Yamaha 2006 Annual Report Download - page 27

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Yamaha Annual Report 2006 27
Alloys for lead frame
Sound chip for mobile phone
Market trends and business strategy
Electronic equipment (semiconductors)
As anticipated, business conditions were
particularly harsh during the year under review.
Although the global mobile handset market
expanded almost 20% in shipment volume
terms during the year, most of the growth
was concentrated in emerging markets where
handsets do not typically contain LSI sound
chips, including those made by Yamaha. In
addition, despite strong underlying demand
from users and handset makers for greater
sound and music functionality, the value of
ringtones has declined amid the proliferation
of high-performance multifunctional handsets.
Yamaha’s strategy is to shift steadily
to higher-value LSIs that incorporate digital
amplifier or compressed music playback
functions, as well as conventional ringtone
functions. While striving to maintain market
share of LSI sound chips for mobile handsets,
Yamaha will work to expand business by
leveraging its know-how in sound and by
supporting various handset makers.
In the amusement equipment sector,
pachinko and pachislot machines continue
to become ever-more complex. This has
brought about the need for advanced
functionality and performance for devices for
these machines, such as sound source and
graphics processors. Shipments of a new
graphics LSI for next-generation machines
began in the second half of the year, and
results have been promising thus far. Going
forward, Yamaha aims to drive continuous
growth in this area by promoting product
development through active communication
with and proposals to equipment makers.
Yamaha continues to actively develop
products for new applications to offset slower
demand for LSI sound chips for mobile
phones. Besides amusement equipment,
Yamaha is targeting markets and applications
in the automotive, consumer electronics, and
communications equipment sectors. Plans are
to make timely launch of new products that
befit needs.
Electronic metal products
Yamaha’s subsidiary Yamaha Metanix
Corporation manufactures and sells copper-
based and nickel-based lead frame materials,
copper-based connector materials, and related
processed parts.
An inventory correction in the first half of the
fiscal year under review was conducted, mainly
for digital consumer electronics market. Demand,
however, began to pick up in the second half of
the year, and the market gradually recovered.
Although demand continues to rise, fierce
competition persists in this market. And that,
combined with steep increases in raw material
prices, means that the market outlook warrants
little optimism at present.
Amid these trying market conditions,
Yamaha continued to employ total production
management (TPM) activities during the year
to raise and stabilize earnings by boosting
productivity and reducing costs. Yamaha
expects its copper-based connector material
business to contribute to growth in the year
ending March 2007 with the shift of that
business to full-scale production. Other efforts
to raise profits in this segment include a focus
on expansion within the sector of materials for
automotive components.