Net sales of electronic devices increased 15.8% over the previous year. Sales of semiconductor products for digital audio-visual equipment, mobile phones, and automobiles were strong in Japan, Asia, and Europe. In addition, market demand for flat screen TVs has taken off, sparking very strong sales growth in plasma display panels and other displays.
The electronic devices segment moved very close to break-even, posting an operating loss of 1.2 billion yen. Aided by a market recovery and the effects of the restructuring initiatives undertaken last fiscal year, the segment achieved profitability in the second quarter. Although first quarter results were adversely affected by the disruption of the Iwate production facility caused by the earthquake off the coast of Miyagi Prefecture in May, the impact was largely offset by higher sales in the second quarter.
In addition to good results in the plasma displays business, which benefited from a strong market, improved yield rate and other cost efficiencies, the components business, which had perennially lost money, is now profitable as a result of cost reductions achieved through productivity reforms.
To achieve greater efficiencies and competitiveness, Fujitsu and U.S.-based Advanced Micro Devices, Inc. (AMD) have expanded their joint venture in flash memory production to integrate their respective marketing and product development operations. Accordingly, on June 30 the two companies transferred their flash memory operations into a newly-established joint venture company, FASL LLC, which is 40% owned by Fujitsu and 60% owned by AMD. Fujitsu will continue to handle sales as a distributor for the joint venture. The new venture's profitability relating to development and manufacturing will be reflected in Fujitsu's financial results according to equity-method accounting treatment.
Demand for flash memory during the period was extraordinarily strong, particularly for the mobile phone market. But it was only at the end of the period that prices finally stopped falling, however, so the profitability of the business continued to face very severe conditions.
