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Sanyo chip sales likely to drop 10 percent this year

Sanyo Electric Co, which last week cut its first-half profit estimate, said semiconductor sales will fall as much as 10 percent this fiscal year on slowing demand for chips used in mobile phones and computers.

Sanyo's chip sales in the year ending March 31, 2002 will fall by as much as ?43 billion (US$362 million), Tadahiko Tanaka, head of Sanyo's semiconductor unit, said. The company's semiconductor sales, which totaled ?430 billion in the year ended March, make up about one-fifth of total sales.

Japanese chipmakers' earnings are tumbling as consumers buy fewer mobile phones and computers. Sanyo's rivals Toshiba Corp, NEC Corp, and Hitachi Ltd, have also slashed profit forecasts, citing weakening demand.

"We are working hard to have low cost operations" to remain profitable, said Tanaka. He declined to give estimates for operating profit at the company's chip business.

The Osaka-based company, which is also the largest maker of mobile phone batteries, last week cut its group net income forecast by 56 percent to ?8.5 billion for the six months ending Sept. 30.

"I have hopes for a recovery in chip orders for mobile phones and PCs" later this year, Tanaka said.

Sanyo's sales of chips used in phones have fallen to about half of last year's levels. Sales of chips used in PCs are down by about a third, Tanaka said.

Half of the company's chips are used in video-cassette recorders, television sets and other products, he said.

Sanyo's semiconductor unit has cut about 1,000 manufacturing workers, including temporary workers, since its fiscal year began in April, moving some to sales and other units, said Tanaka. That's about one-fifth of the chip unit's workforce.

Tanaka made the comments after Sanyo's briefing on its alliance with UK-based Wolfson Microelectronics Ltd. The companies will jointly design, manufacture and sell chips developed to reduce power consumption and improve performance in music players, PC peripherals and other audio-visual devices.

The chips, known as mixed-signal products, will be sold in the second quarter of 2002, the companies said. Sales will reach more than ?10 billion in three years, Tanaka said at the briefing.
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