Epson 2006 Annual Report Download - page 19

Seiko Epson Annual Report 2006 17
Extensive Cost Reductions
Sanyo Epson is pursuing far-reaching
cost reductions to complement fixed-
cost structure reforms enacted during the
year under review. In the purchase of
components from external suppliers, the
Company, while retaining its emphasis
on quality standards and reasonable
costs, is shifting away from sourcing
components primarily from the overseas
bases of Japan-based manufacturers, to
a more global procurement system. As
part of the overall efforts to cut costs, a
cost-reduction team formed among the
design departments in April 2006 has
already taken steps to pare back costs
from the module design stage.
Retaining and Enhancing
Customer Trust Through a
Flexible Production Framework
To preserve its market share in the mobile
phone market, Sanyo Epson is adapting
its response to increased sales volumes.
In amorphous silicon TFTs, where major
volume increases are forecast, the
Company is working to ensure produc-
tion capacity by responding with greater
flexibility. This approach entails moving
faster to complete the shift to lines opti-
mized to produce small- and medium-
sized LCDs, while being prepared to use
spare low-temperature polysilicon TFT
line capacity to handle overcapacity
demand. Module production capacity is
also being expanded as part of this effort.
Short-term volatility in demand is a
hallmark of the market for mobile phone
displays. Consequently, it is imperative
that Sanyo Epson creates an efficient pro-
duction framework able to meet customer
needs while retaining minimal inventories.
Additional efficiency gains and shorter
lead times for this production framework
will further aid in distinguishing Sanyo
Epson from other companies. In recent
years, customers have again begun
emphasizing stable procurement and
high quality over prices. In raising Sanyo
Epson’s already industry-leading capacity
to reliably meet such sizable demand, the
Company is determined to further improve
upon its reputation for reliability.
Sanyo Epson projects that the ben-
efits gained from the above-mentioned
higher volumes and cost reductions will
result in improved earnings year on year
for the fiscal year ending March 31, 2007.
Distinction Through High-
Added-Value Technology and
Business Domain Expansion
Sanyo Epson is enhancing its product
capabilities over the medium term,
distinguishing itself from other firms by
honing its technological strengths in low
power consumption, high aperture
ratios, wide viewing angles, and broad-
spectrum color, and by expanding busi-
ness domains. Mobile equipment with
video functionality is set to make a full-
scale appearance on the market, a
change that will demand longer periods
of battery-powered operation. It is likely
here that Sanyo Epson can leverage its
strengths in low-power-consumption tech-
nology. Centered on this and other distinc-
tive technologies, the Company will pursue
growth markets for a well-balanced busi-
ness structure that can weather fluctuating
conditions in the mobile phone market.
Steps Toward Medium- to
Long-term Earnings Growth
Sanyo Epson has a high market share,
the capacity to reliably meet significant
demand, and powerful technology devel-
opment capabilities—all of the elements
essential to surviving in the small- and
medium-sized LCD market. Capitalizing on
these strengths, Sanyo Epson will strive
to ensure stable medium- to long-term
earnings growth by expanding sales of
LCDs for mobile phones, and through on-
going business domain expansion.
Panel featuring Photo Fine Vistarich
wide viewing angle technology
1.9-inch amorphous
silicon TFT-LCD module
*Refer to “Epson at a Glance” on page 33 for more on
Photo Fine Vistarich features.