Q&As on the Presentation of Financial Statements for the Interim Period of FY2008.3

A1 : Sales of higher gross margin products, including medium to high-end wind instruments, professional audio equipment, and digital keyboards, increased. Other factors contributing to profitability were cost reductions associated with the closing of production facilities in Taiwan and certain other areas and improvement in the profitability of our production facilities in Indonesia and elsewhere.

A2 : In the acoustic musical instruments field, business entry barriers for medium to high-end musical instruments, such as wind instruments, are high, and we anticipate that these levels of profitability will continue going forward. However, in the digital musical instruments business, competition is intense, and we believe that it will continue to be difficult to sustain profitability above the current level.

A3 : Competition in the AV/IT business and the lifestyle-related products business is becoming more intense, and there is concern that these businesses might experience a downturn in performance. In addition, in the musical instruments business, conditions in the North American market are uncertain. Demand for pianos has been weakening since last fall, and there are no signs of a recovery in retail sales of pianos. As a result, we believe that large-scale keyboard instruments will experience difficulty, even over the year-end.

A4 : At present, we do not see any particular factors that might bring a slowdown in the European market in the second half, but we are taking a somewhat cautious stance overall in our planning

A5 : Compared with the previous fiscal year, the rise in raw material prices, including metal materials, resulted in an increase in costs of about ¥1 billion.

A6 : All of our business units within the AV/IT segment are confronting challenging operating conditions. In the online karaoke equipment field, sales in the first half were about 40% of the level for the same period of the previous fiscal year, and we are expecting a similar year-on-year decline in sales for the second half.

Sales of routers have been affected as overall market demand has dropped about 10% year on year, and our sales have been influenced by this downward trend.

In addition, it will be difficult to attain the planned level of sales for IP conferencing systems that we announced previously. Therefore, we are focusing on strengthening our organizational systems and further developing our sales network for these systems. In the AV equipment field, the development of new products is lagging somewhat, and, as a result, we have to anticipate some lost sales opportunities during the year-end demand period.

A7 : Prices of digital pianos are continuing to decline, but in the Japanese market, sales of these units are expanding at musical instrument retailers and at consumer-electronics chain stores, camera mass retailers, and other types of outlets. Since fall this year, we believe we have recovered market share from competitors at mass merchandisers through the introduction of new products. Similarly, in Europe and the United States, we have introduced new, high-value-added products with a wider range of features and are looking to increase our share in these markets.

In the Asia/Pacific region, sales of entry-level portable keyboards and medium-priced models are proceeding smoothly.

A8 : In the Japanese market, medium to high-end wind instruments are selling well, in part because of the positive impact of the “band boom.” In addition, worker strikes at the plants of U.S. competitors have reduced their output, and this has contributed to Yamaha sales. Also, in the U.S. market, models developed jointly with wind instrument performers have also been well received in the market. However, in the European market, we are somewhat behind.

A9 : As of September 30, 2007, Yamaha Motor held 2.93% of Yamaha Corporation’s shares.

A10 : Compared with the same period of the previous fiscal year, we are facing challenging conditions, but, in the second quarter, changes in the product mix resulted in improvement in profitability. However, in the second half, the product mix that we anticipated in the previous outlook will change, thus making it difficult for us to attain the profit level of the previous outlook. For the fiscal year as a whole, we are anticipating results at a level somewhat higher than the previous outlook.

A11 : This is because of delays in acceptance inspections, principally in the musical instruments business. Also, for the fiscal year as a whole, part of the investment in increasing production capacity in China has slipped into the next fiscal year. We have, therefore, reduced our previously planned expenditures.

A12 : LSI sound chips for mobile phones account for a high percentage of our semiconductor sales, and the ratio of relatively high-value-added LSI sound chips for mobile phones is increasing in Japan and overseas. In addition, sales of LSI chips for pachinko machines are expanding steadily, and, as a result, sales and profits rose in comparison with our previous outlook for the first half of the fiscal year. In the second half, we are looking for production at about the level forecast in the previous outlook, but due to other factors, including the delay in budgeted development expenses into the second half, we are expecting a decline in operating income compared with the first half of the fiscal year.