Q1.

What are the prospects for orders for Semiconductor/FPD production equipment in the January-March 2005 period?

A1.

We predict that orders for the period will remain almost on the same level as for the October-December 2004 period, in which the value of orders totaled 112.1 billion yen. Orders for FPD production equipment are expected to grow by around several billion yen, but those for semiconductor production equipment (SPE) are expected to decline by about the same amount. By region, orders for SPE were strong in Japan and other Asian nations, and in terms of applications, memory manufacturers continue to make active investments.

Q2.	Will the level of orders begin to recover in the second half of CY2005?
A2.	We have the impression that the situation has become better than when we announced interim financial results three months ago, but a strong sense of uncertainty remains. We cannot say anything definite in the present circumstances.

Q3.

What are your financial forecasts for the next fiscal year ending March 2006?

A3.

Given the current status of order acceptance, expected backlogs of orders at the end of the current fiscal year, and the effects of the change of sales reporting standards to the confirmation of set-up and testing of products, it seems unlikely that our financial results for the first half of the next fiscal year will decline substantially compared to the same period of the current fiscal year. Financial results for the second half depend on the orders received in the April-June 2005 period and thereafter, but we need to be prepared for a possible slight fall in revenue.

Q4.	What are the prospects for the semiconductor/FPD production equipment markets? When will the markets bottom out?
A4.	At this moment, we take neither an optimistic nor pessimistic view of these markets. The appetite for investment on the part of device manufacturers, our major customers, appears patchy, with investment trends in the market hard to determine.

Q5.	What is the profit goal for the next fiscal year?
A5.	We are in the process of compiling budgets for the next fiscal year and cannot set clear profit goals until we reach a level where figures become definite to a certain extent.

Q6.	Why did you revise dividend forecasts upward at this moment despite not revising financial forecasts?
A6.	The reason for this upward revision of dividend forecasts is that we now have a firm prospect of being able to achieve the financial forecasts for the full year.

Q7.

What is the background to the personnel change of appointing Chairman Higashi to the position of CEO on January 1, 2005?

A7.

This is to maximize our human resources as TEL enters an important period for bolstering its management systems as a manufacturer. Chairman Higashi and President Sato will continue to occupy the same respective positions, but CEO Higashi will make decisions on important matters. Also to bolster management systems, the responsibilities of Vice Chairman Tsuneishi have been clearly defined, and he is now responsible for IR, legal affairs, intellectual property, and worldwide sales support.

Q8.

The medium-term goal for operating income margin is 20%. How will you achieve this goal?

A8.

An operating income margin of around 15% can be attained by (1) improving the profit margin through replacement of existing products with new-generation ones; (2) improving the profit margin through improvement of manufacturing quality; and (3) increasing sales of parts and services. In addition, new products will be introduced in new business fields to increase sales from 100 billion yen to 150 billion yen. In this way, we are aiming to achieve an operating income margin above 20%.

Q9.

What is TEL's share of the market for FPD production equipment for the large size glass substrates?

A9.

In relation to the FPD production equipment we produce, FPD plasma etch/ash systems maintain a large share of the market for seventh and eighth generation glass substrates. FPD coaters/developers are losing their share of the market for the fifth generation glass substrates, hovering between 40% and 50% for all glass generations. At present, we are concentrating on development with the manufacture of high-precision, high-performance panels in mind for the fifth generation and thereafter.

Q10.

Is there a possibility of acquiring or merging with other production equipment manufacturers in the future?

A10.

Mergers and acquisitions are likely depending on the superiority of technologies other manufacturers possess. As production equipment technologies become increasingly sophisticated, it is difficult for a single manufacturer to achieve new technological innovations through its proprietary technologies alone. So we would like to study various means, including not only mergers and acquisitions, but also technical tie-ups, and use the methods that are most effective.

Q11.

Did inventory assets and accounts receivable grow as compared to the same period of the previous year?

A11.

Accounts receivable fell slightly compared to a year earlier. Since the company is in a period of sales growth, inventory assets grew in proportion to inventory for shipments in the fourth quarter and thereafter. The principal reason for substantial growth in inventory assets as compared to a year earlier is that there were 59.1 billion yen worth of products that had already been shipped but whose confirmation of set-up and testing of products had not yet been completed at customer sites. The inventory turnover period at the end of the October-December 2004 quarter, however, was 64 days, the same as at the end of the interim term, three months earlier.

Q12.

Do you intend to continuously improve the accounts receivable collection period?

A12.

It is difficult to assume that the current rate of improvement will continue, but we do not expect it to deteriorate in the future. Due to the change of sales reporting standards to the confirmation of set-up and testing of products, front-line personnel are now aware of the necessity of shortening the time required for start-ups. Therefore, the accounts receivable collection period will continue to improve in the future.

Q13.	In addition to Dr. Ben Tsai, who joined TEL in February 2005, do you have plans to hire more technology-related personnel?
A13.	Along with the maximum utilization of internal resources, we have recruited people experienced in production equipment development since last year.

Q14.	What is the reason for increasing the number of Corporate Directors? Do you plan to increase the number of outside directors?
A14.	The objective of adding three new directors is to have them effectively use the experience and knowledge they acquired at TEL in the past in terms of management strategy. We regard it as useful to invite distinguished people outside the company to join our Corporate Directors and will continue to consider doing so.

Q15.

Specifically, what do you mean by accelerating development of new products?

A15.

Up to now, we have advanced various development projects, and in recent years the commercialization of equipment using RLSA plasma technology has come into view. Specifically, we will increase the number of applications for the existing platform, Trias SPA, by the end of CY2005. We plan to release new production equipment using RLSA plasma technology as mass production equipment in two to three years time, when sales next peak.

Q16.	Is development of equipment that meets the 65nm/45nm node requirements advancing smoothly?
A16.	TEL's existing products are continuing smoothly, and we are also promoting development of new products in accordance with the roadmap.

Q17.	Do you have plans to discontinue unprofitable products in your product lineup?
A17.	Even relatively less profitable products contribute to revenues through increased sales and greater efficiency. At present, there is no product that is positioned as unprofitable and whose production has to be discontinued.