ASPOCOMP GROUP OYJ RELEASE Aug, 3 2005 at 8:01 AM 1(3)


Dear shareholder,

Aspocomp Group Oyj outlined an updated growth strategy in the autumn of 2004.
The implementation is now well under way. The Interim Report released today does
not as yet reflect the expected benefits to our shareholders. However, I believe
that our initiatives – both those which we have kicked off and those we are
still planning – will enable us to successfully achieve our long-term objective:
to provide competitive shareholder returns through sustainable and profitable
growth. This will also support the maintenance of a competitive long-term
dividend yield.

Trend in our business environment

The structural change in the PCB industry – favoring larger units and global
companies – is gathering speed. During the present year, this has been
particularly evident in Europe and lower technology PCB production. Small
suppliers whose production operations are narrow in terms of geographical
location or volume will increasingly find themselves in a tougher position.

The market for PCBs used in handheld devices is becoming polarized. As consumers
in developing countries like China, India, Latin America and Africa become more
important to manufacturers of handheld devices, the need for low-cost PCBs
grows. This continues to drive up the volumes of Asian low-cost PCB production.
On the other hand, the share accounted for by multimedia devices in which more
expensive PCBs are required is on the rise in Europe and North America. Product
lifecycles are becoming shorter and the number of products is on the increase.
This provides opportunities to a limited number of flexible and technologically
advanced European PCB plants.

Industrial consolidation also is accelerating among our customers, as only
large manufacturers have the resources to efficiently design technology
platforms – rather than just individual products. This means that in the future
PCB manufacturers will make a greater number of products for fewer customers.
Customer – supplier relationships will evolve into close partnerships, in which
PCB suppliers will be required to keep honing their flexibility and design
expertise and engage in even more prototyping – all this will be required over
and above better cost-effectiveness.

Growth in the telecom network market has been slightly slower but steadier than
in handheld devices. A substantial number of the field’s leading players are
European companies that operate globally. In this diverse market, close R&D
cooperation will play an even more prominent role in future customer-supplier

The PCB market of the automotive industry continues to expand. Growth is fueled
by the greater amount of electronics incorporated in vehicles – the share of the
materials costs of a car accounted for by electronics will rise to one-third by
2010. The automotive industry is using more HDI PCBs as well as passive
components embedded in PCBs. As electronics comprise an increasingly important
cost component, European and Japanese manufacturers of automotive electronics
are now giving more thought to either purchasing PCBs from low-cost markets or
transferring their operations to these markets. That said, operational
reliability and high-caliber service are vital in the automotive industry. In
other words, to succeed in the PCB market of the automotive industry, one must,
on one hand, provide service that measures up to European and Japanese
expectations and, on the other hand, operate with an inexpensive Asian cost

Top-notch technological know-how is and will remain a priority for global PCB
manufacturers. Products must be adaptable to the design and other trends that
shape end products – at present, the major trend is that devices are expected to
be thin. Another requirement that will play a greater role in the future is the
need to ensure that technology is brought to market as soon as possible; this
provides a competitive edge for customers. Cost management is especially
important in the final stages of product life cycles, entailing ever-higher
efficiency in procurements – close to half of the price of a PCB represents the
cost of its raw materials.

Aspocomp’s strategy

In its customer relationships, Aspocomp seeks a globally consistent service and
operating model. The company decided to expand into Asia already several years
ago. We are well positioned to increase our strength in Asia where large volumes
are increasingly manufactured. In Europe, our focus remains on strong R&D and
increasing the flexibility of our units. We are pushing ahead with our drive to
hone flexibility and cost-effectiveness at all our units. We have kicked off
numerous development projects to beef up our ability to rapidly transfer product
manufacture to the right place at the right time to meet the life-cycle
requirements of customers’ product portfolio. Aspocomp is highly committed to
deepening its cooperation with leading players in its selected end-product
markets so as to ensure a balanced production boosting high operating
efficiency. Our selected core areas are handheld devices, the telecom network
markets and the automotive industry. In these core areas, Aspocomp is best
positioned to leverage not only its great technological know-how and experience,
but also its balanced production structure in Europe and Asia. Furthermore, as
demand cycles fluctuate, variations in demand in different markets balance each
other out.

During the past few months, Aspocomp has focused on bolstering its organization
and expertise areas such as global sales, marketing and governance – by
recruiting key employees. Our aim is to forge a global organization that has a
single customer service model. We have also started up online dialogue between
personnel and management to tap employees’ views as well as support the
implementation of the chosen strategy and operations that are in line with the
company’s values. The company’s incentive schemes have been overhauled. A
project to promote on-the-job stamina has been launched at our Finnish units.

Measures implemented at our units

Our Salo unit, a plant manufacturing a limited range of high-volume products, is
being upgraded into a flexible plant capable of managing a larger number of
products. The main reason underlying the plant’s weak financial performance
during the present year is that its product structure is relatively narrow; it
consists of volume products taken into production prior to the upgrade of the
plant. The average sales price per unit will remain on a low level until new
products are added into production in fourth quarter this year. We can expect
that 2006 will be a markedly better year for the plant.

We foresee growth for our Chinese unit ACP Electronics (ACPE) during the present
year as well. The greatest strength of ACPE’s plant in Suzhou is its ability to
produce high-tech PCBs cost-effectively. We will significantly augment the
plant’s HDI PCB production capacity by the end of this year. Moreover, the
planning of a third production unit is under way at the Suzhou plant; this unit
will focus on the telecom network and automotive industry markets, in which
Aspocomp has long experience. The products made for these markets are similar in
terms of technology and logistics, and as such are suitable for manufacture at
the same unit.

The primary short-term focus of our unit in Thailand, P.C.B. Center (PCBC), is
to improve cost-effectiveness. High performance is being sought by means such as
improving yield and streamlining the product structure. PCBC’s management has
been bolstered during the present year; a new president took the helm of the
company on July 1, 2005. In the medium term, our Thai company aims to achieve
not only cost-savings, but also substantial growth. We expect growth
particularly from the automotive industry, which is increasingly using higher-
tech PCBs and is already a major customer group for the plant.

The present year is significantly weaker for the Modules business than 2004, as
previously forecast. In this business, we are working on bringing new products
to market. New module technologies are geared towards meeting a greater share of
the needs of the value chain in electronics manufacture. However, getting these
technologies into the production stage is a medium-term project, and thus the
volume of the Modules business both this year and the next will most likely
remain at the same level as in the quarter now ended.

Objectives and outlook for the next few years

We aim to achieve profitable growth clearly outpacing that of the market in our
three core areas. The present year marks a very challenging repositioning of
the value proposal to our customers. Compared to expected weak financial
results in 2005, we can expect significant sales growth and earnings
improvement in 2006. In 2007, we anticipate increase in China in particular,
as at that time the third production unit of the Suzhou plant will be in full
production use.

I am confident as I set out to implement our growth strategy with our committed
professionals. We will do our best to meet the expectations of our customers and


Maija-Liisa Friman
President and CEO