Showa Denko K.K. (SDK) to Consolidate Aluminum Alloys Business.

Tokyo, Japan, May 16, 2006 - (JCN Newswire) - Showa Denko  K.K. (SDK; TSE: 4004) decided at its board meeting today to consolidate its aluminum alloys business with that of Sumitomo Corporation (Sumitomo) effective July 1, this year. Specifically, Showa Aluminum Alloy K.K. (SAA), a consolidated subsidiary of SDK, will transfer its business to Summit Aluminum Ltd., a consolidated subsidiary of Sumitomo. SAA will be dissolved in 2007.

SAA has been producing and selling aluminum alloys used mainly as castings for automotive parts. To further strengthen marketing activities and improve production efficiency, SDK decided to transfer SAA--'s operation to Summit and invest in Summit Aluminum. On June 30, SDK will subscribe for new shares in Summit Aluminum to be issued "for allotment to third party." After SDK's equity participation, Summit Aluminum will change its name to Summit Showa Aluminum Ltd., securing the second largest share in the Japanese aluminum alloys market.

Outline of Showa Aluminum Alloy K.K.

Head office:            Ichihara City, Chiba Prefecture
President:              Yasuaki Kamei
Capital:                100 million yen (Owned 100% by SDK)
Total assets:           9,788 million yen
Accounting term:        Ending December 31
Number of employees:    85 (As of December 31, 2005)

SAA's performances in past three years (in millions of yen)

                          2003        2004        2005
Net sales                17,286      19,302      21,084
Ordinary income            299         274         218
Net income                 205          77         124

Following the decision to dissolve SAA, SDK will record an extraordinary loss of 2.8 billion in its consolidated financial statement for 2006. Our performance forecast announced on February 9 is not affected by this issue.

Outline of Summit Showa Aluminum Ltd. (On and after July 1, 2006)

Head office:             11-16, Nishinakajima 1-chome, Yodogawa-ku, Osaka
President:               Masaru Aoyagi
Capital:                 775 million
Accounting term:         Ending March 31
Number of employees:     220
Shareholders:            Sumitomo Corporation (65.76%);
                         Showa Denko K.K. (33.33%); and others

About Showa Denko K.K.

Showa Denko ('SDK'/TSE: 4004/OTC: SHWDF) is a major manufacturer and marketer of chemical products serving a wide range of fields ranging from heavy industry to the electronic and computer industries. SDK makes petrochemicals (ethylene, propylene), aluminum products (ingots, rods) electronic equipment (hard disks for computers), and inorganic materials (ceramics, carbons). The company has overseas operations and a joint venture with Netherlands-based Montell and Nippon Petrochemicals to make and market polypropylenes. In March 2001, SDK merged with Showa Denko Aluminum Corporation to strengthen the high-value-added fabricated aluminum products operations, and is today developing next-generation optical communications-use wafers. For more information, please visit www.sdk.co.jp.

Source: Showa Denko K.K.

Contact:

Showa Denko K.K.
Nobuhiro Kato
[e-mail]
[phone]

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