OBDUCAT’S CEO COMMENTS ON THE ANNUAL ACCOUNTS FOR 2005

Obducat’s industrial order for a NIL (nano-imprint lithography) machine after the end of the reporting period shows that a very important milestone has been reached: NIL technology can be used in mass production. The customer manufactures optical components that are part of a consumer electronics product from Samsung which will be launched on the market in May. It is also interesting that the customer who placed the order now for a further NIL machine had originally expected to place a second order first in autumn 2006. This breakthrough is the result of a very hard and committed effort on the part of Obducat’s personnel over a long period.

“We can ascertain that Obducat’s early entry to the NIL market has been a prerequisite for creating the biggest reference base among all the NIL companies in the global market”, says Patrik Lundström, Obducat’s CEO. In 2005, we have seen that this reference base creates significant credibility in an industrial context. A number of industrial contacts in the course of the year have led to specific activities, the ultimate objective of which is mass production.

Obducat is the largest company in the NIL field with the most installations in the market – more than 50. The industrial customers include GE Plastics, LG Electronics, Dai Nippon Printing, Fujitsu, TDK, Samsung and other market-leading companies.

“The new share issue which was implemented in spring 2005 has enabled us to continue an aggressive development strategy, which has resulted in both additional new inventions as well as the improvement of existing technological features”, comments Patrik Lundström. A total of eight new inventions have resulted in patent applications during the year. The majority of them concern the design of fully automated industrial machines and NIL processes with a focus on mass production applications. Obducat is the only company in the market that has all the essential technologies under one roof for implementing nano-imprint lithography in a mass production environment. We have also strengthened our organisation with an additional six persons, two of whom are on the marketing side from which we are expecting a positive result in the future. At the same time, we have expanded our contact network in the market with more local agents now marketing Obducat’s products.

The expectations which the company had in respect to certain tenders that were referred to in the Q3 report were not able to be realised before the end of the financial year. The industrial order and thereby sales forecast for 2005 has therefore not been able to be achieved. These important tenders are still in the negotiation phase. By far the greatest concentration of the company’s activities in the past year has been on industrial customers/projects, which will hopefully result in further industrial orders in the near future.

“We have not however been able to keep to the timetable that we announced earlier, but in view of the industrial order that has been won we know that the starting signal has been fired. We also know that many customers, as well as potential customers, will be changing their production technology”.

NIL still has excellent prospects of becoming the technology that will win major acceptance for use in mass production within the abovementioned fields. With the breakthrough for Obducat in a consumer electronics context, we are convinced that we are on the right route. We view the future with confidence.

The enclosed document provides a brief description of the status of Obducat’s areas of application.

For further information, please contact:

Patrik Lundström, MD, +46 8 (0)40 – 36 21 00 or +46 (0)703 – 27 37 38

Henri Bergstrand, Chairman of the Board, +46 (0)40-36 21 00 or +46 (0)708 - 88 72 45

Obducat AB develops and supplies technologies, products and processes for production and replication of advanced microstructures and nanostructures. Obducat’s services and products are primarily aimed at expansive companies within the data storage, semiconductor, printed circuit board and sensor industries. Obducat’s technologies include electron-beam technology and nano-imprint technology. Obducat is established in Sweden and the UK, with its head office located in Malmö, Sweden. The company is listed on the NGM list. See www.obducat.com for more information.

Description of status in regard to Obducat’s areas of application.

The breakthrough for consumer electronics products came within the optoelectronics field. Considerable time and resources have been devoted in 2005 to customers who are active this area. There are a whole range of areas of application for optical components such as Rear Projection TV, digital cameras, LCD TVs etc. The important companies in this industry include Triquint, Osram, Nanoopto, Visera and others.

Magnetic memory media means hard disks primarily for hand-held electronic products, such as mobile phones, digital cameras and video cameras. The major companies within the field are Hitachi, Seagate, Fuijitsu, Toshiba and others. The industry is working with two main formats for the future: DTR (Discrete Track Recording) and DPM (Discrete Pattern Media). DTR is the format that is most advanced at present. Working DTR prototypes have already been produced during 2005 with by using Obducat technology. Some of the main players have reached the stage of working on qualifying the production technology. These companies are aiming to launch products on the market during 2007. The other format, DPM, is two to three years behind DTR and can be considered as a further development of the DTR format. The objective of the industry sector is to produce the first working prototypes based on the DPM format in 2006. Hard disks with the DPM format are expected to be launched in 2009-2010.

There is great media attention focused on optical memory media. Toshiba has designed the HD-DVD format in competition against the Blu-ray consortium. So far no winner has yet been crowned, but there is much to indicate that Blu-ray technology has the advantage. For Obducat the application field offers a number of parallel opportunities in the form of technology for manufacturing media and stampers, but also development work for the next generation of optical memory media after Blu-ray. During 2005, Obducat has supplied both HD-DVD and Blu-ray stampers. They are used for qualifying new technology platforms where it is likely that the first ones will be launched in late 2006. The main companies that are developing the next generation optical memory media include for example Samsung with which Obducat has been working since last autumn. The leading players within media manufacturing include Technicolor, Sony, Ritek and CMC.

During 2005, the interest from the display industry has increased and in the latter part of the year Obducat has carried out a joint project with a Taiwanese company. The project resulted in the manufacture of a first prototype for a flexible LCD display. There is also substantial interest with a focus on manufacturing traditional LCD displays. The major players comprise Matsushita, Samsung, LG Electronics, Philips, AU Optronics and Chijmes.

The application area that is normally termed “Semiconductors - Low End” refers to Components

such as HDI (High Density Interconnects), CSP (Chip Scale Package) and PCB (Printed Circuit Board) with integrated optical channels. In very simplistic terms, an HDI substrate is similar to a mini-printed curcuit board on which for example Intel mounts its Pentium processor. This is then fitted to the motherboard in the computer. Obducat has been working for several years with a number of different players within this area. The NIL machine recently supplied to InHa University in Korea will be used for development work within this field. Ibiden, Shinko, AT&S and Aspocomp are a few of the leading players.

Other areas of application where Obducat sees potential are in polymer electronics, bio-based components, “Semiconductor - High End” and molecular electronics. What they have in common is that they are all in the R & D phase with the industrial players. The components within these areas will to a varying degree all enter the product development phase within one to two years. The leading players in this area number Intel, Canon, Olympus, Fuji Electric, TSMC, Toshiba and Fujitsu.

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