Fujitsu 2006 Annual Report Download - page 51

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Annual Report 2006
Device Solutions
Net sales of Device Solutions were ¥707.5 billion (US$5,996 million),
a decrease of 11.0% compared to fiscal 2004. Excluding the impact of
the transfer of our flat panel display businesses, sales on a continuing
operations basis increased by 0.5%. In the LSI Devices sub-segment,
memory sales decreased as a result of a decline in market prices, but the
market for logic chips recovered in the latter half of the fiscal year, espe-
cially for devices used in mobile phone and digital consumer electronics
applications. The start of volume production at our new 300mm wafer
semiconductor fabrication facility also contributed to sales. The combi-
nation of these factors contributed to a slight overall increase in logic
device sales, mostly from overseas sales, compared to the prior fiscal year.
Operating income for Device Solutions was ¥33.3 billion (US$282
million), an increase of ¥0.7 billion compared to the previous fiscal year.
Although operating income in the LSI Devices sub-segment declined as
a result of the weakness of the market during the first half of the fiscal
year, as well as the impact of expenses relating to start-up of the 300mm
wafer production facility at our Mie Plant that began operation in April
2005, the Electronic Components, Others sub-segment continued to
post strong results, and losses associated with the flat panel display busi-
nesses were eliminated. As a result of these factors, overall operating
income improved slightly over fiscal 2004.
The new 300mm wafer semiconductor fabrication facility at our
Mie Plant (Fab No. 1) commenced volume shipments as scheduled
from September 2005. Moreover, in order to meet the growing
demand for leading-edge technology products, we decided in January
2006 to build an additional 300mm wafer facility (Fab No. 2) at the
Mie Plant. Going forward, we will concentrate our resources in logic
LSI devices and work to further strengthen this business while strik-
ing a balance between advanced technology products to drive future
growth and standard products that support our existing business. In
December 2005, Spansion, Inc., our joint venture with Advanced
Micro Devices, Inc. in the flash memory business, issued new shares
in tandem with its initial public offering. As a result, our ownership
share changed from 40.0% to 25.2%.
Net Sales and Operating Income by Business Segment
(including intersegment)
(¥ Billions)
Increase
(Decrease)
Years ended March 31 2005 2006 Rate (%)
Net sales
Technology Solutions . . . . . . . . ¥2,934 ¥2,983 1.7
Ubiquitous Product Solutions . . 1,031 1,059 2.8
Device Solutions . . . . . . . . . . . . 794 707 (11.0)
Other Operations . . . . . . . . . . . 377 447 18.6
Intersegment elimination . . . . . (375) (407)
Consolidated net sales . . . . . . . ¥4,762 ¥4,791 0.6
Increase
Years ended March 31 2005 2006 (Decrease)
Operating income (loss)
Technology Solutions . . . . . . . . ¥142 ¥164 ¥22
Ubiquitous Product Solutions . . 31 34 3
Device Solutions . . . . . . . . . . . . 32 33 0
Other Operations . . . . . . . . . . . 9 7(1)
Unallocated operating costs
and expenses/
intersegment elimination . . . . . (54) (58) (3)
Consolidated operating income . . ¥160 ¥181 ¥21
Geographic Segment Information
Net sales (including intersegment sales) and operating income were gen-
erally level with the previous fiscal year in Japan. However, sales and
income increased in Europe, the Americas and Others (Asia, Australia
and other regions).
Japan
Net sales were ¥3,944.4 billion (US$33,427 million), down 2.0% over
fiscal 2004, but roughly level if the impact of the transfer of flat panel
display operations is excluded.
Operating income was ¥185.8 billion (US$1,575 million), a decline
of ¥1.9 billion compared to a year earlier, but level after excluding the
impact of change in accounting policies. On the one hand, this largely
unchanged result reflected the absence of loss-making flat panel display
businesses following their transfer and a significant drop in losses from
loss-generating projects in the domestic systems integration business.
However, sluggish sales of server-related products in Japan, costs related
to accelerated development of next-generation mobile phone base sta-
tions, optical transmission systems and server-related products, and
expenses associated with start up the new 300mm wafer semiconductor
fabrication facility at our Mie Plant (Fab No. 1), all weighed on earnings.