Acquisition Of The GTRiM Assets Of Fujitsu And Fujitsu Interconnect

The Board of Directors of Magnecomp International Limited ("Magnecomp" or "the Company") wishes to announce that its subsidiary Optimal Technology Limited ("Optimal") has entered into an Asset Purchase Agreement with Fujitsu Limited and Fujitsu's subsidiary Fujitsu Interconnect Technologies Limited (collectively referred to as "Fujitsu") to acquire the GTRiM Assets ("Assets").

Optimal Technology Limited is 51%-owned by Magnecomp and 49%-owned by SAE (HK) Limited, which is a wholly owned subsidiary of TDK, Japan.

Optimal expects to move the Assets from Fujitsu's Nagano, Japan plant to a new building in Changan, Guandong PRC, which is close to its existing plant. Total cost for the investment is estimated at US$13M including the Assets, training and technical know-how, license of intellectual property, moving and set-up/building/facilities cost.

The investment provides the opportunity for Optimal to acquire the GTRiM (Giga Scale Trace Integrated on Metal) proprietary circuit technology developed by Fujitsu Interconnect, which has capabilities that shall be a cornerstone feature in suspension circuits for future generations of higher capacity, higher performance Hard Disk Drives ("HDDs"). The GTRiM technology builds polyimide (PI), an insulating material that is both thermally and electrically stable, onto metal and uses an additive methodology to sputter and build copper traces onto the PI, thus producing precision electrical traces on a thin, flexible metal strip. These electrical traces are needed to provide electrical connection to the magnetic read/write head.

Prevailing technology, which relies only on subtractive chemical etching methodology on a 3 layer laminate, allows only up to 6 electrical traces to be built onto a flexible metal strip, whereas GTRiM permits more precise and higher density of 8 or more electrical traces with a thinner PI layer. This technology has been deployed in mass production of suspensions for magnetic heads in HDDs by Fujitsu and is a proven process and technology.

The need for more precise electrical traces on suspensions, while reducing PI thickness, is a key feature required for next generation HDDs utilising FEMTO sized sliders and/or slider-based dual stage actuator servo systems. It is anticipated that such technologies are likely to be required when HDD storage densities grow beyond 160 Gigabytes per disk (3.5 inch HDD).

With this acquisition, Magnecomp will currently be the only integrated suspension manufacturer in the world with a captive additive circuit supply. This enables the Company to offer more value-added services to its major customers and strategic partners, as smaller and higher performance HDD become increasingly prevalent, especially in mobile electronic devices.

The Company expects to incur some start up losses for the acquisition. However, this is not expected to have material impact on the earnings per share or net tangible assets per share for the Financial Year ending December 31, 2004 ("FY2004"). This investment is expected to have a positive contribution in FY 2005.

None of the directors or substantial shareholders of the Company has any interest, direct or indirect, in the transaction.