Canon 2006 Annual Report Download - page 53

Download and view the complete annual report

Please find page 53 of the 2006 Canon annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 96

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96

51
competitiveness through development of superior next-
generation products.
•Expand operations through diversification: Canon is
studying existing technologies to expand business oppor-
tunities and develop required technologies for new SED
businesses to make SEDs the windows for images and
information in living rooms.
•Identify new business domains and accumulate necessary
technological capabilities: Canon has established a Strategic
Committee for New Businesses. In addition, Canon devel-
oping and strengthening relationships with universities
and other research institutes to carry on fundamental
research and develop cutting-edge technologies. Canon
has signed a comprehensive partnership agreement with
Tokyo Institute of Technology in 2005 regarding joint
research on advanced materials and imaging technologies.
Canon has also tied up with Kyoto University to develop
next-generation medical-image processing technologies.
Canon has utilized 3D-CAD systems for some time to boost
R&D efficiency by curtailing product development times and
costs. Moreover, Canon enhanced and evolved its simulation,
measurement, and analysis technologies by introducing leading-
edge facilities, including one of Japan’s highest-performance
cluster computers in 2005. As a result, Canon has succeeded in
further reducing the need for prototypes, dramatically lowering
costs and shortening development lead times.
Canon has R&D centers worldwide, including the USA. Each
of our R&D centers, with its expertise, is collaborating with
other centers to achieve synergies, and cultivating closer ties in
fields ranging from basic research to product development.
The Company’s R&D activities are conducted in the
following four organizations:
•Core Technology Development Headquarters, where
component engineering and base technology R&D, such
as optics technology and nanotechnology, is conducted
•Leading-Edge Technology Development Headquarters,
where most advanced technology R&D, aiming to create
new technological capabilities, is conducted
•Platform Technology Development Headquarters, where
platform technology R&D, such as system Large-Scale
Integration (LSI) chips, network technology and visual
information technology, is conducted
•Device Technology Development Headquarters, where
key device R&D, such as for semiconductor devices, is
conducted
Canon’s consolidated R&D expenditures were ¥308,307
million (U.S.$2,591 million) in fiscal 2006, ¥286,476 million in
fiscal 2005 and ¥275,300 million in fiscal 2004. The ratios of
R&D expenditure to consolidated total net sales for fiscal 2006,
2005, and 2004 were 7.4 %, 7.6% , and 7.9%, respectively.
Canon believes that new products protected by seminal
patents will not easily allow competitors to catch up with it,
and provide Canon with advantages in establishing standards
in the market and industry. According to the United States
patent annual list, which IFI CLAIMS®Patent Services released,
Canon obtained the 3rd-greatest number of private sector
patents in 2006. This achievement marks Canon’s fifteenth
consecutive year as one of the top three patent-receiving
private-sector organizations.
RECENT DEVELOPMENTS
Canon has decided to purchase from Toshiba Corporation
(“Toshiba”) all of Toshiba’s outstanding shares of SED Inc., a
Canon subsidiary. On completion of the purchase, SED Inc.
became a wholly owned subsidiary of Canon, effective Jan-
uary 29, 2007. In accordance with this decision, which was
based on the assumption of prolonged litigation pending
against Canon in the United States with respect to SED tech-
nology, Canon will carry out the SED panel business indepen-
dently in order to facilitate the earliest possible launch of a
commercial SED television business. Canon, with the necessary
cooperation from Toshiba, will make every effort for the smooth
launch of its television business based on the high image quality
achieved by SED technology.
Canon Electronics Inc. acquired the shares of e-System Cor-
poration (listed on the Hercules Section of the Osaka Securities
Exchange) through a third-party distribution and made it into a
subsidiary as of December 27, 2006. By making e-System Cor-
poration a subsidiary, Canon Electronics Inc. aims to make fur-
ther advances in its group’s information-related business and
develop it into a core business.
MARKET RISK EXPOSURE
Canon is exposed to market risks, including changes in foreign
currency exchange rates, interest rates and prices of marketable
securities and investments. In order to hedge the risks of
changes in foreign currency exchange rates and interest rates,
Canon uses derivative financial instruments.
R&D Expenditure
(Millions of yen)
350,000
0
02 03 04 05 06
233,669
259,140
275,300 286,476
308,307