"We are taking measures based on the outlook that fiscal 2005 will show little growth at a growth rate of around zero percent," said Koichi Nagasawa, chairman and CEO of Renesas, Japan's top semiconductor company. Nagasawa also said the growth rate could even reach into negative territory next year.

Renesas' forecast coincides with the World Semiconductor Trade Statistics group's fall forecast, which predicted a faster decline for the IC market than expected in its spring forecast. The Renesas internal outlook is more severe.

The company reported sales of ¥514 billion (about $4.8 billion) and ¥36 billion (about $340 million) in operating profit in the first half of fiscal 2004 ending in September. "The business was better than expected at the beginning of the term. But the business is decelerating and it remains unclear whether we can achieve the yearly sales target of ¥1.09 trillion (about $10.3 billion)," said Satoru Ito, president and COO of Renesas.

There is a possibility that Renasas could revise its sales target downward, but it hopes to generate ¥60 billion (about $566 million) in operating profits, its original target for the quarter, Ito said.

While Renesas said the industry slowdown will begin earlier than expected, it doesn't expect to be as severe as the 2001 declines. "We'll see substantial deceleration in the first half of 2005 but a recovery in the second half," Nagasawa predicted.

Since company revenues depend heavily on mobile phone chips, which account for about 30 percent of its total sales, the pace of the mobile phone market will determine how quickly the company recovers from the expected downturn.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved