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Fujitsu Semi strengthened by new business focus

Posted: 11 Mar 2011 ?? ?Print Version ?Bookmark and Share

Keywords:fab-lite strategy? ASICs? image ASSPs? Fujitsu Semi strategies?

Struggling to compete in the global IC arena, Japanese semiconductor companies have constantly been challenged to find ways to improve their profitability as they position themselves in high-growth emerging markets. Fujitsu Semiconductor is one company that has stepped up to the plate, announcing a "fab-lite" strategy in August 2009, strategically selecting market segments it wants to serve, and improving production facilities located close to its customers. Its efforts have certainly been rewarded. Reporting losses since it was spun out of Fujitsu in 2008, the chipmaker is now back in the black and set to announce an operating profit for fiscal year 2010.

Haruki Okada, president of Fujitsu Semiconductor, outlines the company's key success strategies in an exclusive interview with Yoichiro Hata, editor-in-chief of EE Times Japan.

EE Times Japan: Tell us how you plan to create competitive advantages.

Haruki Okada

Haruki Okada, president of Fujitsu Semiconductor

Okada: I believe the value of a company is determined first by how profitable that company is, then by whether the company can maintain profit. I'm proud to say Fujitsu Semiconductor has been profitable for five consecutive quarters. With this assurance of profit, we can respond to market changes much more flexibly and effectively. Engineers are much more motivated, too.

Narrowing one's business focus is critical for generating profit. In the semiconductor business, we can no longer expect a return on investment, even when we invest a lot of money in advanced process technologies. Furthermore, we tend to have just too many product lineswhich is true for most Japanese chip vendors today. Unless we solve these two issues, we can't compete.

EETJ: So, you're opting for a fabless strategy, which doesn't require a lot of capital expenditures.

Okada: No. We have chosen a 'fab-lite' option. If we totally leave manufacturing to someone else, we could lose our skills to develop advanced products.

We plan to co-develop 28nm or 45nm processes with TSMC. Fourteen Fujitsu Semiconductor engineers are already in Taiwan working at a TSMC facility. We don't see this as a manufacturing consignment but as a joint development on equal footing.

Meanwhile, we continue to manufacture LSIs using a 45nm process technology in our own fabs. People often see the fab-lite strategy as simply a measure to let someone else handle leading-edge process technologies. I disagree. A key to success in pursuing fab-lite is how one can improve the efficiency of existing manufacturing facilities. We have been restructuring our own factories, while driving the solution business based on standard products, such as MCUs.

Slimming down product lines
EETJ: How did you solve the issue of too many product lines?

Okada: We've narrowed our focus to four areas: high-performance ASICs; image ASSPs; automotive; and mobile/ecology. All four have equal weight, but high-performance ASIC is clearly our flagship operation.

It generates 40 percent of company revenue. A case in point is the processor adopted by Japan's government-funded supercomputer project called "K Computer." (K Computer is a play on the Japanese word "kei," which means 10 quadrillion or 10,000 trillion.) Designed to be the world's fastest computer, K Computer, in development by a joint venture between Fujitsu and Japan's Institute of Physical and Chemical Research, will be able to handle 10,000 trillion calculations per second when it is completed in 2012.

The processor is a highly advanced product with high reliability, designed to achieve both low-power consumption and high performance. We will produce it using the existing 45nm process technologies in our fab. Other products we are manufacturing with the same technologies include ASICs for network equipment and servers.

Another competitive product we offer is an image ASSP called 'Milbeaut.' Its major applications are digital cameras and cellphones. Milbeaut is already popular in the Japanese domestic market, but now it's expanding globally. Leading smartphone vendors in Korea, Europe and the U.S. have already adopted Milbeaut or are in the process of designing it in.

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