1

MegaChips CorporationMegaChips CorporationFinancial rFinancial results for the fiscal esults for the fiscal

thirdthird--quarter ending March 2009quarter ending March 2009(3Q FY3/09)(3Q FY3/09)

http://www.megachips.co.jp/http://www.megachips.co.jp/

Innovation & Rebuild

Jan. 2009

2

CONTENTSCONTENTS1. 3Q FY3/09 Business Report 1. 3Q FY3/09 Business Report -- -- -- -- -- -- -- -- -- -- -- -- -- -- 33

2. 3Q FY3/09 Earnings Forecast 2. 3Q FY3/09 Earnings Forecast -- -- -- -- -- -- -- -- -- -- -- -- -- 1111

3. 3Q FY3/09 Midterm Management Policy 3. 3Q FY3/09 Midterm Management Policy -- -- -- -- -- 1313

4. Summary 4. Summary -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 2121

3

3Q FY3/09 Business Report3Q FY3/09 Business Report

444

3Q3Q FY3/09 Consolidated PerformanceFY3/09 Consolidated Performance

1Q Results 2Q Results 3Q Results 4Q Results 1H Forecasts 2H Forecasts

0010.310.3

1010

FY3/08 FY3/09 Forecast(initial)

2020

3030

4040

5050

15.115.1

14.614.6

10.510.5

50.650.6

9.79.7

27.127.1

27.927.9

55.055.0

00

11

22

33

55

0.450.45

1.141.14

1.181.18

0.650.653.443.44

0.740.74

2.802.80

1.801.80

4.604.60

0.310.31

1.311.31

0.540.540.440.442.612.61 ★★

0.410.411.301.30

1.051.05

2.352.35

Net sales: ¥43.2 billion(+ 7.8%) <78.6%>

Operating income: ¥4.58 billion(+ 64.4%) <99.6%>

Net income: ¥2.56 billion(+ 18.3%) <109.1%>

Net Sales Operating Income Net Income((¥¥ Billions)Billions) ((¥¥ Billions)Billions) ((¥¥ Billions)Billions)

* ( ): Changes from the same period last year (%); < >: Achievement rate vs full-year forecast (%)★The merger with a subsidiary at the beginning of FY3/08 resulted in a tax adjustment that had the effect of

increasing net income by about ¥770 million in FY3/08 (¥610 million for 1H FY3/08).

FY3/08 FY3/09 Forecast(initial)

FY3/08 FY3/09 Forecast(initial)

17.417.4

43.243.2

2.062.06

1.781.78

0.890.89

1.261.26

16.016.0

6060

44

4.584.58

00

11

22

33

55

44

2.562.56

5

Operating Results for ASIC BusinessOperating Results for ASIC Business

8.58.5

43.043.0 45.045.0

22.122.1

22.922.9

7.47.4

13.013.0

8.38.336.636.6

15.415.4

13.713.7

00

1010

2020

4040

3030

5050((¥¥ Billions)Billions) Net SalesNet Sales

FY3/08 FY3/09 Full-year forecast (initial)

Net sales :Net sales : ¥¥36.6billion36.6billionYoY YoY basisbasis:: +5.5%+5.5%Achievement rate against Achievement rate against fullfull--year forecast (initial):year forecast (initial): 81.4%81.4%

The sThe sales increased on a yearales increased on a year--overover--year basis by strong demand year basis by strong demand of softwareof software--storage LSI for the storage LSI for the handhand--held games.held games.

Sales are proceeding as planned.Sales are proceeding as planned.

13.013.0

6

Operating Results for Operating Results for ASSP and Electronic Components BusinessASSP and Electronic Components Business

1.411.41

5.025.02

6.06.0

3.83.8

2.22.21.171.17

1.021.02

1.141.14

1.441.44

1.061.06

3.533.53

1.311.31

00

2.02.0

6.06.0

4.04.0

((¥¥ Billions)Billions)

FY3/08 FY3/09 Full-year forecast (initial)

Net salesNet sales :: ¥¥3.53billion3.53billionYoY YoY basisbasis :: --1.2%1.2%Achievement rate against Achievement rate against fullfull--year forecast (year forecast (initialinitial):): 59.0%59.0%

The sales amount decreased on a The sales amount decreased on a yearyear--overover--year basis. There was theyear basis. There was thestrong demand for highstrong demand for high--performance digital camera LSI and performance digital camera LSI and 11--segseg tuner of the handtuner of the hand--held games. held games. However, the market demand for the However, the market demand for the portable phone 1portable phone 1--seg LSI has seg LSI has greatly decreased.greatly decreased.

The target has not The target has not been been achieved achieved yet .yet .

Net SalesNet Sales

7

Operating Results for Systems BusinessOperating Results for Systems Business

2.612.61

4.04.0

2.012.01

1.991.99

0.520.52

0.950.95

0.820.82

1.211.21

0.780.78

3.053.05

1.061.06

00

2.02.0

4.04.0

1.01.0

3.03.0

((¥¥ Billions)Billions)

77

FY3/08 FY3/09 Full-year forecast (initial)

Net SalesNet Sales

Net salesNet sales :: ¥¥3.05 billion3.05 billionYoY YoY basisbasis :: +70.1+70.1%%Achievement rate against Achievement rate against fullfull--year forecast (year forecast (initialinitial):): 76.3%76.3%

The sThe sales increased on a yearales increased on a year--overover--year basis by the strong year basis by the strong demand for the new products of the demand for the new products of the customercustomer--specific digital video specific digital video surveillance systems.surveillance systems.

Sales are proceeding as planned.Sales are proceeding as planned.0.320.32

888

3Q FY3/09 Summary of Consolidated 3Q FY3/09 Summary of Consolidated PerformancePerformance

Note1: “2009.3 forecast for whole year(3)” is the previous release in Oct 30th, 2008. Note2: The merger with a subsidiary at the beginning of FY3/08 resulted in a tax adjustment that

had the effect of increasing net income by about ¥770 million in FY3/08 (about ¥610 million for 1H FY3/08).

((¥¥ Millions)Millions)2009.32009.3

Results for Results for Apr.Apr.-- Dec. (1)Dec. (1)

2008.32008.3Results for Results for

Apr.Apr.-- Dec. (2)Dec. (2)

2009.3 2009.3 Forecast for Forecast for

whole year (3)whole year (3)YoY BasisYoY Basis

(1)/(2)(1)/(2)Vs. Vs.

forecast forecast (1)/(3)(1)/(3)

LSI BusinessLSI Business

ASICASIC 36,61336,613 34,70434,704 4455,000,000 + + 55..55%% 81.481.4%%ASSP and electronic ASSP and electronic componentscomponents 3,5373,537 3,5813,581 6,0006,000 -- 1.1.22%% 5959..00%%

Net salesNet sales 40,15140,151 38,28538,285 5151,000,000 + + 44..99%% 7878..77%%Operating incomeOperating income 4,5134,513 3,3973,397 4,4,660000 + + 3232..99%% 98.198.1%%

Systems Systems BusinessBusiness

Net salesNet sales 3,0513,051 1,7941,794 4,0004,000 + + 7070..11%% 7676..33%%Operating incomeOperating income 6969 -- 545545 00 －－ －－

ConsolidatedConsolidated

Net salesNet sales 43,20343,203 40,07940,079 5555,000,000 + + 77..88%% 78.678.6%%Operating incomeOperating income 4,5834,583 2,7882,788 44,,660000 + + 6464..44%% 9999..66%%Ordinary incomeOrdinary income 4,7294,729 2,6972,697 44,700,700 + + 7575..33%% 100100..66%%

Extraordinary lossExtraordinary loss 595988 112112 597597 + + 433433..00%% －－

Net incomeNet income 2,5642,564 2,1672,167 2,2,353500 ++ 1818..33%% 109109..11%%Net income per Net income per share (share (¥¥)) 105.72105.72 87.4687.46 97.0397.03 ++ 2020..99%% 109109..00%%

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3Q FY3/09 Consolidated Balance Sheets 3Q FY3/09 Consolidated Balance Sheets

10,00010,000

20,00020,000

30,00030,000

40,00040,000

00

35,32935,329

22,56522,56517,65317,653Accounts receivableAccounts receivable

5,9865,9866,5306,530Cash and cash equivalentsCash and cash equivalents

5,8245,8248,078,0744Investments and other assetsInvestments and other assets

332332393988Tangible/intangible fixed assetsTangible/intangible fixed assets

596596414133Other current assetsOther current assets

1,9591,9592,2592,259InventoriesInventories

FY3/09 FY3/09 3Q3Q

FY3/08 FY3/08 FullFull--yearyear

6,5306,530

17,65317,653

8,0748,074

50,00050,000

Liabilities/Net AssetsLiabilities/Net Assets::Large amount of equityLarge amount of equity

10,00010,000

20,00020,000

30,00030,000

40,00040,000

00

50,00050,000

4747224224Other fixed liabilitiesOther fixed liabilities

2,2442,2441,6481,648Other current liabilitiesOther current liabilities

11,00011,0008,0008,000InterestInterest--bearing debtbearing debt

3,0463,0464,0204,020Accounts payableAccounts payable

20,92520,92521,4321,4366Net assetsNet assets

FY3/09 FY3/09 3Q3Q

FY3/08 FY3/08 FullFull--yearyear

35,32935,329

4,0204,020

8,0008,000

21,43721,437

37,26437,264

5,9865,986

22,56522,565

5,8245,824

37,26437,264

3,0463,046

11,00011,000

20,92520,925

AssetsAssets:High current ratio:High current ratio((¥¥ Millions)Millions) ((¥¥ Millions)Millions)

FY3/08 FullFY3/08 Full--yearyear FY3/08 FullFY3/08 Full--yearyearFY3/09 3QFY3/09 3Q FY3/09 3QFY3/09 3Q

10

1H FY3/09 Consolidated Cash Flows1H FY3/09 Consolidated Cash Flows

Operating cash flows

Investing cash flows

Free cash flows00

--8,0008,000

--6,0006,000

--4,0004,000

--2,0002,000

- 8,454

- 2,633

-- 7,0807,080

-- 1,3741,374-- 1,7651,765

-- 867867

ImprovImprovement inement in free cash flowsfree cash flows

((¥¥ Millions)Millions)

FY3/09 3QFY3/09 3QApr.Apr.-- Dec. Dec.

FY3/08 3QFY3/08 3QApr.Apr.-- Dec. Dec.

11

3Q FY3/09 Earnings Forecast3Q FY3/09 Earnings Forecast

12

Sales and Earnings Forecasts for FY3/09 Sales and Earnings Forecasts for FY3/09 (vs. previous forecasts)(vs. previous forecasts)

ConsolidatedConsolidated

+ 0.3%+ 0.3%2,6122,612+ 11.5%+ 11.5%2,2,3535002,2,626200Net incomeNet income

+ 2.4%+ 2.4%105.60105.60+ 11.5%+ 11.5%97.0397.03108.18108.18Net income per Net income per share (share (¥¥))

－－183183－－597597597597Extraordinary lossExtraordinary loss

+ 48.3%+ 48.3%3,3043,304+ 4.3%+ 4.3%4,7004,7004,9004,900Ordinary incomeOrdinary income

+ 39.4%+ 39.4%3,4443,444+ 4.3%+ 4.3%44,,66000044,,808000Operating incomeOperating income

+ 5.6%+ 5.6%50,67150,671-- 2.7%2.7%5555,000,0005533,,550000Net salesNet sales

－－-- 737737－－0000Operating incomeOperating income

－－2,6092,609－－4,0004,0004,0004,000Net salesNet salesSystems Systems BusinessBusiness

+ 13.1%+ 13.1%4,2454,245+ 4.3%+ 4.3%4,4,6600004,4,808000Operating incomeOperating income

+ 3.0%+ 3.0%48,06148,061-- 2.9%2.9%5151,000,0004949,,550000Net salesNet sales

-- 10.4%10.4%5,0205,020-- 25.0%25.0%6,0006,00044,,550000ASSP and ASSP and electronic electronic componentscomponents

+ 4.6%+ 4.6%43,04143,041－－4455,000,0004455,000,000ASICASIC

LSI BusinessLSI Business

YoY Basis YoY Basis (Full(Full--year year

(1)/(3)(1)/(3)

FY3/08FY3/08FullFull--year year

results (3)results (3)

YoY Basis YoY Basis (Full(Full--year) year)

(1)/(2)(1)/(2)

FY3/08FY3/08FullFull--year year forecast forecast

(initial) (2)(initial) (2)

FY3/09FY3/09FullFull--year year forecast forecast

(revised) (1)(revised) (1)((¥¥ Millions)Millions)

13

3Q FY3/09 3Q FY3/09 Midterm Management PolicyMidterm Management Policy

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MMiidterm Growth Strategydterm Growth Strategy

The best solution to satisfy customer needsThe best solution to satisfy customer needsNo. 1 Fabless Venture Company in Japan

●●Concentrate on the customerConcentrate on the customer--based business.based business.Take full advantage of our skill in both LSI and system, and Take full advantage of our skill in both LSI and system, and providprovide e the best the best possible possible solution to the customer.solution to the customer.

●●Diversification of the business modelDiversification of the business modelExpand the business opportunity and customers with broad Expand the business opportunity and customers with broad range ofrange of productsproducts from LSI to System.from LSI to System.11：：IP salesIP sales22：：Hardware solution business by the chipHardware solution business by the chip--set, combination ofset, combination of

our ASSP and the LSI from other company.our ASSP and the LSI from other company.33：：Module and board business with our LSI and softwareModule and board business with our LSI and software44：：Design service to major customersDesign service to major customers’’ LSI and system LSI and system

productsproducts

●● Diversification of core competenceDiversification of core competenceImprove the applied technology in addition to the hardware and Improve the applied technology in addition to the hardware and software.software.

15

Future Policy 1Future Policy 1

Structure ChangeStructure Change（（Feb 1, Feb 1, 20092009))

●●Shift to the customerShift to the customer--based businessbased businessFrom the standard goods to compete on cost performance, shift toFrom the standard goods to compete on cost performance, shift to the the customercustomer--based business that brings high value to the leading accountsbased business that brings high value to the leading accounts..

LSI LSI BusinessBusiness

SystemSystemBusinessBusiness

The organization that makes full use of the characteristics and

advantage of each businessfield

The organization that makes full use of the characteristics of both specific customers and coretechnology

ASSP B

usinessA

SSP Business

ASIC

Business

ASIC

Business

Customer Customer Specific Specific Business HQBusiness HQ

SpecificSpecific--useuseBusiness HQBusiness HQ

ASSP &

ElectronicA

SSP & Electronic

Com

ponentsC

omponents

ASIC

Business

ASIC

Business

Custom

er SpecificC

ustomer Specific

SystemSystem

Business HQBusiness HQ

System B

usinessSystem

Business

Division

Division

LSI Business

LSI Business

Division #

Division #

22

LSI Business

LSI Business

Division #

Division #

11

Electronic Device

Electronic Device

& M

odule Business

& M

odule Business

Before 2007May 2008New

Pursue customerPursue customer--based businessbased business

SystemSystemB

usinessB

usiness

・Build up long-term trustful relations: Improve order accuracy・Stable demand：Assess demand, avoid overstock・High-value competition：Avoid cost competition※Establish recession-proof structure

16

Future Policy Future Policy ２２

Develop the market less Develop the market less affected by economic affected by economic

ups and downs.ups and downs.

New BusinessNew Business Current BusinessCurrent Business

GameGame

Digital Digital AppliancesAppliances

Security Security SystemSystem

Home infrastructure, Home infrastructure, EcoEco--business and business and Energy fieldEnergy field

●●Entry into new market and developmentEntry into new market and developmentDevelop home infrastructure, EcoDevelop home infrastructure, Eco--business and energy field that arebusiness and energy field that areless vulnerable to the influence of market and expected to be inless vulnerable to the influence of market and expected to be increasedcreasedin accordance with social needs.in accordance with social needs.

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LSI Business Segment LSI Business Segment –– Business DomainsBusiness Domains

Current main productsCurrent main products

Strengthen the operating base by diversifying products to curreStrengthen the operating base by diversifying products to current nt customerscustomers

Establish relationships with new major customersEstablish relationships with new major customers

Develop potential customersDevelop potential customers(Products for application(Products for application--specific memory and image specific memory and image processing, etc.)processing, etc.)

ApplicationApplication--specific memory products with hspecific memory products with highigh--capacity, capacity, quickquick--delivery and delivery and advanced advanced securitysecurity

Solutions for optional devicesSolutions for optional devices Solutions for portable game players and video game Solutions for portable game players and video game

devicesdevices

LSI for game cLSI for game cartridgesartridges used for used for portable playerportable player

* Wii, NINTENDO DS, GAMEBOY ADVANCE and DS are registered trademarks and trademarks of Nintendo.

LSI for video gameLSI for video game

Entertainment Entertainment applicationsapplications

Amusement Amusement applicationsapplications

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LSI Business Segment LSI Business Segment –– Business DomainsBusiness Domains

Current main productsCurrent main products©2007 Nintendo

Module, IP, Software, etc.Module, IP, Software, etc.

Supply best solutions demanded in the dynamically changing digitSupply best solutions demanded in the dynamically changing digital era.al era.-- Expand the product portfolio from single LSI chip to the moduleExpand the product portfolio from single LSI chip to the module-- Develop IP business (R&D assets)Develop IP business (R&D assets)

Accelerate business operation with alliancesAccelerate business operation with alliances

Expand the telecommunications fieldExpand the telecommunications fieldEco and security products using home Eco and security products using home network, powernetwork, power--line communication and line communication and wireless communication (ZigBee, etc.)wireless communication (ZigBee, etc.)

Mobile DMobile D--TV applicationsTV applicationsDigital camera applicationsDigital camera applicationsTelecommunications applicationsTelecommunications applications

Industrial applications Industrial applications Social infrastructure applicationsSocial infrastructure applications

Supply products from single LSI to the module Supply products from single LSI to the module with embedded softwarewith embedded software

System LSISystem LSI

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Systems Business Segment Systems Business Segment –– Business DomainBusiness Domain

Current main productsCurrent main products

Aim to develop Systems Business into a consistently profitable bAim to develop Systems Business into a consistently profitable business by usiness by concentrating and specializing concentrating and specializing inin customercustomer--specific systems for security specific systems for security monitoring applicationsmonitoring applications

Expand the business by diversifying product portfolio to currentExpand the business by diversifying product portfolio to current customerscustomers

Home security applicationsHome security applications Expand the range of products for home Expand the range of products for home security systemssecurity systems

•• Image transmission serverImage transmission server•• Digital video recorderDigital video recorder•• Video monitoring & security systemVideo monitoring & security system•• Controller terminal for security systemController terminal for security system•• Network camera, etc.Network camera, etc.

Expand the product category of fully digital Expand the product category of fully digital video surveillance systems video surveillance systems (From small(From small--scale security monitoring scale security monitoring system to the largesystem to the large--scale system))scale system))

Strengthen network camera fieldStrengthen network camera field

Business security applicationsBusiness security applicationsCCTV applicationsCCTV applications

20

Special dividend Ordinary dividend

Performance Indicators Performance Indicators (Dividends / Share Repurchases)(Dividends / Share Repurchases)

20

10

30

0

【Fundamental Policy】Annual dividend per share is based on a dividend payout ratio of about 30% of consolidated net income or 10 yen, whichever is higher.

10 10

1618

23

9

5

Commemorative dividend(15th anniversary）

Special dividend(tax benefit from

absorption of subsidiary)

(¥)

Stable dividend policy

Earnings-linked dividend policy

FY3/04 FY3/05 FY3/06 FY3/07 FY3/08

21

● Maximize our technical capabilities and concentrate in the customer-based business in order to diversify theproducts to the existing accounts and develop leading customers.

● Nurture board/module business with our core LSI and IP, analog products and small-scale LSI, and aim to expand business opportunity and new customers.

● Launch new business in the industry and social infrastructure fields.

● Maximize our technical capabilities and concentrate in the customer-based business in order to diversify theproducts to the existing accounts and develop leading customers.

● Nurture board/module business with our core LSI and IP, analog products and small-scale LSI, and aim to expand business opportunity and new customers.

● Launch new business in the industry and social infrastructure fields.

Key Investment HighlightsKey Investment Highlights

In order to further expand the business, we will reinforce the cIn order to further expand the business, we will reinforce the customerustomer--specificspecificbusiness and provide broad range of solutions from LSI to systembusiness and provide broad range of solutions from LSI to system as wellas wellas increasing business opportunity and customer base.as increasing business opportunity and customer base.

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IR PolicyIR Policy>> Purposes of investor relations and basic policy

MegaChips bases investor relations activities on the principles of fairness, timeliness, accuracy and continuity. We provide information about strategies, finances and other items in order to increase the transparency of our operations. To earn the trust of shareholders, investors and securities analysts and receive a proper evaluation, senior management frequently participates in investor relations activities.

>> Disclosure rules

MegaChips discloses information in accordance with the Financial Instruments and Exchange Law, Company Law and other laws and regulations (“laws and regulations” hereafter) and the Rules for Timely Disclosure of Corporate Information by Issuers of Listed Securities of the Tokyo Stock Exchange, where MegaChips shares are listed. Furthermore, even when not required by laws and regulations or disclosure standards in timely disclosure rules, we aggressively provide information that we believe has an effect on investment decisions by shareholders, investors and securities analysts and other information that we believe is useful to gain a better understanding of MegaChips.

>> Disclosure method

MegaChips distributes information using the Timely Disclosure network (TDnet) operated by the Tokyo Stock Exchange in accordance with timely disclosure rules. This includes information covered by the disclosure standards of the timely disclosure rules as well as information that we believe has an effect on investment decisions by shareholders, investors and securities analysts. In addition, we quickly post this information on the company Website. We also provide other information that we believe is useful to gain a better understanding of MegaChips by issuing IR publications or news releases and posting this information on the company Website.

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IR PolicyIR Policy>> Forward-looking statementsThe information MegaChips discloses may contain forward-looking statements. These statements are based on the judgments of management based on information available when the information was disclosed and thus embody uncertainties and risks (“risks” hereafter). Readers are cautioned to remember that actual results and other developments may differ from these forecasts for a number of reasons. Please refer to the “Cautionary Statement on Risks” section for more information.

>> Investment decisionsMegaChips discloses information for the purpose of giving people a better understanding of the company and not for the purpose of soliciting investments in securities issued by the company. Investors are asked to reach investment decisions on their own.

>> Provision of third-party information about MegaChipsParties other than MegaChips, including securities analysts, the media and a variety of Internet information sites, announce information and forecasts about MegaChips. MegaChips is not in a position to comment on this information or express its support. However, if there is an obvious mistake in this third-party information that could cause a loss of trust in the company or prevent the company from receiving an appropriate evaluation, a correction will be announced and the proper information released.

>> IR “Quiet Period”To prevent leaks of information about earnings releases that could affect its stock price as well as to ensure fairness, MegaChips observes a “quiet period” during the five business days prior to the earnings announcement for each quarter. During this period, the company will not make any comments involving financial performance. However, information covered by laws and regulations and timely disclosure rules will be disclosed even during this “quiet period” and management will respond to inquiries about this information.

>> Other itemsTimely Disclosure Declaration (see Tokyo Stock Exchange Website)Summary of Timely Disclosure Framework (see Tokyo Stock Exchange Website)Standards for Information Disclosure (MegaChips internal regulations)

24

Inquiries to:Inquiries to:

PR, FINANCE & ACCOUNTING OFFICE,PR, FINANCE & ACCOUNTING OFFICE,MegaChips CorporationMegaChips Corporation

irir--team@megachips.co.jpteam@megachips.co.jp

44--11--6, Miyahara, Yodogawa6, Miyahara, Yodogawa--ku, Osaka 532ku, Osaka 532--00030003TEL: 06TEL: 06--63996399--28842884 FAX: 06FAX: 06--63996399--28862886