April 4, 2007 – Fujitsu Ltd. is delaying a planned capacity expansion of 300mm/65nm production due to lackluster demand for chips in digital appliances and game consoles, according to Japanese wire reports.

A year ago the company had projected it would achieve 25,000 wafers/month output at its Mie facility by March 2008, and earlier this year the company ramped a second facility there. But now the company has pared down its expectations to about 18,000 wafers/month, and will slow future expansion as well, the papers note, citing slowdown for system chips despite a ramp of memory output.

The papers speculated that demand faced by Fujitsu’s foundry customers is to blame, since the high-end system chips are produced on a foundry basis. One suggested culprit: Sony, which has seen disappointing sales of game consoles.

Fujitsu already had lowered its revenue expectations for standard/advanced logic LSI sales by about 10%, to a flat-year-on-year 460 billion yen (US $3.87 billion) from 510 billion yen ($4.29 billion), due to production adjustments from customers primarily in digital audio/video and mobile phone areas. Shigeru Fujii, president of Jujitsu’s Electronic Devices Group, acknowledged that the company’s semiconductor operations lost money during the fiscal year ended in March, but the overall group (which also includes electronic components) turned a profit of 20 billion yen ($168.3 million) on 760 billion yen in sales ($6.40 billion) — a 40% slide in annual profits on 7% higher sales, and lower than early projections of 30 billion yen ($252.5 million) profits on sales of 810 billion yen ($6.82 billion).