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SDK and KEMET to Strengthen Alliance in Aluminum Capacitors

November 19, 2003

Showa Denko K.K. (SDK) and KEMET Corporation (KEM) today announced plans to further enhance their technical and manufacturing alliances by expanding their Co-manufacturing Agreement regarding solid conductive polymer aluminum surface-mount capacitors.

Both companies will continue to market and sell aluminum polymer capacitors to their respective customers and market areas. SDK will continue to market under the trade name, SDK-CAP and KEM under AO-CAP. No disruptions of service or quality are anticipated, except for the X case size products, which will be temporarily discontinued until mid 2004.

In 1999, KEM and SDK entered into an agreement that consisted of KEM licensing SDK polymer aluminum technology. This agreement involved KEM producing aluminum capacitors using SDK’s technology for the front-end of the process (rack, formation, etc. through mold encapsulation).

SDK also entered into the manufacturing arena by producing products through their own front-end process. KEM used their own back-end process (assembly, testing, etc. through packaging) and completed the manufacturing for both companies.

After an extensive re-evaluation of today’s market requirements, the decision was made to eliminate duplication by combining the manufacturing processes to reduce the total manufacturing cost and allow both companies to build on synergies of their individual strengths.

As part of the above agreement, SDK has decided to build a second production line at its site in Oyama, Tochigi Prefecture. The new line, with capacity to produce 8 million capacitors a month, will start operation in July 2004.

SDK is currently producing solid aluminum capacitors at its production line in Omachi, Nagano Prefecture. The PC market, the major market for the solid aluminum capacitors, is expected to grow at a yearly average of 10% from this fall through 2006.

For notebook-size PCs in particular, there is a strong demand for high-capacitance, low ESR (Equivalent Series Resistance) solid capacitors with low operating voltage. Since SDK-CAP and AO-CAP meet these requirements, their consumption is expected to increase rapidly.

In the medium-term consolidated business plan the “Sprout Project” that started this year, SDK is placing special emphasis on the electronics market. As part of this strategy, SDK will continue to provide high-performance solid aluminum capacitors for use in PCs, communication equipment and household electric appliances