Casio 2006 Annual Report Download - page 15

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These days, TFT LCDs are key components of digital cameras, cellular phones and other mobile communications
equipment. At Casio, our operations are focused on small-sized TFT LCD panels. These panels, primarily for digital
cameras and cellular phones, are used in our own products, and are also supplied to other manufacturers.
In the term under review, the market for small-sized TFT LCD panels experienced an accelerated decline in product
prices. At Casio, although production volumes exceeded previous-year levels, the plunge in unit prices was much
greater than expected. Consequently, sales and operating income showed year-on-year declines. In response
to the downward trend in prices in the small-sized TFT LCD market, we formed a tie-up with HannStar Display
Corporation, a Taiwan-based maker of TFT LCDs in August 2005. This agreement enables us to expand our
capacity without having to undertake additional capital investment. In this way, we will ensure an adequate level of
inventory without having to undertake additional investments to increase in-house production capabilities.
We expect that our operating environment will remain challenging, and have formulated the following two
measures. From the current term, we will undertake full-scale procurement of LCD panels from HannStar, to secure
a suffi cient level of inventory. This enables us to undertake more aggressive marketing activities, while working to
increase our fl exibility in responding to market changes to minimize risk. Another measure is to develop a third,
high-value-added application for TFT LCDs, in addition to digital cameras and cellular phones. Specifi cally, we
will begin supplying our TFT LCDs for portable GPS (global positioning system) car navigation devices, which are
currently in strong demand in Europe and North America.
2.4-inch QVGA TFT LCD for a cellular phone
TFT LCDs
13
Annual Report 2006