Seiko Epson, the Japanese company, will be reducing their exposure to mobile phones in their chip and display businesses. Heavy competition in the mobile phone business has driven prices down significantly for these components, which has caused the company to suffer a loss in those two divisions.
“Reducing our reliance on the mobile phone market will be a big point for us as we change our product portfolio over the medium term,” said Seiko Epson President Seiji Hanaoka.
The electronics services division of the company, which includes semiconductors, LCD panels and quartz components, is expected to show a loss of $84 million by the time the fiscal year ends in March. That is the main contributor to the 60% decrease in overall corporate net profits that is being predicted.
This move has become necessary because of the distribution of their products. Two-thirds of the LCDs and half of the semiconductors that the company makes go to outside mobile phone producers, making them very vulnerable to downward price pressure. To overcome this situation, they will look to diversify the use of their screens into other applications such as car navigation systems, increase the use of their own chips in house for their printers and increase sales of chips to other semiconductor companies on a contract basis.