Pentax 2003 Annual Report Download - page 12

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Hoya has continually strived to anticipate latent needs and growth potential in the market, develop
products suited to next-generation technology and create the manufacturing structure to produce them.
We will continue nurturing the HDD glass disk business to become one of the pillars of profitability for
the Company.
Optical Glass
Hoya’s lineup of optical glass products comprises glass materials, as well as the optical lens devices used in
digital cameras and video recorders. The Company is involved in all aspects of their production.
The technical advances made in the field of optical lenses are striking. Whereas it was once neces-
sary to compensate for spherical lenses with several additional lenses in order to focus a beam of light, the
development of aspherical lenses has greatly reduced the number of additional lenses necessary. Greater
lens precision, moreover, has led to significant reduction in size and weight, benefiting innovation in digi-
tal cameras.
As digital appliances become a more essential part of everyday life, the need for greater functionali-
ty and higher definition from optical glass products continues to increase. Along with heightened expecta-
tions for a greater number of applications for optical glass products and the expanding market that
accompanies it, advances in development and production techniques are occurring daily.
Hoya is responding to these trends by fully utilizing the merits of an integrated production system
that covers raw material to finished product, revising the process of purchasing, production and sales, and
upgrading its development and production structure in order to improve competitiveness.
Optical Communications Products
The optical communications industry entered a period of structural adjustments following the collapse of
the market for fiber optics in 2001, and the market remains depressed. Internet traffic volume is growing
rapidly, however, and the infrastructure for broadband communications such as ADSL and FTTH is
steadily expanding, leading the Company to believe that optical communications remains a long-term
growth field.
Hoya is shrinking its business for WDM filters and microlenses, which are now more commodities
than specialty products, but continues to concentrate on light polarizers for isolators, a market of which
Hoya commands approximately 50%, though the scale is small. At the same time, the Company is contin-
uing with strategic investments in new technologies and product development of integrated devices, in
anticipation of a recovery in the market.
In the market for optical communications products, restructuring is taking place on the supply
side, while a recovery in the market is not expected to begin until the latter half of fiscal 2004 at the earli-
est. Fiscal 2004 should be a turning point, therefore, and with an eye toward medium-term growth Hoya
is making strategic upgrades in the optical communications products business.
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