Fujitsu Ltd, Japan’s fourth-largest chipmaker, said it may focus on semiconductor design to reduce spending on machinery as falling demand may force the company to miss its full-year business targets.
“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 on Wednesday. “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 investing in factories.
Meeting profit targets this year will probably be “extremely difficult” because of slumping demand, Okada said.
Tokyo-based Fujitsu in May forecast “several billion” yen in operating profit in the chip business for the 12 months ending next March 31 on ¥490 billion (US$4.6 billion) in revenue. The semiconductor operations reported two straight years of losses because of spending on manufacturing facilities.
“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 (台積電), Yukihiko Shimada, an analyst at Mitsubishi UFJ Financial Group Inc, said. “Fujitsu would be wise to seek production partners.”
Fujitsu said in May it would cut capital spending for semiconductors by 47 percent to ¥50 billion this fiscal year.
The company, which in March spun off the chip unit, invested about ¥312.5 billion in the business over the past three years, the company said.
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