Production of ATM Core Components Greatly Expanded in Response to Neｗ Korean Bills

October 25, 2006

- Upgrade and new products to cover approximately 15000 units -

October 25, 2006 — From this year through into next year, Fujitsu Frontech is developing a bill recycle unit (BRU)⁽¹⁾, one of the core components of ATMs, that is able to handle the new bills being issued in Korea, and plan to produce approximately 15,000 units for use in upgraded and new ATMs. These components will be shipped for ATMs sold by FKM, which is a subsidiary of Fujitsu Frontech in Korea, and for ATMs from LG N-Sys, which is one of Korea's leading ATM equipment manufacturers.

New 5,000 won bills were issued in Korea in January of this year, with new 10,000 won and 1,000 won bills scheduled to be issued next year. Because the new bills are much smaller than the previous bills, the ATM components that handle the bills, including the BRU and bill discriminator unit in particular, as well as the accumulation unit, transport unit and feed-in unit, need major modifications requiring new development. Financial institutions will need to respond to the issuing of the new bills by either purchasing new ATMs that are already equipped with a new BRU that supports the new bills, or by upgrading ATMs that are currently in operation by replacing the existing BRU.

According to the electronic newspaper sector of the Korean media, by 2008 approximately 30,000 ATMs are expected to be replaced with new ATMs or be upgraded with a replacement BRU as a result of the issuing of the new bills. The price of ATMs that support the new bills is approximately 30 million won per ATM, and the cost of upgrading an ATM with a replacement BRU is expected to be 10 million won per ATM. The scale of demand for ATMs that support the new bills is therefore estimated to be close to 1 trillion won.

Although there are four major ATM equipment manufacturers in Korea and each of these companies is planning to release new model ATMs that support the new bills, the BRUs that are at the hearts of the ATMs used in Korea are supplied to all of these companies from Japanese manufacturers, including Fujitsu Frontech. Almost all of the BRUs that will be used to respond to the new bills will be supplied from Japan.

The Fujitsu group has formed a strategic alliance with NCR Corporation aimed at improving ATM technology, allowing the Fujitsu group to globally supply products that incorporate the results of cooperative development between the two companies. Furthermore, Fujitsu Frontech has built up over 30 years of bill discriminator knowledge and experience through supplying BRUs overseas and gaining an understanding of the characteristics (material, print properties, etc.) of the bills from each country. Fujitsu is therefore able to deliver stable device operation by developing equipment based on technological capabilities that leverage this experience. Furthermore, as a result of our experience in bill handling technology, Fujitsu Frontech BRUs have a simple architecture that can handle both new and old bills, allowing us to take the lead ahead of other companies in responding to the release of new bills.

Business development in Korea is the responsibility of the Fujitsu Frontech subsidiary FKM⁽²⁾. Since it was established in 1998, FKM has a track record of delivering approximately 12,000 ATM and CD units, which are used by 15 different client companies. This year, FKM is expected to post record sales in excess of 10 billion yen (2005 sales were 4 billion yen) as a result of the response to the new bills.

Since 2004, Fujitsu Frontech has been supplying BRUs through FKM to LG N-Sys, which is one of the leading ATM equipment manufacturers in Korea, and will also deliver BRUs that support the release of new bills to LG N-Sys. FKM and LG N-Sys hold a large combined share of more than 33% of the total ATM market in Korea. Fujitsu Frontech is forecasting shipments of new components for a total of approximately 15,000 units to these two companies for installation in new ATMs and for upgrading BRUs in existing equipment

Footnotes

1 bill recycle unit (BRU):

A mechanical component that is capable of collecting and dispensing bills. This component demands particularly high precision design, high quality, and high reliability in order to be able to support the variety of bills and new bills.

2  FKM:

Formal Company Name: FKM Co., Ltd.
Address: Taeyeong Bldg., 3rd floor, 252-5 Gongdeok-dong, Mapo-gu, Seoul ,Korea