Pentax 2011 Annual Report Download - page 33

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Fiscal 2011 Business Overview and Results Outlook for Fiscal 2012
Fiscal 2011 Business Overview and Results
Hoya develops and manufactures glass disk substrates for 2.5-
inch memory disks in hard disk drives (HDDs), which are used
mainly in notebook PCs and external hard drives. During the
fiscal year under review, the market for these HDDs and the
glass memory disks inside them expanded steadily, driven by
strong demand in notebook PCs for both business and personal
use.
The HDD market is expected to continue expanding alongside
growing demand for even larger capacities in data storage, with
HDDs remaining competitive in terms of both price and
reliability. This is despite the emergence of a number of
competing storage device technologies, including Internet-based cloud computing and solid state
drives (SSD) using flash memories. At the same time, higher storage densities in HDDs will
require glass disks of even higher quality. To address both these output and quality demands,
Hoya in 2010 began production at its second factory in the Philippines and also started
constructing a second factory in Vietnam. As an upside to the large investment this entailed,
Hoya’s capacity for producing glass disk substrates will surge 70% once these two facilities are
ready.
By contrast, a challenge in the past year was the sharply higher price of cerium, a rare earth
consumed in polishing glass disks. This squeezed profit margins, as it was difficult for Hoya to
ask customers to shoulder this cost increase, and there were limits to cost-reduction efforts. To
solve this problem, Hoya is developing alternative technologies for eliminating the use of cerium.
Hoya believes that it may be able to switch to these alternatives in 2011.
In other developments, on June 30, 2010, Hoya sold its operations for applying magnetic
coatings to glass disk substrates, to concentrate instead on fabricating and polishing glass
substrates. This move will eliminate competitive relationships that stood in the way of in-depth
communications between Hoya and its customers, enabling the free exchange of ideas for
mutually improving product competitiveness.
Outlook for Fiscal 2012
HDD have advanced rapidly in density from 160GB (gigabyte) per square inch, to 250GB and
320GB. In the near term, mass production will commence on 500GB products. In the first half of
fiscal 2012, the challenge for Hoya will be improving the quality of glass disks to meet the more
rigorous approval standards HDD manufacturers will impose when they raise density. On the
other hand, those higher approval standards will also mean higher barriers to entry that work to
Hoya’s quality advantage. The fundamentals of maintaining high quality, remaining cost
competitive and meeting tight delivery timeframes are lasting strengths we will continue to
Glass Memory Disks for Hard
Disk Drives