*NEWS*EPSON TO CUT EXPOSURE TO M.PHONES

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*NEWS*EPSON TO CUT EXPOSURE TO M.PHONES

 user 2005-11-30 at 10:45:00 am Views: 78
  • #12983

    Seiko Epson to cut exposure to mobile phones
    TOKYO,
    Nov 05- Japan’s Seiko Epson Corp.  will significantly cut the exposure
    of its chip and display businesses to the mobile phone market after
    heavy price falls pushed those operations into the red, it said on
    Tuesday.

    “Reducing
    our reliance on the mobile phone market will be a big point for us as
    we change our product portfolio over the medium term,” Seiko Epson
    President Seiji Hanaoka said in an interview.
    Seiko Epson expects
    its electronics devices division, which includes semiconductors, liquid
    crystal display (LCD) panels, and quartz components, to post an
    operating loss of 10 billion yen ($84 million) in the business year
    through March.
    While it has also been hit hard by falling profit
    margins at its ink jet printer division, the sluggish performance of
    its devices unit is the main reason Seiko Epson expects its group net
    profit to slump 60 percent to 22 billion yen this year.
    Hanaoka said
    unit sales of devices would be solid through the year-end shopping
    season, but suggested that profits would be hard to come by as key
    clients such as Nokia pressure it to lower prices for small LCD panels
    and LCD driver chips.
    “We have a good read on orders through the end
    of December but the January to March quarter is still unclear,” he
    said. “The situation is that we are still having to cut prices.”
    Seiko
    Epson currently supplies about two-thirds of its LCDs and about half of
    its semiconductors to mobile phone producers, making its earnings
    extremely vulnerable to demand and price swings in the volatile
    cellphone market.
    DIVERSIFICATION
    To diversify its business risk,
    Hanaoka said the company would reduce sales of cellphone-use displays
    to 50 percent of the total by increasing sales for other applications
    such as car navigation systems and pachinko machines.
    Hanaoka said
    sales of chips to handset makers will be cut to 30 percent from 50
    percent by procuring more semiconductors for its printers in-house,
    increasing sales of chips that leverage its low-power consumption
    technology, and boosting supply of chips to other semiconductor firms
    on a contract basis.
    Seiko Epson and Sanyo Electric Co. merged most
    of their LCD operations last year. Sanyo Epson Imaging is owned 55
    percent by Seiko Epson and 45 percent by Sanyo, and focuses on small
    LCD panels for digital cameras and mobile phones.
    According to
    researcher DisplaySearch, Sanyo Epson held 12 percent of the market for
    small and midsize LCDs last year, behind only Sharp Corp. (6753.T:
    Quote, Profile, Research) and a venture between Toshiba Corp.  and
    Matsush*ta Electric Industrial Co. .
    Seiko Epson has also suffered
    from sluggish demand for high-temperature polysilicon (HTPS) LCD
    devices used in LCD projectors and rear-projection TVs, which have not
    sold as well as hoped as many consumers bought plasma or LCD TVs
    instead.
    Seiko Epson makes rear projection TVs and LCD projectors, and also supplies the HTPS device to other firms.
    “Inventory
    adjustments (for HTPS) continue and the conditions remain tough, but we
    expect our customer base to increase next year,” Hanaoka said. He said
    contracts have already been signed but declined to give the number or
    names of its new customers
    .