Slide 1: FY2008 Advanced Service Business Outlook
May 29, 2008 ＦＹ2008 Advanced Service Business Outlook
Slide 2: Agenda
１ FY2007 Results ２ FY2008 Outlook ３ Advanced service business ４ Other businesses ５ Summary 2
Slide 3: Topics of FY2007
Topics of FY2007 Consecutive profit increase for 4 years by improving the product mix Semiconductor design business increased by 15% with strong design software and tester Expanding embedded software helped the electronic component business to keep the same profit level Innotech financial structure
Slide 4: FY2007 Results
FY2007 Results 〔mil. yen〕 Sanei IT Overseas Consolidated Innotech Change* Hytechs ACCESS Sales N e t S a l e s 37,481 3,744 2,397 14,800 52,836 △9% Cost of Goods Sold 31,101 2,888 1,480 14,365 44,272 △11% Gross Profit 6,380 856 917 435 8,564 3% S G A 4,000 419 515 164 5,232 4% Operating Pr ofit 2,38
Slide 5: Segment Comparison
Segment Comparison 〔mil. yen〕 FY2006 FY2007 Change Net Sales 57,959 52,836 △9% Semiconductor Design 14,083 16,166 15% Electronic Components 43,876 36,670 △16% Cost of Goods Sold 49,640 44,272 △11% Gross Profit 8,319 8,564 3% Semiconductor Design 4,756 5,125 8% Electronic Components 3,563 3,439 △4% S
Slide 6: Sales by business segment
Sales by business segment 〔mil. yen〕 FY2006 FY2007 Change* Comments Semiconductor Design 14,083 16,166 15% Sales increase due to larger Cadence 6,637 7,877 19% customer base Semiconductor Testers 3,895 4,545 17% Solid sales to Toshiba/SANDISK Design Consignment 3,551 3,744 5% Strong demand for LSI d
Slide 7: Improvement of profitability
Improvement of profitability Cost coverage ratio Ordinary profit rate 6.1% 5.3% 103.5% 4.5% 3.9% 81.2% 73.5% 63.2% 62.9% -1.5% FY2003 FY2004 FY2005 FY2006 FY2007 Cost Coverage Ratio ＝（SGA) / (Gross Profit on Sales + Financial Balance) 7
Slide 8: Improvement of financial balance
Improvement of financial balance （bil. yen） 20 Liability with interest 10 Operating CF 0 FY2004 FY2005 FY2006 FY2007 -10 Operating CF 6 bil. yen Liability with interest decreased by 5.2 bil. yen Paid Interest Decreased by 77Mil.yen 8
Slide 9: Agenda: FY2008 Prospects
１ FY2007 Results ２ FY2008 Prospects ３ Advanced service business ４ Other businesses ５ Summary 9
Slide 10: FY2008 Outlook
FY2008 Outlook Aiming to achieve five consecutive years of profit increase by pursuing the “Advanced Service” business Expecting a solid growth for the semiconductor design business The profitability of electronic components will improve due to embedded software expansion 26% of the dividend payout
Slide 11: FY2008 Business Forecast
FY2008 Business Forecast 〔Mil. yen〕 IT Overseas Innotech Sanei Hytechs Consolidated ACCESS Sales 1H FY08 1H FY08 1H FY08 1H FY08 1H FY08 N e t S a l e s 18,000 41,000 1,900 3,800 1,350 2,800 3,300 8,000 22,000 48,000 C o s t o f 15,140 34,500 1,430 2,810 840 1,700 3,210 7,800 18,080 39,200 G oods So
Slide 12: Forecast by segment
Forecast by segment 〔mil. yen〕 FY2007 FY2008 Change Net Sales 52,836 48,000 △9% Semiconductor Design 18,927 20,000 6% Electronic Components 33,909 28,000 △17% Cost of Goods Sold 44,272 39,200 △11% Gross Profit 8,564 8,800 3% Semiconductor Design 5,517 6,000 9% Electronic Components 3,047 2,800 △8% S
Slide 13: Sales prospects by business
Sales prospects by business 〔mil. yen〕 FY2007 FY2008 Change Semiconductor Design 18,927 20,000 6% Cadence and Others (*1) 7,984 8,500 6% Semiconductor Testers and Others (*1) 5,497 6,200 13% ASIC Design/Sales (*2) 1,702 1,500 △12% Design Consignment 3,744 3,800 1% （Sanei Hytechs） Electronic Componen
Slide 14: Improving profitability
Improving profitability “Revival Plan” “Multi-layer Focus on Pursuing Growth” Profitable Advanced Strategy business areas services （％） （％） 20 Gross margin ratio 10 (left axis) Operating margin ratio 15 (right axis) 10 5 Net profit ratio (right axis) 5 0 0 FY2004 FY2005 FY2006 FY2007 FY2008 (Fct) 14
Slide 15: Dynamics of advanced service business
Dynamics of advanced service business Advanced service business Providing profound technical Advanced service business support to customers Providing profound technical support to customers Providing the optimal solution for each customer Sustainable Expandable Profitable Providing right solutions q
Slide 16: Examples of advanced service business
Examples of advanced service business IT ACCESS Sanei Hytechs Sustainable Sustainable ･Success projects lead to next one ･Success cases lead to continuous orders Expandable Expandable ･Digital TVs, multi-function printers ･Expansion of customer base through Multiple successes with domestic colla
Slide 17: Profit increase by Advanced Services
Profit increase by Advanced Services （bil. yen） 10 Gross profit on Sales 5 72% 51% 0 FY2004 FY2005 FY2006 FY2007 FY2008 （Fct） 17
Slide 18: Agenda: Advanced service business
１ FY2007 Results ２ FY2008 Prospects ３ Advanced service business ４ Other Businesses ５ Summary 18
Slide 19: Expansion of New customers and the license models
Cadence Expansion of New customers and the license models （bil. yen） 9 400 Sales 8 Cumulative number of customers 7 350 6 316 306 300 5 288 4 268 250 3 244 companies eDA card License Multi-year license 200 Models TBL(Time Based License) One-time license and maintenance 150 FY2003 FY2004 FY2005 FY200
Slide 20: Customer Portfolio
Cadence Customer Portfolio ASIC/Design Electronic System Makers Others Services Components KME Tier 1 ROHM MITSUMI CANON DNP ALPS Sales over RICOH TOPPAN NJRC ￥100 mil. NSW TDK YOKOGAWA Tier 2 SANKEN Automotive CASIO Communication TOKO OLYMPUS MEITEC Fabless over DENSO FUJIFILM ￥20 mil. OMRON MEGA C
Slide 21: Optimized Test System
Semiconductor Testers Optimized Test System Various cost reduction benefits Space reduction Zero footprint Low price *70% less size compared to ATE *50% less compared to ATE Less energy consumption *35% reduction compared to ATE DUT measurement Flexibility Supporting more than 1000DUT *Higher throug
Slide 22: Growth by Innovation
Semiconductor Testers Growth by Innovation [bil. yen] 5 Strong business with Toshiba・SANDISK Sales 4 3 2 1 0 FY2005 FY2006 FY2007 FY2008 (Fct) 22
Slide 23: Sales trend of Sanei Hytechs
Sansei Hytechs （LSI Design） Sales trend of Sanei Hytechs [bil. yen] 4 20% 3 15% 2 10% 1 5% 0 0% FY2004 FY2005 FY2006 FY2007 FY2008(Fct) Sales Operating margin Leveraging its analog design expertise Value-added by mixed-signal design skills and its proprietary IP portfolio 23
Slide 24: Innotech Sales Division
ASIC consignment Strengthening the sales force Advanced Service Innotech ＦＡ Sales Division MFP Medical Faraday eASIC PC peripherals Communication Digital consumer Sanei Hytechs Strengthening the sales force and focusing on cultivating new customers 24
Slide 25: IT ACCESS: One-stop solution
IT ACCESS （Embedded software development） One-stop solution 1992 Real-time OS 1998 Cutting-edge browser in the digital consumer market 1999 Japanese input system New engineering company in the embedded field 2000 High-speed security system 2002 Light-weight data management 2005 High quality GUI with
Slide 26: IT ACCESS: Seizing current market needs
IT ACCESS （Embedded software development） Seizing current market needs Sales [bil. yen] 3 Software license Design consignment Broadcasting GPS Others 10% 8% 2 Industrial Digital TV 26% 27% ＭＦＰ 1 29% FY2007 sales by application 0 FY2005 FY2006 FY2007 FY2008 （Fct） 26
Slide 27: Agenda: Other Businesses
１ FY2007 Results ２ FY2008 Prospects ３ Advanced service business ４ Other Businesses ５ Summary 27
Slide 28: HDD: Developing new businesses
HDD Developing new businesses Newly growing markets Empowering engineering support Sales [￥bil.] Focus on high-capacity applications Spot orders Overseas Starting SSD business 30 CE OA and others 20 10 0 FY2004 FY2005 FY2006 FY2007 FY2008 (Fct) 28
Slide 29: Electronic Devices: Network Convergence of wired and wireless
Electronic Devices Network Convergence of wired and wireless HDMI 8 [￥bil.] Sales Home Network 6 ((((((((((( Network Convergence of wired and wireless 4 Wireless Wired Expansion of HDMI-incorporated applications HDMI FY2006 FY2007 FY2008 (Fct) 29
Slide 30: Agenda: Summary
１ FY2007 Results ２ FY2008 Prospects ３ Advanced service business ４ Other Businesses ５ Summary 30
Slide 31: Expected consecutive profit growth
Expected consecutive profit growth for 5 years （bil. yen） 4 Ordinary profit Net profit 3 2 1 0 FY2008 (Fct) FY1987 FY1988 FY1989 FY1990 FY1991 FY1992 FY1993 FY1994 FY1995 FY1996 FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 -1 -2 “Revival Plan” started Cumulative -3 Or
Slide 32: Why we are resilient?
Why we are resilient ? Deep penetration into our customers Involving with internationally competitive product-lines and customers Solid business base by providing development support for cutting-edge products Maintaining competitive engineering skills scarce in a market place Diversifying
Slide 33: Note for Forward Looking Statements
Note for Forward Looking Statements The information provided in this presentation includes forward looking statements based on current expectations, forecasts or beliefs. Such forward looking statements include a number of preliminary assumptions about future events that are subject to factors and u