LXXXI Asamblea Nacional “La Globalización: Retos y oportunidades” (Muchisima gracias para su introducción, muy amabile.) Thank you for your kind introduction. (Estimado convidados y amigos, perdona me, por favor, para hablar en Ingles　－ y para usar illustracion con texto in Ingles, Japones y Espanol.) Distinguished guests and friends. Please forgive me for making this presentation in English, using slides with texts that are mixtures of English, Japanese and Spanish. Today, I would like to talk to you about the “Risks and Opportunities” based on my experiences of wearing three hats. I would like to begin by addressing this theme from the perspective of the Japan Society of San Diego and Tijuana, talking about what “true globalization” has meant for Japan, focusing on its successes and mistakes that Japan has made throughout the history. Next, I would like to introduce Kyocera to you, how it developed from a very small venture business (PyMES), and the challenges it meet in achieving its vision of becoming a truly global corporation. Finally, allow me to wear my hat as an old university professor to theorize on the future of globalization and the important role that Mexico can play in this. I would like to aim this specifically at the four Objectives of this National Assembly. México Japón E. U. A. Michael S. Inoue, Ph.D. Presidente, Sociedad Japonesa de San Diego y Tijuana (JSSDT) Senior Advisor, Kyocera International, Inc. (KII) A Former Professor, Oregon State University

Objetivo #1 Identificar las oportunidades, los retos y las amenazas que la globalización plantea en particular a los empresarios (Kyocera Mexicana, SA de CV) y en general para el desarrollo de México (y Japón). Namely: Challenges and Risks of globalization on sub-contractors from Kyocera’s perspectives, and on the general development of a country, using the example of Japan.

Objetivo #2 Urgir a los responsables de las decisiones nacionales, a los políticos y en general a los mexicanos (japonés) a que unamos esfuerzos en pro de la competitividad como una fórmula indispensable para afrontar los retos y amenazas que plantea la globalización. #2: Challenges and Risks of globalization on sub-contractors from Kyocera’s perspectives, and on the general development of a country, using the example of Japan.

Objetivo #3 Proponer a la sociedad puntos de consenso indispensable en México (Japón y Kyocera) para hacer posible el incremento de la competitividad y en consecuencia abatir la pobreza en un mundo crecientemente globalizado. #3: How Japan and Kyocera had grown out of “poverty” and gain their competitiveness in an increasingly competitive global market.

Objetivo #4 Llamar a los empresarios mexicanos (Kyocera) para que se unan a los que ya están en Coparmex (e.g. JETRO) en la búsqueda de la economía competitiva y socialmente responsable que necesita el país (Japón) frente a la globalización. #4: The roles that an organization similar to COPARMEX (Jetro in the case of Japan) can play in economic competitiveness and social responsibility globalization of a country, Japan.

¿Qué es precisamente la globalización? (Case of Japan) 1549 Francisco de Javier 8/15/1549; a Mexican missionary included in 26 Martyrs of Nagasaki (2/5/1597) 1650 Isolation 1817 Commodore Matthew Perry visits Japan 1882 Japanese Navy visits San Diego, Acapulco 1900 Colonialization (Manchuria, Korea, Taiwan, …) 1940 Militarism 1945 End of WWII; survival (imitations); Protectionism 1959 Economic boom; Acquisition of foreign companies 1998 Bubble bursts In the case of Japan, the country was first opened by trade and religious missions, notably Saint Francis of Xavier who came to Japan in 1549. As Christianity spread rapidly, alarmed Shogun began persecuting missionaries, crucifying 26 martyrs in 1957, including a Mexican friar. Then the country entered into isolation, closing all ports to foreign vessels, except Nagasaki, until Commodore Perry of the US Navy forced Japan to end its isolation. Japan built its armed forces and the first Japanese Navy Vessel, Tsukuba, visited San Diego in

¿Qué es precisamente la globalización? Stage 0 Isolation and Protectionism Stage 1 Regional and inter-state commerce Stage 2 Colonialization (Foreign capital, technology) Stage 3 Bilateral commerce Stage 4 International companies Local production by foreign subsidiaries Stage 5 Multinational corporation Local R&D, product design Stage 6 Global corporation A group of multinational companies So, what is “Globalization”? I think that globalization is a dynamic concept that continues to evolve, even today. Stage 0 is a complete isolation and protectionism, trying to safeguard what we now have, avoiding any competition. Today, even countries North Korea and Cuba recognize that they cannot continue to exist in isolation. However, companies use isolation and protection to safeguard R&D and new business ideas to incubate. Stage 1 is for regional and inter-state commerce within a country. This is where most small to medium size companies start. Stage 2 is what I call colonialization, where capitals and technolgies are imported and products are exported. Stage 3 is where we have two-way trades that benefit both countries and their companies. Trading companies are established. Stage 4 is where international companies are established with local production in addition to sales. Technologies are transferred from the parent. Stage 5 is a truly Global Corporation with

¿Qué es precisamente la globalización? (Case of Kyocera) 1959 Dr. Kazuo Inamori establishes Kyocera in Kyoto with 27 employees, US$10,000 in capital. Sales: $5K/mos. 1965 Texas Instruments (‘65), IBM(‘66) place orders. 1969 Kyocera International, Inc. established in Sunnyvale, CA. 1972 KII Production in San Diego, (1st Japanese Mfg in CA) 1976 ADR listed on NYSE 1984 Established KDDI (then DDI) 1990 Merged AVX, the first stock swap merger of a Japanese company with a foreign company 1995 20% listed AVX on NYSE $1B sales, Profit grew x5 2000 Established Kyocera Wireless Corp.(from QUALCOMM) 1959: 27 employees and US$10,000 in capital, dreamed to be: First in the neighborhood First in Kyoto First in Japan First in global “technical ceramic” business 1965: Used a Japanese trade company to market overseas. 1969: Established Kyocera International, Inc., in Sunnyvale, CA, USA as a sales company. 1972: Become the first Japanese Manufacturing Plant in California 1976: ADR listing on NYSE 1984: Established Kyocera Chairs at MIT, CWRU, University of Washington 1984: Established DDI Corporation (now KDDI) and Inamori Foundation 1990: Effected merger of AVX 1995: Published “Passion for Success” from McGraw Hill; DDI enters cell phone business; Re-list AVX on NYSE with sales doubled to US$1B; profit grew over 500%) 2000: Established Kyocera Wireless Corp. (formerly QUALCOMM Handset Division)

Introducing Kyocera Corporation (1) Founded : April 1959 Headquarters : Kyoto, Japan FY00 Sales : 1.285 Trillion Yen (about $10.2 Billion) General Facts : >80% of sales derived from telecom, information processing and Internet-related businesses Leading Products : Telecom & information equipment (wireless phones, copiers, printers, faxes); advanced ceramics; electronic components; semiconductor packages; solar power systems; cameras

Introducing Kyocera Corporation (2) Workforce: Approximately 42,000 worldwide Research and Development Centers: Central Research Center, Kagoshima Yokohama Research Center, Yokohama Keihanna Research Center, Kyoto Kyocera Mita R&D Center, Osaka Advanced Ceramics Technology Center, Vancouver, WA, U.S.A. Advanced Products Technical Center, Myrtle Beach, SC, U.S.A. Israel Research Center, Jerusalem, Israel Manufacturing Plants: 61 Japan: 18 ROW: 43 Named by IndustryWeek among “The World’s 100 Best-Managed Companies”

Strategic Market Directions

Fine Ceramic Group Share of Kyocera Group’s FY01 Net Sales: 28.3% FY01 sales: ¥363 billion ($2.881 billion) up 34.0% Fine Ceramic Parts Semiconductor Parts Consumer-related Products

Electronic Device Group Share of Kyocera Group’s FY01 Net Sales: 30.6% FY01 sales: ¥393 billion ($3.116 billion) up 46.6% Electronic Components

Share of Kyocera Group’s FY01 Net Sales: 36.3% Equipment Group Share of Kyocera Group’s FY01 Net Sales: 36.3% FY01 sales: ¥467 billion ($3.709 billion) up 117.3% Telecommunications Equipment Information Equipment Optical Instruments

Business Segment Information Semi 34.0% Fine Cer Consumer 30.6% 36.3% Telcom Info Optical

Global Manufacturing THE AMERICAS 20 Manufacturing Plants San Diego, CA CDMA wireless phones San Diego, CA Semiconductor packages Beaverton, OR Semiconductor packages Mountain Home, NC Structural ceramic parts Vancouver, WA Structural ceramic parts Scottsdale, AZ Solar energy products Irvine, CA Carbide Cutting Tools Biddeford, ME (AVX) Electronic components Colorado Springs, CO (AVX) Electronic components Conway, SC (AVX) Electronic components Myrtle Beach, SC (AVX) Electronic components Raleigh, NC (AVX) Electronic components Olean, NY (AVX) Electronic components Sun Valley, CA (AVX) Electronic components Tijuana, Mexico Semiconductor packages Chihuahua, Mexico (AVX) Electronic components Juarez, Mexico (AVX) Electronic components San Salvador, El Salvador (AVX) Electronic components Sao Paulo, Brazil Optical instruments Manaus, Brazil (AVX) Electronic Components Provincia de Buenos Aires, Argentina Solar energy products

Global Manufacturing JAPAN 18 Manufacturing Plants Hokkaido Kitami Optical ceramics, telecom equipment, electronic components Fukushima Tanagura Telecom equipment Chiba Sakura Solar systems Nagano Okaya Optical instruments, electronic components Tokyo Ohme Optical lenses Mie Ise Solar power systems Mie Tamaki Laser printers Shiga Semiconductor packages, electronic components, structural ceramic components, solar products Kagoshima Sendai Semiconductor packages, electronic components, structural ceramic parts Kagoshima Kokubu Semiconductor packages, electronic components, Kagoshima Hayato Electronic components Kyocera Elco Corp. Electronic connectors Kyocera Optec Co. Ltd. Optical instruments Kyocera Mita (5 plants) Copiers and facsimile equipment

Global Manufacturing EUROPE / MIDDLE EAST 12 Manufacturing Plants Paignton, England (AVX) Electronic components Newmarket, England (AVX) Electronic components Biggleswade, England (AVX) Electronic components Coleraine, N. Ireland (AVX) Electronic components Larne, N. Ireland (AVX) Electronic components Betzdorf, Germany (AVX) Electronic components Seurre, France (AVX) Electronic components Beaune, France (AVX) Electronic components Saint Appolinaire, France (AVX) Electronic components Lanskroun, Czech Rep. (AVX) Electronic components Uherske Hradiste, Czech Rep. (AVX) Electronic components Jerusalem, Israel (AVX) Electronic components

Major Operating Subsidiaries and Affiliates PRODUCT / SERVICE Telecommunications common carrier Mobile and portable telephone services PHS communication services Amusement and leisure Multimedia services Leasing services Telecom & information systems services Electronic Components Electronics Connectors CDMA wireless phones Copiers, faxes Electronic components COMPANY DDI Corporation Cellular Telephone Companies DDI Pocket Telephone Companies Taito Corporation Kyocera Multimedia Corporation Kyocera Leasing Co., Ltd. Kyocera Communication Systems Co., Ltd. Kinseki, Ltd. Kyocera Elco Corporation Kyocera Wireless Corp. S.K. Teletech Co., Ltd. Kyocera Mita Corp. AVX Corporation

Necesidades Fisiológicas Triángulo de Braham H. Maslow (1908-1970) sobre las necessidades humanas (Inoue, Murray y Blanco, p.28) Crea- tividad Auto Estima Pertenencia Segridad Necesidades Fisiológicas So how do we tie these together? The common thread that would tie Mexico, Japan, and the world in our discussion of Globalization? As the basis, I would like to use Braham H. Maslow’s model of human needs.

National Development Arts, sciences Sovereignty Autonomy Education, social development Security (Laws and Order) Food, Clothing, Shelter, Energy A nation follows a same path.

Maslow’s Triangle for a Global Corporation Morality Mission Co. Structure Inspired Leadership Dedicated Workforce Safety, security, compensations

Maslow’s Triangle for Kyocera “Respect the Divine Co. And Love People” Motto Philosophy Kyocera Philosophy Amoebas Co. Structure Inspired Leadership “Formula for Dedicated Workforce Success” Safety, security, profit, compensations

Maslow’s Triangle for a Corporate Location Tech- nology Logistics Infrastructure Quality labor cost Prospect for profitability, Safety, security, water, food, housing

Kyocera Formula for Success The Result of our work Or of our life = Ability (0~100%) x Effort (0~100%) X Attitude (-100%~100%)

Kyocera Philosophy P. A. S. S. I. O. N. Dr Kyocera Philosophy P.A.S.S.I.O.N. Dr. Kazuo Inamori, Founder Kyocera & KDDI Purpose/Profit Ambition Sincerity Strength Innovation Optimism Never Give Up

Global Prosperity and Happiness Mexico, Japan and EUA can lead the world

Consolidated BUSINESS OVERVIEW For the year ended March 31, 2001 Kyocera Corporation Consolidated BUSINESS OVERVIEW For the year ended March 31, 2001

Presentation Outline 1. Introducing Kyocera Corporation 2. Strategic Market Directions 3. Business Segment Information 4. Global Manufacturing 5. Organization 6. The “Inamori Group” 7. North American Operations 8. Fiscal 2000 Sales by Product Line 9. Major Operating Subsidiaries & Affiliates

Telecommunication Environment Quality of Life Kyocera Strategy Products for Telecommunication Environment Quality of Life