Nikon 2003 Annual Report Download - page 10

Operating฀Results฀
The฀protracted฀downturn฀in฀the฀semiconductor฀industry฀took฀another฀turn฀
for฀the฀worse฀in฀the฀summer฀of฀2002,฀leading฀many฀semiconductor฀manu-
facturers฀to฀slash฀capital฀investment.฀This฀caused฀sales฀of฀IC฀steppers฀to฀fall฀
signicantly฀below฀initially฀forecast฀levels฀in฀volume฀terms.฀Segment฀sales฀
dropped฀33.1%฀to฀¥133,102฀million,฀which฀resulted฀in฀an฀operating฀loss฀of฀
¥24,595฀million.
Business฀Strategy
We฀are฀taking฀a฀fresh฀look฀at฀the฀issues฀facing฀us฀in฀this฀business฀and฀
developing฀solutions฀to฀individual฀issues฀as฀quickly฀as฀possible,฀all฀the฀while฀
seeking฀to฀build฀on฀our฀strengths.฀The฀strategy฀that฀we฀are฀implementing฀
has฀three฀specic฀aims.
Our฀rst฀aim฀is฀to฀entrench฀the฀position฀of฀Nikon฀in฀steppers฀based฀on฀the฀
latest฀technical฀advances.฀In฀March฀2003,฀we฀delivered฀an฀NSR-S306D฀ArF฀
excimer฀stepper฀to฀a฀customer฀in฀the฀United฀States.฀This฀model฀boasts฀a฀reso -
lution฀of฀less฀than฀80nm฀with฀the฀world’s฀highest฀NA฀0.85฀lens.฀In฀October฀
2003,฀we฀plan฀to฀launch฀the฀next฀model฀in฀this฀series,฀the฀NSR-S307E.฀Besides฀
its฀world-beating฀lens฀capabilities฀and฀wider฀exposure฀area,฀this฀stepper฀also฀
boosts฀manufacturing฀productivity.฀Nikon฀steppers฀lead฀the฀world฀not฀only฀in฀
terms฀of฀lens฀quality,฀but฀also฀in฀total฀output฀(the฀number฀of฀non-defective฀
wafers฀processed฀in฀a฀given฀time),฀and฀we฀are฀always฀developing฀and฀rening฀
the฀technology฀to฀upgrade฀performance฀on฀both฀counts.฀
To฀ensure฀that฀we฀retain฀this฀technical฀edge,฀we฀also฀continue฀to฀invest฀
in฀the฀development฀of฀next-generation฀lithography฀to฀respond฀to฀evolving฀
requirements฀as฀chip฀architecture฀becomes฀increasingly฀intricate.฀In฀June฀2003,฀
Nikon฀delivered฀its฀rst฀stepper฀for฀R& D฀that฀prints฀the฀circuit฀pattern฀using฀
electron฀beams฀(EB)฀instead฀of฀light.฀EB฀steppers฀are฀designed฀for฀ultra-high฀
resolution฀of฀less฀than฀45nm.฀
Moreover,฀we฀are฀currently฀in฀promising฀sales฀negotiations฀for฀LCD฀step-
pers฀designed฀to฀handle฀large฀5th฀and฀6th-generation฀glass฀substrates,฀and฀we฀
expect฀these฀machines฀to฀contribute฀to฀sales฀growth฀in฀the฀upcoming฀year.
Second,฀we฀are฀actively฀seeking฀to฀expand฀our฀customer฀base.฀Since฀semiconduc-
tor฀production฀lines฀are฀not฀always฀necessarily฀reliant฀on฀the฀latest฀technology,฀and฀
the฀manufacturing฀equipment฀that฀is฀required฀differs฀according฀to฀the฀devices฀being฀
produced,฀we฀are฀developing฀various฀more฀affordable฀product฀options฀that฀can฀cater฀
to฀the฀needs฀of฀a฀broader฀range฀of฀customers.฀In฀November฀2003,฀we฀plan฀to฀launch฀a฀
new฀NSR-SF200฀KrF฀scan฀eld฀stepper.฀This฀offering฀can฀be฀mixed฀and฀matched฀with฀
our฀latest฀ArF฀stepper฀models,฀and฀this฀exibility฀will฀allow฀customers฀to฀reduce฀the฀cost฀
of฀their฀overall฀investment.฀In฀addition,฀with฀ArF฀steppers,฀we฀are฀developing฀immersion฀
technology,฀which฀introduces฀pure฀deionized฀water฀between฀the฀projection฀lens฀and฀
the฀wafer,฀thereby฀improving฀lens฀resolution฀signicantly.฀This฀illustrates฀another฀pos-
sible฀approach฀to฀meeting฀the฀needs฀of฀customers฀in฀an฀affordable฀manner.฀To฀attain฀
this,฀we฀are฀strengthening฀our฀sales฀and฀marketing฀capabilities.
Original฀Nikon฀stepper฀installations฀now฀exceed฀7,000฀units.฀Taking฀advantage฀of฀
this,฀we฀are฀seeking฀to฀expand฀business฀through฀the฀sale฀of฀second-hand฀machines.฀
Demand฀for฀second-hand฀steppers฀is฀especially฀high฀in฀China,฀a฀market฀where฀Nikon฀
already฀has฀the฀leading฀share฀in฀the฀industry.฀Recycling฀of฀the฀installed฀stepper฀base฀
presents฀a฀major฀business฀opportunity฀for฀us.฀In฀December฀2002,฀we฀established฀a฀local฀
stepper฀maintenance฀and฀repair฀service฀subsidiary฀in฀Shanghai.฀Close฀cooperation฀with฀
this฀new฀company฀promises฀to฀generate฀higher฀sales฀revenues฀from฀the฀Chinese฀market.
Our฀third฀strategic฀aim฀is฀to฀focus฀effort฀on฀fundamental฀structural฀reform฀of฀all฀
operations฀within฀the฀Precision฀Equipment฀Company.฀One฀particular฀objective฀is฀to฀
speed฀up฀operational฀throughput฀so฀that฀we฀can฀meet฀customer฀requirements฀in฀a฀
timely฀manner.฀By฀March฀2004,฀we฀aim฀to฀cut฀production฀and฀installment฀lead฀times,฀
as฀measured฀from฀lens฀cutting฀and฀nishing฀to฀completion฀of฀machine฀installation,฀to฀a฀
maximum฀of฀six฀months,฀which฀is฀approximately฀half฀the฀current฀average฀value.฀We฀plan฀
to฀achieve฀this฀by฀improvements฀in฀processes฀and฀production฀technology.฀Alongside฀this฀
initiative,฀we฀are฀also฀tackling฀nance-related฀issues฀by฀actively฀reducing฀inventory฀to฀
restore฀protability.
As฀part฀of฀this฀program฀to฀reduce฀lead฀times,฀we฀have฀been฀making฀further฀progress฀
in฀incorporating฀C A D / CA M฀and฀other฀IT฀systems,฀including฀CR M฀and฀SC M฀systems,฀to฀
increase฀process฀productivity฀in฀various฀ways.฀These฀investments฀enable฀us฀to฀manage฀
our฀business฀more฀efciently฀without฀signicant฀increases฀in฀headcount,฀allowing฀us฀to฀
focus฀on฀making฀innovative฀product฀proposals฀to฀customers฀to฀solve฀their฀requirements.฀
We฀are฀condent฀that฀the฀rst฀results฀of฀our฀various฀restructuring฀initiatives฀will฀emerge฀
as฀a฀marked฀improvement฀towards฀the฀end฀of฀the฀scal฀year฀ending฀March฀2004.
Topics/Achievements
Nikon฀became฀the฀rst฀manufacturer฀of฀steppers฀
to฀receive฀a฀P Q S฀(Preferred฀Quality฀Supplier)฀award฀
from฀Intel฀Corporation฀of฀the฀U.S.฀In฀Japan,฀Nikon฀
received฀similar฀recognition฀of฀its฀high-quality฀cre-
dentials฀in฀the฀form฀of฀a฀Good฀Partner฀award฀from฀
Toshiba฀Corporation.
precision equipment
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