SCMGTM is a proprietary anode material for lithium-ion batteries produced by SDK. It is made through a process of shaping raw carbon material and heating it at high temperatures. Use of SCMGTM improves load current characteristics and battery cycle life, as shown in Graphs 1 and 2. This enables heavy current loads and long-term battery use. SCMGTM has been adopted for electric vehicles launching this year. SDK is expanding production capacity of SCMGTM to meet the growing demand for lithium-ion batteries in electric vehicles.

1. Characteristics of SCMGTM
SCMGTM
is produced by first processing raw material ofcarbon with SDK’s proprietary technologyto optimize its
shape as anode material,and heating it at high temperatures in a special graphitizing furnace. The use of
SCMGTM
improves load currentcharacteristic and charge & discharge cycle life of lithium -ion batteries (see
graphs 1 and 2 below).
Graph 1: Rapid discharge characteristic (4C) of lithium-ion batteries using SCMGTM
Graph 2: Charge/discharge cycle life of lithium-ion batteries using SCMGTM
The improvementin load currentcharacteristic enables the use ofheavy current while the improvementin cycle
life ensures long-term use ofbatteries. Thus,SCMGTM
has been adopted for use in various models ofEVs that
will be launched this year on the world market.
Market for lithium-ion batteries in EVs
Automakers are now working hard to develop eco-friendly cars in view of the environmental problems,such as
global warming,and the depletion ofoil and natural gas resources. Hybrid cars, in which both electric motors

2. and engines are installed,have alreadyreached the stage of commercial production. Furthermore,plug-in hybrid
cars and EVs—driven solelyby electric motors—are now reaching the commercial production stage.
These eco-friendlycars require high-performance batteries thatcan store a large amountofelectric power in a
relatively small space. Producers ofautomobiles and electric appliances are developing lithium-ion batteries to
meetsuch demand. As part of that developmenteffort, SCMGTM
has been evaluated for automotive applications.
Capacity expansion
SDK has alreadystarted expanding its SCMGTM
production capacity at Omachi,modifying the special
graphitizing furnace and adding new powder processing units for completion bythe end of this year. SDK will
establish a competitive production setup through efficientcapital investment,fully utilizing its existing facilities at
Omachi for the production of graphite electrodes.
While carefully watching the trends in demand for lithium -ion batteries for cars and determining the synergy, SDK
will make further investments in graphite-anode-material production facilities,centering on the special graphitizing
furnace. The total investmentin the 2009-2012 period is expected to reach approximately 2 billion JPY.
SDK’s lithium-ion-battery-related carbon business
Besides SCMGTM
,SDK has been producing and selling VGCFTM
carbon nanotubes since 1996. When added in
the electrodes oflithium-ion batteries, VGCFTM
provides better electric conductivity. Demand for VGCFTM
has
been increasing due to the rise in the production volume of lithium -ion batteries. The demand increase is also
due to the recenttrends that VGCFTM
, which was at first added in anodes only, is now added in cathodes as
well. Thus,in 2007,SDK expanded its VGCFTM
production capacity from 40 tons a year to 100 tons a year.
SDK has succeeded in the development ofSCMGTM
on the strength of its lithium-ion batteryevaluation
technologydeveloped jointly with customers through R&D of VGCFTM
. Also, SDK’s proprietaryhigh-temperature
graphitizing technology,accumulated over manyyears in the graphite electrode business,has contributed to the
success. We will provide high-qualityproducts based on an efficient production setup,seeking synergies with the
graphite electrode production capabilities atOmachi.
Under the Passion Extension for 2009 and 2010,SDK is strengthening its R&D efforts in the area of
environmental protection and energyconservation to meetincreasing social needs. In particular,we will step up
R&D pertaining to metal and inorganics,including graphite,in which we have competitive strengths due to the
accumulation oftechnologies.