First Half Results for Fiscal Year 2014

(ending March 2014

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Nihon Dempa Kogyo Co., Ltd.

NoteStatements made in this presentation with respect to our current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about our future performance. These statements are based on managements assumptions and beliefs in light of information currently available to it. We caution that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue reliance on them. You also should not rely on the belief that it is our obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Risks and uncertainties that might affect us include, but are not limited to; fluctuation of currency exchange rates, overall supply and customer demand in the industry, product development and production capacities, performance of affiliated companies, and other risks and uncertainties.

2

1 FY2014 1st Half Results

2 Market trends and our products

3 Forecast for the full year FY2014

Contents

3

Summary of FY2014 1st Half Results

(Million yen)

FY2013 FY20141st Half 1st Half

Net sales 25,727 25,572 155Operating income 696 312 384Income before tax 594 198 396Net income 565 173 392Total comprehensive income 174 657 831

Change

Net salesAlthough the sales for automotive and fixed radio communication

were higher than the previous year, the sales for mobile communication and AV/OA were lower than it (especially in FY2014 1Q), and the overall sales dropped slightly.Income

The profit was lower than the previous year, mainly due to a fall in price for mobile communication and a reduction in quantity and price of optical products for cameras.

321

756

597

407

311385

37

424

158

471

204

575 552

284

196

398

149

482

202

401

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Q Q

FY2012 FY2013 FY2014

Income (Million yen)Operating income

Income before tax

44

Quarterly Results

12,125

13,82312,685

12,17112,652

13,07512,840

12,05612,251

13,321

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Q Q

FY2012 FY2013 FY2014

Net sales (Million yen)

In FY2014 2Q (Jul.- Sept.), the sales recovered to the same level as the previous year. The profit returned to the black, mainly due to products for fixed communication and AV/OA.

5

Sales trend of main applications

0

1,000

2,000

3,000

4,000

5,000

1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q

FY2012 FY2013 FY2014

(mil.) Mobile

0

1,000

2,000

3,000

4,000

5,000

1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q

FY2012 FY2013 FY2014

(mil.) Fixed radio

0

1,000

2,000

3,000

4,000

5,000

1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q

FY2012 FY2013 FY2014

(mil.) AV/OA

0

1,000

2,000

3,000

4,000

5,000

1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q

FY2012 FY2013 FY2014

(mil.) Automotive

Mobile communicationIn FY2014 Q2 (Jul.- Sept.), sales recovered mainly for smart phones.Fixed radio CommunicationSales for the communication infrastructure, such as base stations for mobile phones are on the increase, from the bottom figure of FY2013 2Q.AV/OAIn FY2014 2Q (Jul. Sept.), sales for home electrical appliances, such as game consoles, recovered.AutomotiveIn FY2014 first half(Apr. Sept.), the sales recovered.

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Summary of Cash Flow

(Million yen)

FY2013 FY20141st Half 1st Half

532 1981,601 1,912

210 1,0451,923 1,065

3,339 1,230Others 145 110

3,194 1,120 1,271 55

1,496 344Cash dividends paid 195 196

1,301 54130 596

8,796 11,812 190 1968,636 11,412

Income before income taxesDepreciation and amortizationChange in working capital

Net effect of currency translation

Net decrease()/increase in cash and cash equivalents

.Operating activitiesPurchase of property, plant and equipment

.Investing activities

Cash and cash equivalents at end of year

Free cash flowIncrease in debt

.Financing activities

Cash and cash equivalents at beginning of year

1,065

55

541

Cash Flow of 1st half FY2014

1,120

FinancingCF

Free CF+

OperatingCF

InvestingCF

4,247

2,760

3,937

5,699

2,3003,067 3,247 3,040

3,425 3,700

FY2010

actual

FY2011

actual

FY2012

actual

FY2013

actual

FY2014

forecast

Capital investmentDepreciation

Capital investment & Depreciation(Million yen)

2,2412,420

2,686 2,5002,400

4.3% 4.4%

5.3% 5.1%4.7%

FY2010

actual

FY2011

actual

FY2012

actual

FY2013

actual

FY2014

forecast

R&D expenses (Million yen)R&D expensesR&D expenses ratio against sales

7

Capital investment & R&D expenses Capital investment

2.3 billion expected for FY2014 as originally planned R&D expenses

2.4 billion expected for FY2014 as originally planned

1H actual1,1181H actual

Investment 1,230Depreciation 1,912

Additionally invested 0.7bn ahead of FY2014 plan on initial FY2013 plan(5.0bn)

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1 FY2014 1st Half Results

2 Market trends and our products

3 Forecast for the full year FY2014

Contents

Business portfolio target

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Current business field

Expansion of business field

IndustrialConsum

er

Space/ Aviation/ Defense Medical/ Food/

Environment, etc.Public

SystemBase station/ Optical communications/ Broadcast

Mobile communications, AV/OA, Automobile

Crystal Units Optical Products

Crystal Oscillators High Accuracy

Ultrasonic DevisesSynthesizersSensors

1,129 1,018 893 874 849

471 700 915 1,038 1,147

1,6001,718 1,808

1,913 1,997

107% 105% 106% 104%

0%

20%

40%

60%

80%

100%

120%

0

500

1,000

1,500

2,000

2,500

CY2011 CY2012 CY2013 CY2014 CY2015

Feature phone Smartphone

Reference :Goldman Sachs, TSR and estimation of NDK

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Reference: TRI

Mobile communications market

Global mobile phone market trend Brand market share of mobile phones in China1Q 2013

The mobile phone market is expected to grow continuously, but growth rate will fall along with the popularization.

In 2013, the number of smartphones will exceed feature phones.

The growing market of smartphones is crossing over from the developed countries to China or the developing nations.

The market share of local makers will increase in China.

Design simplification and price reduction will progress.

Others

(Million units) YOY

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Mobile communications market] New product : Crystal unit with a built-in temperature sensor

Clock

Temperature info.

1 package

Crystal unit

Temperature sensor

NX1612SB(size:1.61.20.65mm)

- World's lowest-profile (height 0.65mm) - Contributing to customers freedom for design

Crystal unit with a built-in temperature sensor (2016 and 1612 size)

Demands for chipsets due to simplification of design

NX2016SF(size:2.01.60.65mm)

[Structure]Tempera-ture compen-

sation Circuit

RFTransceiver

Baseband Application Processor

GPSGPSWLANWLAN

BluetoothBluetooth

Unification of multiple chips

As for the chipset, unification of multiple chips is further developed and optimum functions for it is expected.

Compact and thin, responding to space saving due to high density packaging.

Provides temperature information to chips and improves frequency accuracy

Temperature sensor built-in

Developedin FY2014

Under development

Worldwide sales volume of automobile

8,011 8,4618,716 9,122

9,502 9,851

106% 103% 105% 104% 104%

0%

20%

40%

60%

80%

100%

0

2,000

4,000

6,000

8,000

10,000

12,000

2011 2012 2013 2014 2015 2016

(10 thousand units)

Others

China

North

AmericaEU

Japan

Total

12

Automotive marketTowards a stable growth

The sales of automobiles overall expected to be a stable growth Strong growth in China and other developing nations

In 2012, Japanese makers have recovered from production reduction due to the earthquake disaster and the flood in Thailand.

America

ReferenceFuji chimera

Camera(Front)

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Camera(rear)

Automotive marketExpanding market /Purpose collision-free car

Crystal units are used for them and expansion of market is expected. Crystal oscillators and SAW devices are expected to increase in

demand for advanced control system working with map information using GPS, etc.

Millimeter-waveradar(Front)

- Optimum distance between cars- Maintaining lane- Detection of sudden cut-in, etc.

Millimeter-waveradar(rear)

- Rear collision warning- Lane change support, etc.

Vehicle control technology leading to future automatic drive is practically applied.

0

2,000

4,000

6,000

8,000

10,000

12,000

2012 2013 2014 2015 2016 2017

1000TB/ month

Others

Feature phones

M2M

Tablet PC

Note PC

Smartphones

13 times !

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ReferenceCISCO

Fixed radio communications marketIncrease in data traffic

Explosive increase in mobile data traffic Increase in base stations and optical communication apparatus

TB(terabyte) a trillion ( 12 times of 10)

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Fixed radio communications marketNew products:Arbitrary Output Frequency VCXO

Demands for optical communication devices

15MHz:

155.52MHz:

622.08MHz:

915MHz

NV7050SH(size:7.05.0mm)

622.08MHzor

644.53MHz

NV7050SJ(size:7.05.0mm)

Customers Customers

High accuracy, Low phase noise and Low jitter, and High reliability Moreover, VCXO enables customers to select the necessary frequency

Advantages on the part of customers(1)Reduce the items of parts and simplifies its management(2)Shorten the period of development of new products

Arbitrary frequency 1 wave output Any Rate VCXO

Select 1 wave of two frequenciesHigh frequency Selectable VCXO

Under development Under development

Smart meter

Sensor

Battery

Smartphone

Gateway

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[Fixed radio communications market] Smart grid

HEMS=Home Energy Management System

Smart meter is being introduced in many countries, which is essential for realization of Smart grid.

Connects home electronics with wireless communication, links to external network and optimizes energy management

Gives information on meter-reading with an accurate time management to electric company

Smart meter HEMSHome electronics/Gateway)

Tuning fork crystal units, crystal oscillators, clock oscillators and SAW filters are used for smart meters or HEMS.

-250

40 60 80 100 120

-200

-60 -40 -20 0

ppm

20

50

0

-50

-100

-150

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Fixed radio communications market/Smart metersNew products : clock oscillator for use in high-temperature

NZ2520SG(size:2.52.0mm)

Low-current-consumption, 32kHz crystal clock oscillator for use in high-temperature

Demands for attainment of accurate time managementAccurate clock source is required even under a wide temperature range environment where meters are installed. Moreover, the new product will correspond to low power consumption of meter.

- Operating under high temperature105Previously, 85- Electricity consumption:45 reduction as compared to previously

Relation of temperature and frequency

The new product has more stable frequency within a wide range of temperature, compared to the tuning fork type which is generally used as a clock source.

The new product

Tuning fork type

Developedin FY2014

Utilized our propriety technology based on an AT cut crystal oscillator, featuring outstanding temperature and accuracy properties

18

1 FY2014 1st Half Results

2 Market trends and our products

3 Forecast for the full year FY2014

Contents

19

Forecast for the Full year FY2014

ReferenceExchange rate sensitivityInfluence on net sales (Annual) 1 fluctuation approx.210 millionInfluence on operating income (Annual) 1 fluctuation approx.50 million

(Million Yen

1H 2H Annual(Actual) (Forecast) (Forecast)

Net sales 25,572 25,428 51,000Operating income 312 388 700Income before tax 198 302 500Net income 173 227 400Ratio of income before tax 0.8% 1.2% 1.0%Exchange rate(against the U.S. dollar)

97.99 95.00

FY2014

Development

Preparing for next year

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New market

Fixed radio Communica-

tionGrowth

Base

Automotive

AV/OA

Mobile Communica-

tion

IndustrialConsum

er

Increase profits by expanding range of high value added products New differentiated products of OCXO/VCXO/TCXO

Development of new fields using crystal technology SensorsIndustrial, medical, etc.

Sales/ profit basisMaintaining a large share Profit secured

Profit improvement by new products using new methodsCapacity preparation is readySwitch over from TCXO to crystal unit with abuilt-in temperature sensorSecuring profit

Ensure profit improvement from the next year onwardsChange earning structure and accelerate new product development

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IR Information Contact

We are grateful for your continuous support.

Nihon Dempa Kogyo Co., Ltd.Treasury and Accounting Division

Mail: irmaster@ndk.com