Epson 2009 Annual Report Download - page 9

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8
4. Bold actions in the electronic device businesses
As it launches its new Mid-Range Business Plan, Epson has concluded that while its small- and
medium-sized display and semiconductor businesses possess their own unique strengths, the worsening
business environment has made a return to profitability unlikely and that further growth is unlikely. Epson
has therefore decided to embark on bold actions in these businesses.
Small- and medium-sized displays
As explained earlier, Epson’ s recent efforts to return this business to profitability have borne some fruit.
However, profitability has suffered as a result of the economic downturn. Epson has therefore continued
with its efforts to consolidate production sites and transfer staff to growth businesses and to strategic
businesses within the Group.
Epson understands the difficulty of returning this business to profitability by its own efforts. In March 2009,
the Company therefore came to an agreement to begin discussions with Sony Corporation over an alliance
in the field of small- and medium-sized liquid crystal displays (LCDs), including the transfer of a part of
business assets of the Company to Sony. Combining the technical, product design, and manufacturing
capabilities of the two companies will help meet internal demand and improve the ability to respond to
customer needs and increase product competitiveness.
Semiconductors
Epson has to date aimed to maintain plant utilization rates by promoting hybrid ICs that take advantage of
its expertise in low-power-consumption and low-leak technologies, and by accepting silicon foundry orders.
However, demand has fallen due to the economic recession, and profitability has declined rapidly.
Epson forecasts that even if the economy recovers, a return to profitability in semiconductors is unlikely. It
has therefore decided to reposition the semiconductor business into a business that will leverage its
technical assets to support other parts of the Group as Epson seeks to expand into the growth areas and
strategic areas defined in SE15. Epson will continue to emphasize its low-power consumption analog
mixed-signal technologies as a core product line, but will aim to establish a thoroughly streamlined
operation.
In the medium-term, this will mean consolidating two domestic manufacturing sites into one. At the same