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President's Message
I would like to take this opportunity to extend my best wishes and to thank everyone for the exceptional support given to us.
The deterioration in the global economy since the second half of last year inevitably caused a sudden contraction of the market in the semiconductor industry. However, growth is expected to continue over the medium to long term, due to increasing advancement of PCs and portable equipment, expanding markets led by developing countries, and new uses for semiconductors.
On the other hand, however, competition for survival is expected to further intensify on a global basis. Product cycles will accelerate more than ever due to rapidly advancing technological innovation. It will be necessary to establish flexible development and production systems
to manufacture at low cost in order to keep up with constantly changing market needs.
Faced with these industry conditions, the Shinko Group is committed to pursuing reforms based on our thoroughly “genba-shugi” (work site-oriented) philosophy at all stages of the manufacturing process,
from development to design, manufacturing, and shipping. In addition to pursuing further rationalization and productivity improvements in all departments, the Group will continue working to meet customer needs as quickly as possible, making best use of the technological expertise we have accumulated since our founding. We will also continue to pursue the development and commercial production of clearly differentiated products to improve our competitiveness and secure profits.
The Shinko Group was significantly affected by the drastic inventory adjustments accompanying the fall in demand for semiconductors. As a result, consolidated net sales for the period under review were 140,510 million yen (down 34.6% year on year). We promptly responded to the dramatic fall-off in orders by such means as implementing cost-cutting measures in all departments and cutting investment, as well as reducing inventories and improving productivity through our production reforms. However, a dramatic fall-off in production and continually falling prices for our products, combined with the effects of a strong yen relative to the dollar, resulted in a consolidated recurring loss for the period of 6,961 million yen and a net loss of 6,042 million yen.
In the semiconductor industry, end use demand for electrical / electronic devices, automobiles, and other products that incorporate semiconductors is expected to remain depressed and capacity utilization is expected to remain low due to surplus supply capacity. It is expected to be some time yet before we see a real recovery. In addition, intensifying competition among companies and the shift in demand to low-cost products are expected to put even greater downward pressure on product prices, and stagnation in market conditions is widely expected to continue in the long term.
The Shinko Group intends to respond to the current economic difficulties by continuing the thorough implementation of various emergency measures and working to optimize management resources and improve profitability. In addition, as a leader in semiconductor packages we intend to further develop and optimize the possibilities of the semiconductor packaging technology we have accumulated since our founding, to bring to market new products meeting the needs of our customers. We are also committed to overcoming the difficulties of the fiercely competitive semiconductor market to achieve “Progress without Limits,” by redoubling our efforts to achieve production reforms based on the “genba-shugi” principle. We will work as a team to create a manufacturing environment that ensures that quality is built into our products and to rebuild our profit structure.
June 2009
Mamoru Kuroiwa
President