Announcement Concerning Acceptance of Tender Offer

As announced in the June 14, 2006 press release, entitled "Basic Agreement with respect to Share Transfer", Komatsu Ltd. (President: Masahiro Sakane; hereinafter referred to as "Komatsu") has executed a basic agreement with SUMCO Corporation (President: Kenjiro Shigematsu; hereinafter referred to as "SUMCO") concerning SUMCO's tender offer for Komatsu Electronic Metals Co., Ltd. (President: Takashi Abe; hereinafter referred to as "KEM") and Komatsu's acceptance of such offer (hereinafter referred to as the "Basic Agreement"). SUMCO has since completed due diligence and the competition authorities of the relevant countries have approved the transaction, provided that Komatsu understands that the waiting period under the competition law of the People's Republic of China will expire by the day before the last day of the tender offer period. Therefore, in accordance with the Basic Agreement, a resolution on the conclusion of an agreement concerning the tender offer and Komatsu's acceptance of the tender offer was passed at the board of directors meeting of Komatsu held today. Thus Komatsu hereby announces the following.

Reasons for Accepting the Tender Offer
Komatsu's core focus is the comprehensive "industrial machinery business," such as construction and mining machinery and industrial machinery. With respect to the electronics business, including the silicon wafer business operated by KEM, Komatsu's objectives have been to maintain the independent management of such business, and to seek to develop the business based on an alliance with a leading industrial partner.
KEM incorporated a joint venture company (Formosa Komatsu Silicon Corporation) with Taiwan Plastics Group in 1995, which has established a position as a top supplier of 200mm silicon wafers in Taiwan. Employing its dual manufacturing site system, in Japan and Taiwan, KEM has worked to strengthen its business and increase profitability.
Komatsu believes that KEM can expect further development of its business by becoming a member of the SUMCO Group through both an acceleration of capital investment in 300mm silicon wafers in Taiwan and synergy in the area of technology.
In addition, the transfer of the KEM shares to SUMCO will enable Komatsu to concentrate its management resources on its core focus of the comprehensive "industrial machinery business." Komatsu will strengthen the operating base of its core focus even further and aims to actively expand its business.

Number of Shares that will be Applied for under the Tender Offer
18,702,900 common shares of KEM (61.93% of the issued and outstanding shares of KEM, representing all of the shares of KEM held by Komatsu).
However, because SUMCO only plans to acquire 15,402,000 common shares (that is, 51% of the issued and outstanding shares) through the tender offer, Komatsu will continue to hold at least 3,300,900 common shares of KEM (that is, 10.93% of the issued and outstanding shares of KEM) after the completion of the tender offer.

Tender Offer Price
JPY2,400 per common share of KEM

Schedule
September 12, 2006Announcement of the tender offer
September 13, 2006Public notice of commencement of the tender offer
October 11, 2006Last day of the tender offer period
October 18, 2006Settlement commencement date

[Komatsu Electronic Metals Profile]
Corporate name:Komatsu Electronic Metals Co., Ltd.
Date of establishment:April 18, 1960
Head office:1324-2, Masuragahara, Omura, Nagasaki
Representative Director:Takashi Abe
Business activities:Manufacture and sale of silicon wafers
Main shareholder:Komatsu Ltd. (61.93%)
Manufacturing bases:Nagasaki, Miyazaki, Taiwan (Formosa Komatsu Silicon Corp.)
Number of employees:2,758
Net sales:JPY86.6 billion (for the fiscal year ended March 31, 2006)

[SUMCO Profile]
Corporate name:SUMCO Corporation
Date of establishment:July 30, 1999
Head office:1-2-1, Shibaura, Minato-ku, Tokyo
Representative Director:Kenjiro Shigematsu
Business activities:Manufacture and sale of silicon wafers
Main shareholders:Sumitomo Metal Industries, Ltd. (29.9%), Mitsubishi Materials Corporation (29.9%)
Manufacturing bases:Saga, Imari, Yonezawa and other locations
Number of employees:5,554
Net sales:JPY220.5 billion (for the fiscal year ended January 31, 2006)

Future Outlook
As a result of the completion of the tender offer, KEM will no longer be a consolidated subsidiary of Komatsu. After the completion of the tender offer, Komatsu will make an announcement concerning the projections for the fiscal year ending March 31, 2007.

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