Fujitsu 2008 Annual Report Download - page 48

FISCAL 2007 BUSINESS RESULTS
nMarket Trends*1
The value of the global semiconductor market rose by 3.2% to US$255.65 billion in
2007. Market growth was substantially lower than the robust 8.9% growth rate
recorded in 2006.
Market conditions rapidly deteriorated in semiconductors for the digital consumer
electronics sector from the second half of fiscal 2006. Signs of a rebound began to
emerge, however, from the outset of fiscal 2007, culminating in firm demand for semi-
conductors for use in digital consumer electronics and mobile phones in the first half.
Adverse conditions re-emerged in the second half of the year, however. Anticipated
growth in semiconductor demand ahead of the 2008 Beijing Olympics was undermined
by fears of a US economic downturn due to the subprime mortgage crisis. Demand was
also stymied by deepening concerns that escalating prices for crude oil and other raw
materials would trigger an economic slowdown. These trends prompted a more cau-
tious approach to increasing inventories among electronic equipment manufacturers,
resulting in lackluster semiconductor demand in the run up to the Olympic Games.
nOperational Review
Sales from the Device Solutions segment increased 4.5% year on year to ¥796.7 billion.
While sales in Japan of standard technology logic products struggled, most visibly in the
industrial machinery and digital consumer electronics sectors, sales of advanced tech-
nology logic products based on 90nm process technology to the digital camera, mobile
phone and server sectors grew. Coupled with the start of outsourced production of
flash memory at semiconductor production facilities acquired from Spansion Japan
Limited, sales in Japan increased 14.1% for the year. In contrast, sales outside Japan
declined 9.9%. This outcome mainly reflected decreased business volume due to
changes in the flash memory sales structure at Fujitsu sales companies outside Japan.
Segment operating income edged down ¥0.7 billion to ¥18.2 billion. Excluding
the effect of changes in accounting policies, income was ¥7.9 billion, representing a
year-on-year decrease of ¥11.0 billion. In the LSI Devices sub-segment, higher sales of
advanced technology logic products were not sufficient to offset the impact of a slow
recovery in demand for standard technology logic products. Earnings were also
impacted by increased depreciation associated with the start of operations at the Mie
Plant Fab No. 2, a facility specializing in 65nm process technology. The Electronic Com-
ponents, Others sub-segment met with similar results, as the yen’s appreciation from
the end of December 2007, tougher price competition and increased upfront invest-
ments all weighed on earnings.
(Years ended March 31)
(Years ended March 31)
OPERATING INCOME/
OPERATING INCOME MARGIN
CAPITAL EXPENDITURE, RATIO OF
R&D EXPENDITURE TO NET SALES
(Billions of Yen)
(Billions of Yen)
(%)
(%)
(Years ended March 31)
SUBSEGMENT SALES*
LSI Devices
Electronic Components, Others
* Including intersegment sales
(Billions of Yen)
Operating income
Operating income margin
Capital expenditure (left scale)
Ratio of R&D expenditure to net sales
(right scale)
2004 2005 2006 2007 2008
0
12
6
18
24
30
0.0
2.0
1.0
3.0
4.0
5.0
22.7
29.0 29.5
19.0 18.2
2.8
3.7
4.2
2.5 2.3
2006 2007 2008
0
50
100
150
200
0
3
6
9
12
115.5
166.2
117.3
5.4 6.1 5.3
2004 2005 2006 2007 2008
0
300
600
900
376.9 326.5
247.4 289.1 287.9
427.7 468.2 460.1 473.5 508.8
804.6 794.7 707.5 762.6 796.7
046
ANNUAL REPORT 2008FUJITSU LIMITED
DEVICE SOLUTIONS