Chihiro Kanagawa , president and CEO of Shin-Etsu Chemical Co., Ltd , announced plans for a major expansion in 300mm silicon wafer production capacity at Shin-Etsu Handotai's facilities in Fukushima Prefecture, Japan and a new manufacturing facility for 300mm wafers in Vancouver, Washington in the U.S.

Shin-Etsu Handotai ("SEH") is a wholly owned subsidiary of Shin-Etsu Chemical Co., Ltd. SEH is the world's largest producer of silicon wafers with customers located around the world.

The plan is to increase manufacturing capacity of 300mm wafers at SEH in multi-phases from the current level of 300,000 to 500,000 wafers per month by the autumn of 2006. Construction for these expansions has already begun. With these increases in capacity, SEH will be able to efficiently supply the 300mm wafers required by its customers in a timely manner and will further solidify the company's No.1 global position in 300mm silicon wafers.

The production capacity in Vancouver will be SEH's first production facility for 300mm silicon wafers outside of Japan. Mr. Kanagawa noted that the decision to build the new production capacity in the U.S. was based, in part, on the company's desire to diversify geographically to better assure customers of stable supplies in all circumstances.

In February 2001, SEH became the first company in the world to commercially produce 300mm silicon wafers - well ahead of competing producers. Since the initial production, SEH has invested in 300mm silicon wafer manufacturing facilities in timely fashion. By the end of March 2004, capacity had been increased to 200,000 wafers per month. Between March and December 2004 the capacity was further increased to 300,000 wafers.

In response to the growth in the global demand for 300mm wafers, the company has initiated it's plans for further production capacity increases. SEH will increase 300mm wafer capacity to 400,000 wafers per month by September of next year and to 500,000 wafers by the autumn of 2006. The investment to increase the monthly wafer capacity from 300,000 to 500,000 is estimated to be approximately U.S. $1 billion.

SEH carefully tracks the growth in worldwide demand for silicon wafers. If customers' demand justifies it, SEH plans to increase the group's global production capacity for 300mm silicon wafers from 500,000 to 700,000 wafers per month after 2007. This increase in production will be accomplished by expanding production for these wafers at the company's site in Vancouver, Washington.

Beyond 2007, SEH will continue to invest in its 300 mm wafer capacity to serve customers around the world with quality products supplied from well-timed expansions that meet Shin-Etsu's investment standards.

December 22, 2004