of the entire company achieved 115% based on 20 operating days, while MLCCs achieved 100% based on 27 operating days. We expect 110% company-wide and 95% for MLCCs in Q3. Production will be 320 billion yen in Q3 and 267 billion yen in Q4 (assuming $1=115 yen). In Q2, we achieved 347 billion yen in production.

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A: We are making capital investments in SAW filters, but the accelerated use of five-mode phones in China is causing a shortage of supply. We expect that this shortage will remain next year. Not the entire lineup of MLCCs, but the cutting-edge segment for small-sized large capacity MLCCs is expected to grow by approximately 20%. We will therefore continue to make capital investments in this segment, where we don’t anticipate any loss of balance between supply and demand.

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A: We will see 10 to 20% growth in the demand of components for smartphones - in particular MLCCs, SAW filters, and coils. Despite declines in prices, we expect higher sales since they offer high added value.

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A: In the current fiscal year, we plan to increase capacity for MLCCs by 10%. We are achieving 30% growth in production capacity for SAW filters. The 10% plan for MLCCs covers the entire MLCC range, and we plan a slightly higher level for the cutting-edge segment. We are not going to change these plans.

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A: We have yet to develop our budget, but our capacity management will depend on balancing an increase in the number of components used per smartphone, production quantities, and market share. If we are to make a capital investment, we won’t assume an increase in the market share. Instead we will enhance production capacities with a focus on the products of which we expect to see more units used per phone in 2016F, such as cutting-edge MLCCs, SAW filters, and coils.

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A: We expect an 11% increase over the first half. Demand from the automotive market will develop steadily without being much affected by unit sales and developments in individual customers’ production, since the main product is on general-purpose components such as capacitors.

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This Q&A contains forward-looking statements concerning Murata Manufacturing Co., Ltd. and its group companies' projections, plans, policies, strategies, schedules, and decisions. These forward-looking statements are not historical facts; rather, they represent the assumptions of the Murata Group (the "Group") based on information currently available and certain assumptions we deem as reasonable. Actual results may differ materially from expectations due to various risks and uncertainties. Readers are therefore requested not to rely on these forward-looking statements as the sole basis for evaluating the Group. The Company has no obligation to revise any of the forward-looking statements as a result of new information, future events or otherwise.

Risks and uncertainties that may affect actual results include, but are not limited to, the following:

1.economic conditions of the Company's business environment, and trends, supply-demand balance, and price fluctuations in the markets for electronic devices and components
2.price fluctuations and insufficient supply of raw materials
3.exchange rate fluctuations
4.the Group's ability to provide a stable supply of new products that are compatible with the rapid technical innovation of the electronic components market and to continue to design and develop products and services that satisfy customers
5.changes in the market value of the Group's financial assets
6.drastic legal, political, and social changes in the Group's business environment; and
7.other uncertainties and contingencies.

The Company undertakes no obligation to publicly update any forward-looking statements included in this Q&A.