Japan Earthquake - Customer Update 4

20 May 2011

All AZ facilities in Japan are operating normally and are at full capacity.

All direct raw material supply risks have been mitigated. The one remaining indirect supply risk relates to a supplier that is situated within 30kms of the Fukushima nuclear plant. Although that supplier has resumed operations, AZ stringently follows a policy of not procuring material from within a 50km radius of the nuclear plant. This supplier is now qualifying the material in their alternate plant in Nagoya. Meanwhile, we have adequate inventory to cover demand until the end of 2011. Overall, therefore, the risk to our supply chain is currently minimal.

Two weeks ago, Chubu Electric Power Company (CEPCO) announced the shutdown of its Hamaoka nuclear plant which is located within 5km from our Shizuoka facilities. The nuclear plant is shut down until a seawall can be constructed and other safety modifications are completed. This work is expected to last for at least two years. CEPCO has communicated plans to increase electricity supply in the region, thereby addressing concerns of potential power shortages arising due to the shutdown. These measures will ensure that all demand in our region is met. Even though the risk of power outage is low, we are preparing countermeasures to ensure business continuity at our facilities.

Radiation contamination risks have reduced considerably, though as previously communicated we have implemented radiation contamination detection procedures, and additional Geiger counters are being procured to ensure safe handling and shipment of products.

All AZ logistics functions are operating normally and we are yet to identify any shortages or delays to any of our IC or Optronics customers.