Pentax 2008 Annual Report Download - page 17

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Using adversity as a springboard for future growth
In the fiscal period under review, the 2.5-inch HDD market
expanded on a global scale amid growing worldwide demand for
notebook computers. Hoya's unit sales of substrates increased
from the preceding fiscal year, but unit sales of media fell as a
result of lagging development. Market prices also dropped, owing
to severe market competition. Also, for products denominated in
dollars, a rising yen eroded unit prices after conversion to the
Japanese currency. As a result, sales declined overall.
Around the spring of 2007, HDD manufacturers fully
transitioned to a perpendicular magnetic recording method that
enables increased storage capacity through greater data
recording density. Although Hoya got a head start in developing
media compatible with the new method several years in advance,
delays in technical development at the final phase of
commercialization thrust the Company into an uphill battle with
its rivals in the first quarter of the fiscal year under review.
However, we staged a gradual comeback from the second quarter
and have now returned to a stable production system. As a result
of such technical issues, significantly lower product prices despite
market expansion, and ongoing cost pressures due to rising raw
materials prices and the influence of exchange rates fluctuations,
profitability in the fiscal year under review also declined compared
with the previous fiscal year.
Expanding production systems in response to globally
increasing demand
Advancing rapid development through an
organizational structure responsive to the market
Demand for notebook computers is surging on a global scale,
with notebook PCs forecast to overtake desktop models in 2009 as
a percentage of all computers sold. This growing demand,
replacement demand for desktops in Western markets and new
demand for notebook PCs from emerging markets are expected
to propel continued robust growth in the 2.5-inch HDD market as
well. Moreover, although 3.5-inch HDDs have been standard for
desktops because of the lack of need for portability, recent
indications point toward the adoption of 2.5-inch units for
desktops as well, in the interests of energy and space efficiency.
Hard disk drives (HDDs) are incorporated into personal computers
and other digital devices as data storage units. Highly shock-
resistant glass disks are used in HDDs for notebook computers,
portable game consoles and other mobile devices to ensure that
data is not damaged in transit due to vibration or impact.
Hoya produces and sells substrates (polished glass plates) and
media (consisting of magnetic recording films formed on the
surfaces of the substrates) for such glass disks. Nearly all the
Company’s sales of such products are for 2.5-inch disks, which are
incorporated into HDDs and used in notebook computers, car
navigation systems and game consoles.
Glass Memory Disks for Hard
Disk Drives
We will further enhance our production and
development structure to accommodate
continuing growth in the 2.5-inch HDD market
Significant Actions Taken and Results Achieved in
the Fiscal Year under Review
Policies and Forecasts for the Year Ahead
Glass memory disks used in notebook computer HDDs (illustration)
HOYA ANNUAL REPORT 2008 15