How does Toshiba plan to achieve growth over the next three years?
It plans to spend 50 percent of its capital expenditures on semiconductor production, concentrating on NAND, with a total of 65 percent of its capex spent on electronic device-related production. At the same time, it plans to spend nearly half of its R&D budget, some 46 percent, on electronic devices, the Japanese electronics giant said.
Toshiba Corp. laid out its next three year plan, detailing its strategy for three core business groups, electronic devices, digital products and social infrastructure products.
For electronic devices, the company is shooting for compound annual growth of 8 percent between fiscal 2004 and fiscal 2007, following a rate of just 1.3 percent between fiscal 2002 and fiscal 2004. It plans to focus on such products as NAND and broadband system LSI, as well as flat panel display products, namely organic LED devices and surface conductor electron emitter displays(SED).
Specifically for semiconductors, Toshiba says it is going to focus much of its efforts on NAND production on 300mm wafers. It sees the overall NAND market growing at a 28 percent compound annual growth rate between fiscal 2005 and fiscal 2008, surpassing the $17.8 billion (2 trillion yen) mark in fiscal 2008.
But Toshiba also plans to proceed with plans to get involved in broadband system LSI, utilizing Cell technology, in addition to its established businesses in image sensors, multimedia SOCs, LCD drivers and power devices. It plans to spend $4.9 billion (550 billion yen) on semiconductor production, or half of its projected $9.8 billion (1.1 trillion yen) cap ex for the three-year period.
While Toshiba aims for compound annual growth rate of 8 percent for electronic devices, specifically for its semiconductor business, it wants to achieve a rate of 9 percent, having achieved just 2 percent between fiscal 2002 and 2004.
As for its FPD business, it plans on direct investment toward mass production of SED devices, as well as establishing a new facility to integrate system-on-glass (SOG) technology with optically compensated bend (OCB) LCD technology. The company says it will concentrate on introducing differentiated products in the FPD market during this three-year period.
In terms of R&D dollars for electronic devices, Toshiba said it plans to spend $4.9 billion (552 billion yen) over the next three years, or 46 percent of its $10.7 billion (1.2 trillion yen) it has budgeted for R&D between fiscal 2004 and fiscal 2007. Specifically for SED, it wants to have that display technology in full mass production by fiscal 2007, Toshiba said.
In terms of strategy, Toshiba said its goal is to increase sales in China and construct strong partnerships with strategic customers, as well as beat its competitors on advanced process technology, raise its design efficiency and improve its cost structure, all while establishing a new global network.
Toshiba is also maintaining its focus on digital products, primarily consumer devices. It also wants to achieve a compound annual growth rate of 7 percent during this three-year period, following a rate of just 3.6 percent in the previous three-year period. In addition to the aforementioned FPD televisions, it plans to focus on high definition DVD, hard disc drives, its audio/visual (AV) notebook and thin and light PC lines, 3G mobile phones and multi-function printers.
Among its base strategies for its digital products business, it specifically plans to encourage the global introduction of W-CDMA terminals, as well as promoting/introducing differentiated products and promoting production efficiency and strengthening cost competitiveness. Specifically for its AV business, Toshiba plans to promote alliances and a vertical integration model while revising its business structure.
As consumer electronics and the PC continues to merger, it sees its AV business as a pillar of future growth; it specifically plans to achieve a compound annual growth rate of 10 percent over the three year period for its AV business.
