We have received reports from a few customers that electrical shorts have occurred in IC packages which use EME molding compound using inorganic phosphorus as a flame retardant. The following is the statement of the Company regarding such problem:

1. We have been supplying products that comply with the applicable material specifications and pass IC manufacturers' qualification tests. Therefore, we maintain that we have fulfilled our responsibility as a material manufacturer.
   
   
2. After receiving reports regarding the IC package problem from our customers, we began an investigation in cooperation with the customers. However, we have not yet identified the root cause of this problem.
   
   
3. Based on the information we have been able to obtain so far, we can report that data developed to date indicates that the rate at which these shorts occur is extremely low compared to the size of total sales volume of the EME molding compound using inorganic phosphorus and that the incidents have been confined to certain specific uses only.
   
   
4. Our molding compounds are usually supplied to IC manufacturers. In our understanding, IC manufacturers have used our molding compounds after having tested them using their own qualification standards based on their own expertise relating to IC packages. In addition, we were not provided with detailed information regarding specific applications for IC packages or the final products containing IC packages, or environmental conditions in which they operate, etc. We were not in a position to obtain such information.
   
   
5. However, as we place our first priority on our customers, we have stopped manufacture and sale of the EME molding compound which uses inorganic phosphorus and recommend the use of our alternative compounds instead.