*NEWS*EPSON TO CUT EXPOSURE TO M.PHONES

[Anonymous]

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.

[Author]

November 30, 2005 at 10:45 AM