Omron 2007 Annual Report Download - page 23

22
MARKET ENVIRONMENT AND KEY STRATEGY
Increasing Profitability and Promoting the
Development of New Business Areas
In fiscal 2007 we expect to see further growth in the elec-
tronic components market for digital consumer appliances and
mobile devices. This growth will be driven largely by replace-
ment sales and the growing popularity of products like flat
screen TVs and mobile telephones featuring more electronic
components accompanying technical innovation. Electronic
components for industrial use can also look forward to a year of
sound performance, with the help of robust capital investment
plans by companies. However, intensifying competition on a
global scale is putting further downward pressure on prices.
In the backlight business for liquid crystal displays in particular,
the selling prices for liquid crystal displays both for TVs and
mobile devices are falling at a rapid pace. Meanwhile, the man-
ufacturing costs of our mainstay relay products are being
pushed up significantly by costs for raw materials due to soar-
ing conditions in the silver and copper markets. As a measure
to boost earnings in this challenging environment, particularly in
small-size backlights for mobile devices where there is strong
pressure to lower costs, we integrated our product strategies
for point light source lights for the low end of the market and
multiple light source lights for the high end of the market, which
had previously been promoted on two separate tracks, and we
have been devoting efforts to improving efficiency in develop-
ment costs and enhancing our product power. We have also
established a Business Strengthening Project which we are
deploying across the ECB company as we promote sweeping
measures to improve productivity.
As a new initiative, we are presently strengthening and
expanding our line of semiconductor-related products through
our new company Omron Semiconductors Co., Ltd., a whol-
ly-owned subsidiary established at the end of 2006.
Semiconductor business assets transferred from Seiko Epson
Corp. form the foundation of this subsidiary, and in fiscal 2007
we plan sales of approximately ¥3 billion (see the special feature
on P33). Moreover, in our optical fiber communications com-
ponents business, which is beginning to show promising signs
of growth, we will promote the global development of the fiber-
to-the-home (FTTH) market.
BUSINESS RESULTS AND OUTLOOK FOR FISCAL 2007
Outlook for Double-digit Growth in Sales and Profit
despite Concerns over Pressure on Earnings
In fiscal 2006, ECB recorded net sales of ¥138.4 billion
(up 41.6% year on year), and operating income of ¥13.1 billion
(up 16.9%). In the domestic market, demand for semiconduc-
tor and equipment related products is moving at a favorable
pace. In addition, the round of inventory adjustments for digital
consumer electronics which was underway during the second
half of the previous year has come to an end, and our main-
stay products, such as switches and relays for printed sub-
strates as well as connectors, made steady progress. Overseas
Soichi Yukawa, Senior Managing Officer
Company President, Electronic Components Company
At ECB we are aggressively moving into new growth domains in efforts to expand and extend
the reach of our business. We are now doing this by offering innovative products that make
the most of new technologies in areas such as liquid crystal backlights, input devices, and
face recognition sensing to enhance the performance of mobile telephones and digital
devices, which are rapidly growing industries.
ELECTRONIC COMPONENTS BUSINESS (ECB)
Manufacture and sale of electronic components for consumer appliances, mobile devices, telecommunica-
tions and industrial equipment, and amusement devices