Japan Earthquake - Customer Update

17 March 2011

AZ Electronic Materials continues to manage the impact of the Tohoku earthquake in Japan.

AZ’s manufacturing facilities in the Shizuoka prefecture continue to operate normally, including our IC lithography and dielectric operations, and our Optronics production facilities; power supply to the facility is stable and Tokyo Electric Power Company (TEPCO) has not issued any plan for rolling blackouts in the region/prefecture. Our Tokyo office is also staffed and operating normally.

The TEPCO blackouts may affect the capacity of our second dielectric operations in Saitama. The schedule indicates a daily minimum 3-hour blackout, with a maximum daily blackout of up to 6 hours. As a result there could be some reduction in capacity at Saitama, however schedule workarounds are in place to mitigate the impact on production including the use of additional capacity now coming on line at our Shizuoka facility that is currently unaffected by blackouts.

A small number of our suppliers suffered damage to their facilities as a result of the earthquake; in some cases the supplier is moving production to an alternate plant, in other cases we are changing to an alternate source. In the meantime we have sufficient inventory for several months’ production.

Due to the disruptions at Tokyo’s Narita airport, we have moved air shipments to Nagoya and Osaka airports. The Yokohama port is fully operational for ocean freight. In-land logistics continue to be challenging due to the shortage of gasoline, and the complexities surrounding road and rail transportation to the ports.

We are contacting all affected customers directly and proactively, and further information is available from our normal offices and contacts worldwide.