Epson Acquires Shares in Sanyo Epson Imaging Devices to Create Wholly-Owned Subsidiary

– TOKYO, Japan, December 13, 2006 –

Seiko Epson Corp. ("Epson") today concluded a contract with Sanyo Electric Co., Ltd., ("Sanyo Electric") to acquire the shares held by the latter in the two companies’ joint venture, Sanyo Epson Imaging Devices Corp. ("Sanyo Epson"). Details of the agreement are as follows.

1. Reasons for the share acquisition
Sanyo Epson began operations in October 2004 as a joint venture between Epson and Sanyo Electric. Through synergies created by combining the specialist areas of the two companies, the aim was to become the leading supplier of small- and medium-sized LCDs by creating high performance products and achieving high cost performance. Since its establishment, Sanyo Epson has been successful in expanding its business by fusing the technologies and technical knowledge of Epson and Sanyo Electric. However, intensified competition in the market for small- and medium-sized LCDs has resulted in severe and continued price erosion beyond forecasted levels. As a result, Sanyo Epson has been unable to expand to the desired scale.

In its Creativity & Challenge 1000 mid-range business plan announced on March 16, Epson committed itself to exploring every possibility in honing business strategies aimed at maximizing profitability and corporate value in each of its businesses. Against this background and the aforementioned market environment, Epson determined that greater speed was necessary to take decisive measures aimed at restructuring and improving profitability in its display business. As a result, Epson and Sanyo Electric have decided to dissolve the joint venture, and to make Sanyo Epson a wholly-owned Epson subsidiary. Epson therefore plans to purchase Sanyo Electric’s shares on December 28. At the same time, the name of Sanyo Epson will be changed to Epson Imaging Devices Corp.

2. Outline of Sanyo Epson (as of March 31, 2006)

(1) Business name Sanyo Epson Imaging Devices Corporation
(2) Representative Shuji Aruga (president)
(3) Head Office address 2-4-1 Hamamatsu-cho, Minato-ku, Tokyo, Japan
(4) Date established October 2004
(5) Capitalization 18 billion yen
(6) Proportion of holdings Seiko Epson Corp.
Sanyo Electric Co., Ltd.
55.0%
45.0%
(7) Business lines Development, manufacture and sales of STN LCDs, MD-TFD LCDs, amorphous silicon TFT LCDs and low-temperature polysilicon TFTs
(8) Fiscal year end March 31
(9) Employees 2,882

3. Outline of Sanyo Electric (as of March 31, 2006)

(1) Business name Sanyo Electric Co., Ltd.
(2) Representative Toshimasa Iue (president)
(3) Head Office address 5-5, Keihan-Hondori 2-Chome, Moriguchi City, Osaka, Japan
(4) Date established April 1950
(5) Capitalization 322.2 billion yen
(6) Business lines Manufacture and sales of electrical machinery and appliances
(7) Employees 106,389 (consolidated)

4. Business outlook

This transaction is not expected to have a material affect on Epson’s financial outlook.