Fujitsu to Expand Overseas Chip Sales to 50%

[HenryTo]

The deflation coming from Japan continues.
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Fujitsu to Expand Overseas Chip Sales to 50% of Revenue by 2009

By Pavel Alpeyev and Mikako Nakajima

Aug. 28 (Bloomberg) -- Fujitsu Ltd., a Japanese maker of network equipment, computers and semiconductors, is seeking increased chip sales from overseas as international growth is expected to outpace the domestic market.

``The key to our survival as a device maker is to increase our presence in markets'' outside of Japan, such as the U.S., China, Taiwan and South Korea, Shigeru Fujii, the head of Fujitsu's chip business, said in an Aug. 24 interview in Tokyo. ``Sales by Japanese electronics makers are not expected to gain much, so we need go where the growth is.''

Fujitsu, focusing on making semiconductors for computer servers, cars and digital cameras, is targeting overseas markets to account for 50 percent of chip sales by March 2009, from 30 percent now. The company, which sold its memory chip and flat- panel divisions in the past three years because of falling prices and increased competition, is forecasting revenue at its semiconductor unit to rise 11 percent to a record this year.

Fujii declined to give a target for 2009 chip sales.

The Tokyo-based company in April said spending in the chip business will climb 51 percent to 140 billion yen this year, as it boosts output at its factory in Mie prefecture in central Japan. Monthly production at the factory is expected to rise to 15,000 wafers by March, from the 8,000 targeted in September.

Profit Outlook

The company's total net income for this fiscal year ending March 2007 will probably rise 17 percent to 80 billion yen, the highest in 16 years, Fujitsu said in April. Sales will probably gain 8.5 percent to 5.2 trillion yen, helped by demand for software services, chips and servers. Operating profit is forecast to rise 4.7 percent to 190 billion yen.

Fujitsu and Advanced Micro Devices Inc. in 1993 combined their NOR flash memory divisions and created Spansion Inc. That company, Intel Corp.'s biggest rival in cell-phone memory chips, sold shares to the public in December.

NOR flash memory chips are postage-stamp-size semiconductors whose unique property is that they retain electronic data even after the power has been switched off. Fujitsu also made dynamic random access memory, or DRAM, for personal computers until 2001, when lower prices from Taiwanese and Korean competitors forced it and rival Toshiba Corp. to abandon the business.

The company in 2005 sold its liquid-crystal display unit to Sharp Corp. and its plasma screen business to Hitachi Ltd.

To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net .

Last Updated: August 27, 2006 19:34 EDT