IC Packages/IC Lead Frames
President and Representative Director
I sincerely thank everyone for the exceptional support given to us.
I would like to express my sincerest sympathy to those affected by COVID-19. I would also like to express my deep gratitude to everyone who is working to prevent the spread of the virus.
Expanding use of big data, artificial intelligence (AI), and other advanced technologies, supported by the practical implementation of the fifth-generation mobile communications systems (5G), is changing the structure of the economy and society. They have the potential to create innovation on a different order of magnitude than ever before. It is expected that the progress of semiconductors will continue as a key technology for achieving this potential. Moreover, the markets for semiconductors are expected to continue expanding in the future, including the automotive market, in which technological development such as autonomous driving is accelerating, the market for applications related to the Internet of Things (IoT), which is anticipated to expand rapidly, and the medical field that supports people’s health, as well as in other areas.
The Shinko Group is committed to developing highly competitive products, based on our interconnection technology that brings the marvelous features and benefits of semiconductor devices into people’s lives. We will strive to provide products and services with high value for customers and to support their success. Through these initiatives, we will pursue our own development and growth. In addition, we will focus on cash flow and on building a solid management foundation able to continuously generate profits.
Through the practice of the “SHINKO Way,” which embodies the Shinko Group corporate philosophy and policies, we are committed to developing business that we contribute to the creation of a prosperous society while pursuing harmony with stakeholders.
During the fiscal year under review, there was a sense that semiconductor demand had bottomed out in the second half of the year. Nevertheless, due to factors including stagnation in the smartphone market where demand for memory was significantly lower as well as the impact of inventory adjustments, conditions remained challenging in the semiconductor market.
In this environment, the Shinko Group focused on allocating management resources in growth markets, including the decision to make additional capital investments beginning in fiscal year 2018 with the aim of strengthening production systems for next-generation flip-chip type packages and the sequential construction of production lines. Under difficult circumstances caused by deteriorating market conditions, the Shinko Group actively engaged in sales activities and focused on securing earnings. As a result, revenue from flip-chip type packages and heat spreaders increased. Meanwhile, due to the impact of restrained investment in the first half of the fiscal year, sales of ceramic electro static chucks decreased while revenue from plastic BGA substrates and lead frames declined. As a result of these factors, consolidated net sales for the period under review were 148,332 million yen (up 4.3% year on year). Although profit and loss took an upturn with improved profitability driven by increased revenue from the second half of the fiscal year, sales of ceramic electro static chucks and other products declined significantly in the first half of the fiscal year; the cost of setting up the production lines for next-generation flip-chip type packages increased; and the yen exchange rate maintained a high level. Such factors resulted in consolidated recurring income of 4,813 million yen (down 37.1% year on year) and profit attributable to owners of the parent of 2,690 million yen (up 6.5% year on year).
Regarding the future of the semiconductor industry, there are concerns that the deterioration of the real economy due to the prolonged impact of COVID-19 will have serious consequences, including repercussions for semiconductor demand for automobiles and other products. On the other hand, demand for semiconductors is anticipated to increase significantly over the medium to long term for a wide range of applications. These applications include servers, which are expected to see higher demand due to the launch of 5G and more use of IoT and AI, as well as in the automotive field, where technological development is accelerating, and for mobile devices, a market that is projected to grow due to an upsurge in teleworking. Nonetheless, it is expected that the operating climate will remain challenging, as it will require setting up development and production systems that can respond quickly and flexibly to increasingly sophisticated market needs.
Given this environment, in pursuit of future development the Shinko Group will strengthen its efforts to improve productivity and reduce costs, strive to optimize management resources, and focus on the allocation of management resources in markets with high growth potential. For capital investments to strengthen the production systems for next-generation flip-chip type packages, we will sequentially begin operations of production lines, focusing on capturing growing demand for high-performance semiconductors, such as those for data centers. We will also make every effort to increase sales of products that contribute to boosting the performance of semiconductors including the expansion of next-generation plastic BGA substrates sales for which we installed production lines at our Arai Plant in Myoko City, Niigata Prefecture, and strengthening the production systems for heat spreaders, which are expected to see increased orders for CPUs for servers and other hardware.
To achieve “Progress without Limits,” the Shinko Group will provide customers in semiconductor markets where continued growth is expected with high-value products and services offering solid value and rooted in customer needs for function, performance, cost, and quality.
President and Representative Director