Q1.	What are the prospects for the semiconductor market in 2006?
A1.	We expect that the market will be in positive circumstance during the next fiscal year, but that the rate of growth will not be particularly high.

Q2.

TEL is forecasting substantial decreases in revenue and income in the fiscal year ending March 31, 2006 (FY2006), taking into consideration changes in method of accounting procedures. Considering the current strength of the market, however, isn't this forecast understated?

A2.

The shipment forecast for the calendar year 2005 represents about a 10% reduction, but we expect about a 20% decline during the fiscal year (April 2005 to March 2006). The forecast may be slightly understated in light of the recent upturn trends in the market, but financial forecasts for the second half are unclear, and we expect the forecast for the entire year to become clearer during the summer of 2005.

Q3.

Please explain each of the regional sales forecasts for semiconductor and FPD production equipment in FY2006.

A3.

We expect the Japanese market to continue to perform steadily, as it did last year. We project slight increases in Europe and the United States, but equipment shipped last fiscal year is included in the sales forecast, and we believe shipments this fiscal year will remain at the same levels as last year. We expect capital investment in Asia as a whole to decline as compared to last year, but customers in South Korea are showing strong enthusiasm for such spending, and we anticipate capital investment in Asia as a whole to increase starting after the summer of 2005, depending on trends among Taiwanese foundry makers.

Q4.	It appears that the composition of semiconductor production equipment sales during the fiscal year ended March 31, 2005 (FY2005) underwent a change; why was this?
A4.	There were no significant changes in the market shares of our main products, but the increases in the shares of single wafer deposition systems and cleaning systems relatively resulted in the change.

Q5.	Has there been any change in the competitiveness of TEL's main products?
A5.	Sales of our main products, including coaters/developers, etch systems, thermal processing systems, and FPD production equipment, have increased steadily, and although there have been some minor shifts, we are not aware of any decline in market share.

Q6.	What was the scale of post-sales business in FY2005?
A6.	Sales for the entire year were about 80 billion yen.

Q7.

What has been the result of structural reforms to reduce manufacturing costs?

A7.

TEL has promoted structural reforms with the aim of reducing lead times and cutting manufacturing costs, and we believe that we made significant progress in the first year. In the second year, we have had to increase production substantially because of changes in the market environment. We had the option of increasing fixed costs, but responded by boosting production through the normalization of the manufacturing periods. As a result, although manufacturing periods were not substantially reduced, we believe that the ability of fewer than 9,000 employees to respond to shipments of over 700 billion yen was due to the success of structural reforms.

Q8.	What is the future goal for reducing manufacturing lead times?
A8.	At the start of the structural reforms, the goals were three months for existing products and two months for new products. Unfortunately, these goals have not yet been achieved, but we will review the process right from the design stages, and we hope to achieve these goals within three years.

Q9.	How much progress has been made in improving the financial statements by achieving a positive cash flow during a period of increased production, and in reducing interest-bearing debts?
A9.	We have achieved our goal of reducing interest-bearing debts to under 100 billion yen. Improvements in cash flows have exceeded our initial expectations.

Q10.	Did control of fixed costs proceed well during FY2005? What is your forecast for the current fiscal year?
A10.	We achieved our goal concerning the control of fixed costs in the previous fiscal year, but this fiscal year we expect a strategic increase in development, leading to a slight rise in fixed costs.

Q11.	What is TEL's pricing strategy for the future?
A11.	By promptly and accurately grasping the needs of semiconductor manufacturers, to hasten product development, it becomes possible to strategically exercise decision-making authority regarding the price and cost of production equipment. In the future, we will respond at the design level for new products, but not for existing products, to differentiate our equipment concepts.

Q12.	Can you provide specific details concerning plans to launch new FPD coater/developer products?
A12.	We are aiming to launch a new model at the end of this fiscal year, and we believe that beginning next fiscal year we will be able to substantially recover market share of equipment for large glass substrates.

Q13.	Why is performance-based compensation linked to consolidated net income in the new executive compensation system?
A13.	We considered a variety of indices and determined that linking to net income would be the most appropriate way of sharing the financial results of the year with shareholders.

Q14.	Is TEL considering an incentive program for regular employees to enhance business performance?
A14.	Until now, we have used bonuses paid to regular employees to create differentiation, but in the future we plan to consider a bonus systems that is more closely linked to business performance.

Q15.	Why did orders during the period from January to March 2005 surpass initial forecasts?
A15.	The main reason was an increase in orders in Japan. Orders in other regions did not differ substantially from our initial forecasts.

Q16.	Orders during the period from April to June 2005 are expected to be in the 110 to 130 billion yen range; what trends does TEL expect in specific regions?
A16.	Capital investment in Japan continues to perform steadily, and we have seen some investment moved up. Accordingly, we are predicting that the high level of orders for Japan will continue.

Q17.	In what region do you expect the next peak in orders?
A17.	We believe that orders will peak primarily in Asia, but it is difficult to predict when the peak will occur.

Q18.	What developments in orders are expected during this fiscal year?
A18.	Over the medium- to long-term, we expect the silicon cycle to peak in 2007 or 2008, and based on this, we believe that 2005 and 2006 will be a period of leveling off, with orders in the 110 to 120 billion yen range each quarter.