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Annual Report 2004 21.

HDD motors with ultra-high precision bearings

and assembly technology, resulting in low-

noise, long-life, shock resistant HDDs

we must respond to the rapid contrac-

tion in the deflection yoke market by

integrating overseas manufacturing

operations at one location. In VIL

PWBs, we will shift our focus to

providing components for digital

cameras, laptop computers and other

AV products. Both these steps will

enhance our earnings capabilities.

Growth Strategy for

Components & Devices

We initially created our optical pickup

business to supply devices for CD

players. In addition to these devices,

we also began developing optical

pickups for DVD recorders. We will

launch these in-house manufactured

devices in the second half of fiscal

2005. Because these optical pickups

will be used as key devices in DVD

recorders manufactured by JVC, we

will be able to offer products that

standout in the market in terms of

both technology and cost.

The electronics industry is calling for

HDDs with smaller disks and increas-

ingly slimmer drives. Naturally, this

means fluid dynamic bearing motors

for HDDs and motors for optical disk

devices must be more compact and

thinner than ever before. In response,

we will channel resources into fields,

Components & Devices and

the Leap Ahead 21 Plan

Faced with drastic changes in its oper-

ating environment, primarily the global

downturn in the IT sector, this seg-

ment has struggled to drive a turn-

around in earnings. The Leap Ahead

21 plan therefore aims to rebuild the

business by pushing forward radical

operational restructuring by channel-

ing resources into proprietary products

such as motors and optical pickups.

We will then use these components

and devices to inject greater value into

our finished products.

Fiscal 2004 Operating Results

In the year under review, there were a

number of reasons for the deterioration

in operating results, including a con-

traction in the global deflection yoke

market that was more severe than

expected, and a delay in launching

fluid dynamic bearing motors for

HDDs (hard disk drives). We also

failed to keep up to speed with the

growing density and complexity of VIL

PWBs (high-density build-up printed

wiring boards).

It is a matter of priority that we

quickly strengthen our operating struc-

ture by continuing to rebuild the

segment’s business base. In particular,

where applications for our small

motors are growing, to create a frame-

work that allows us to deliver the kind

of products industry needs—when it

needs them.

JVC originally created the Compo-

nents & Devices segment to carry out

the in-house production of components

for JVC products. Later, external

sales of components for IT products

increased, and the segment became

primarily focused on supplying cus-

tomers outside the JVC Group. Now,

we are bringing the business back full

circle, and focusing operations on the

in-house development and manufacture

of key devices to inject greater added

value into new JVC products. In this

way, the Components & Devices

segment will play an important role

in the company-wide “Only One”

product strategy.

In fiscal 2005, we will continue to

rebuild the business base and focus