Fujitsu Ltd. said it may focus on semiconductor design and reduce spending on machinery because the company is predicted to miss its full-year projections amid falling demand.
"The investment needed for cutting-edge production capacity is enormous, reaching hundreds of billions of yen," Haruki Okada, who heads the chip business at Fujitsu, said in an interview last week. "We aim to significantly minimize such spending and invest our money in strengthening product lines and development."
Fujitsu, which plans to cut capital spending on semiconductors by 47 percent this year, joins Freescale Semiconductor Inc. and Sony Corp. in scaling back chip manufacturing to avoid multibillion dollar investments in factories. Meeting profit targets this year will probably be "extremely difficult" because of slumping demand for electronics, Okada said.
Fujitsu, Japan's fourth-largest chip maker, in May forecast "several billion" yen in operating profit in the chip business for the 12 months ending March 31, 2009, on ¥490 billion in revenue. The semiconductor operations reported two straight years of losses because of spending on manufacturing facilities.
The unit will probably report a ¥2 billion operating loss on ¥470 billion in sales this business year, returning to profit in the 12 months ending March 2010, Yukihiko Shimada, an analyst at Mitsubishi UFJ Financial Group Inc., forecast in a report on Aug. 18, citing the slowing global economy for the predicted loss.
"Production of next generation chips requires considerable scale found in only a handful of companies" such as Intel Corp., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., Shimada said. "Fujitsu would be wise to seek production partners."
Tokyo-based Fujitsu said in May it will cut capital spending for semiconductors by 47 percent to about ¥50 billion this business year.