2009/2/25

Management Strategy Division

4th Annual　Taiyo Pacific Partners

Investor Conference

Company Overview

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Contents

Corporate Overview

Semiconductor Business

Network Business

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Corporate Overview

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Who is MACNICA?

Macnica is one of the strongest value added semiconductor distribution companies world wide. Our specialty is demand creation.

We are an independent company, not part of a keiretsu corporate group.

We have our own sales channels in Japan, Asia Pacific, Europe and in the USA.

We strategically make acquisitions to broaden our client base and further our position as Japan’s leading value added reseller (VAR).

CORPORATE OVERVIEW

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Basic information

Established: 1972

Market capitalization: ¥20.0bn (as of February 20, 2009)

Sales (FY3/08): ¥154.2bn

Stock information:Market: Tokyo Stock Exchange, 1st sectionIPO: February, 2000Ticker: 7631

Top shareholders#1 41.8% Haruki Kamiyama (Founder and Chairman)#2 8.9% Taiyo Pearl Fund#3 7.4% Japan Trustee Services#4 4.7% Fidelity#5 3.5% Hiroko Kamiyama (Chairman Kamiyama’s wife)

CORPORATE OVERVIEW

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CORPORATE OVERVIEW

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Recurring Profit

Employees

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CORPORATE OVERVIEW

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Revenue by Customer (Consolidated)

Top 10 Customers by Net Sales (FY3/08)

0 50 100 150 200 250

Fujitsu Group

Hitachi Group

Panasonic Group

NEC Group

Sanyo Group

Canon Group

Sony Group

Toshiba Group

Mitsubishi Group

Epson Group

Units:M$

¥90/US$

CORPORATE OVERVIEW

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Sales Breakdown by Business

Business Structure

Consolidated Net Sales: $1.7bn

Semiconductor Business, 92%

Network Business, 8%

FY3/08 ¥90/US$

CORPORATE OVERVIEW

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Semiconductor Business Overview

1. Industry Trends2. Competitive Advantages3. Our Strategy

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1.　 Industry Trends

A Global Market

M&A and Consolidation

System in Chip

New Technology

SEMICONDUCTOR BUSINESS1. Industry Trends

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A Global Market

SEMICONDUCTOR BUSINESS1. Industry Trends

JAPAN16%

Asia56%

EUROPE14%

USA14% USA

27%

EUROPE23%

JAPAN25%

Asia25%

Demand Creation (Design)Consumption

Area Consumption Demand Creation (DC)

DC Growth/yr

USA 14% 27% 5-7%

Europe 14% 23% 3-5%

JAPAN 16% 25% 5-7%

Asia 56% 25% 10-15%

Total 100% (250B$) 100% For next 5 years * Macnica estimate

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M&A and Consolidation

SEMICONDUCTOR BUSINESS1. Industry Trends

Macnica a driving force in industry consolidation

There have been many M&A’s creating large suppliers of more standardized products (i.e. ASSPs) and large distributors focusing mainly on logistics.

There has yet to be significant M&A activity for high-value added customizable products (i.e. PLDs – Macnica’s core competency) or for companies focusing on demand creation like Macnica.

With Macnica’s acquisition of Cytech (Nov. 2008), the leading Chinese value-added reseller, Macnica is leading the industry in becoming the first Japanese VAR to acquire a company in the Asia Pacific region.

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System in Chip (SiC)

ASSPs: standarized by application – many different kinds

Programmable Chips: PLDs (programmable logic devices), etc.

Because PLDs and other chips are programmable, there is an opportunity to add value when selling to customers.

SEMICONDUCTOR BUSINESS1. Industry Trends

Two main types of SiC

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New Technology

MEMS: InvenSense, SiTime, Akustica etc

LED: Philips Lumileds, LEDEngin

SEMICONDUCTOR BUSINESS1. Industry Trends

The other way Macnica can add value is by finding interesting partners overseas and introducing their innovative products to buyers in Asia

MACNICA is picking up new lines of not only the innovative advanced technology, but also the new concept technology products shown below

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2. MACNICA’s Competitive Advantages

Good Product Lines

Strong Balance Sheet

SEMICONDUCTOR BUSINESS2. Competitive Advantages

Strength:

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Strength: Technical Capabilities

Sales & Assistant590

Engineers230

Engineers230

Semiconductor BusinessEmployees

FY3/08

SEMICONDUCTOR BUSINESS2. Competitive Advantages

Macnica has more qualified field application engineers (FAE) than its competitors, enabling us to truly add value to our customers in helping them design innovative products.

　　　　　　　　

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Macnica’s target markets are where we can add value

Strength: Less Commoditized Products

Demand Creation Value

DRAMDRAM

ＣＰＵＣＰＵ

Macnica’s TargetMacnica’s Target

FLASHFLASH

LOGICLOGIC

Value Added ProductsValue Added Products

Value Add comes from excellent technical

capabilities

Value Add comes from excellent technical

capabilities

No Value Added

No Value AddedAdvanced

Technology

SEMICONDUCTOR BUSINESS2. Competitive Advantages

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Strength: Japan’s largest PLD distributor

SEMICONDUCTOR BUSINESS2. Competitive Advantages

ALTERA52%XILINX

40%

ACTEL3%LATTICE

5%

ALTIMA39%

TED22%

ELSENA4%

OTHERS12%

AVNET5%

PALTEK9%

Marubun9%

JAPAN market size ($650M)

Supplier market share for PLD

VAR market share for PLD * Company estimate

Xilinx is number one globally, but Macnica has propelled Altera to #1 position in Japan

FY3/08 ¥90/US$

Elsena + Altima = 44% Macnica market share

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Strength: Original Solutions

High Performance Dual Core DSP Reference Design

MARBO-3 MARBO-3EX

Macnica also offers original development and solution kits to proactively meet client needs and shorten time-to-market

SEMICONDUCTOR BUSINESS2. Competitive Advantages

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Strength: Finding new products from global ventures

FY3/08

SEMICONDUCTOR BUSINESS2. Competitive Advantages

Macnica’s network and ability to spot new technology make us the most capable distributor to pick up excellent new ventures world wide.

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Strength: We are a key partner to global leaders

＊ Internal competition is avoided at MACNICA by division company system

Categ. Line Industrial Network Infra. Automobile

PLD ALTERA ★ ★ －

Analog Analog Devices ★ ★ ★

National Semiconductor ★ ★ －

RICOH ★ － ★

Infineon － － ★

ASSP Broadcom － ★ －

MARVELL ★ ★ －

PMC Sierra ★ ★ －

SEMICONDUCTOR BUSINESS2. Competitive Advantages

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Strength: Strong Balance Sheet

Capital adequacy ratio: 70 ％

From a position of no debt, we took on a $100mn loan to finance half the acquisition of Cytech.→ lower cost of capital

Remain in a good position for further M&A with over $170mn in cash as of end-December 2008.

SEMICONDUCTOR BUSINESS2. Competitive Advantages

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3.　Our Strategy

Market Focus

Globalization

Field Programmable

SEMICONDUCTOR BUSINESS3. Our Strategy

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Market Focus

Industrial Applications:

- Medical equipment, instruments, testers, robotics, FA, etc.

Network Core Infrastructure:

- Telecom & Datacom

Automobile electronics

SEMICONDUCTOR BUSINESS3. Our Strategy

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“Broad-Base” definition:

Mid-small size companies; under $10mn in annual procurement (SAM)

Large target market:

2000 potential customers

Macnica’s strategic targets over the next year:

Boost stability: Reduce sales to top 20 customers from >70% under 50%

Boost margins: Raise broad-base sales from 20% 40%

Market Focus: Broad-Base Customers

SEMICONDUCTOR BUSINESS3. Our Strategy

We are attacking a new, exciting market that we feel will boost Macnica’s profitability and provide increased stability.

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Globalization

1st step Asia, next step Europe

M&A targets are demand creation companies, not simply fulfillment (no plain distributors). We are looking for value-add.

Cytech background:

- Cytech is the most technically capable VAR in China

- Macnica is the 1st Japanese VAR to conduct an M&A in China; we were able to do this because of our industry-leading technical capabilities and financial strength.

SEMICONDUCTOR BUSINESS3. Our Strategy

Our acquisition of Cytech (Nov. 2008) is the first step in our global plan

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Network Business

1. Business Model2. Competitive Advantages3. Strategy

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Two Business Models: OEM and Channel

OEM Direct Sales Resellers

FujitsuNECHitachi

Mitsubishi ChemicalKDDINRI

Fujitsu GroupNEC Group

IBMNTT Group

Unisys Group

Soft BankDIS

System Integrators

Carrier & ISP

Channel Business ModelChannel Business ModelOEM Business ModelOEM Business Model

NETWORK BUSINESS1. Business Model

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Sales by Product

Hardware 50%Hardware 50%

Software 22%Software 22%

Service28%Service28%

NETWORK BUSINESS1. Business Model

Sales Breakdown by Products

Net Sales: 140M$

FY3/08 ¥90/US$

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Consistently high profitability since 2005

Net Sales & Gross Profit

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FY3/ 04 FY3/ 05 FY3/ 06 FY3/ 07 FY3/ 0835

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NETWORK BUSINESS1. Business Model

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Competitive advantages of MACNICA NETWORKS

Excellent engineering support capabilities

90 engineers: Hardware/software design and support engineers

Software Localization- Japanization (Message, GUI to support 2byte

code characters)

Software/hardware porting to Japanese platforms

OEM customization

NETWORK BUSINESS2. Competitive Advantage

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Strategy: Focus on two target applications

Two key target markets:

1. Security Related Products- McAfee: Encryption Software- BlueCoat: Web Security Solution

2. Integrated Server Control Solutions- BladeLogic: Software to automate server operations- Mimosa: Email Archive Solution

NETWORK BUSINESS3. Our strategy