(Correction of Disclosures) (Progress of Disclosures) Notice Regarding Negotiations on Share Acquisition of Power Semiconductor Substrate Manufacturing Subsidiary (FLH) by Our Chinese Parts Cleaning Business Subsidiary (FTSVA)

Overview of M&A

Our Chinese parts cleaning business subsidiary, FTSVA, has entered into a share transfer agreement to acquire 100% of the shares of power semiconductor substrate manufacturing subsidiary FLH. As acquisition consideration, FTSVA will issue its shares and convertible bonds to FLH's shareholders, and plans to conduct a public offering. The valuation of FLH’s shares is 6.55 billion CNY (approximately 140.3 billion JPY) based on a third-party valuation company. The convertible bonds have a 4-year maturity, 0.01% interest rate, and contain a mandatory conversion clause.

Impact on Shareholders and Profit Compensation Agreement

In conjunction with this transaction, when FTS transfers FLH shares, a profit compensation agreement will be signed with FTSVA. If FLH's profit performance over three years falls below the promised target, FTS will compensate by repurchasing the shares. The public offering subscription amount is within approximately 16.8 billion JPY, and the funds will be allocated to projects such as developing high-performance silicon nitride ceramic substrates. Following the transaction, FTSVA’s equity stake is expected to change from 50.24% to 51.46%.