Turning the listing proceeds into semiconductor and FPD capacity (2004)

Entrusting ¥21.4 billion to an industry that swings

What was settled in 2004 was not how to raise money but whose capital-spending cycle to entrust it to. The $197.9M (¥21bn) or so raised in four share issues went neither into the cash balance nor into dividends; it changed shape into the FPD equipment business taken over from Fujitsu VLSI, an assembly company in Taiwan, and the Aichi plant at Kasugai. Since equipment orders are capped by assembly floor space and headcount, there was a logic to holding capacity in advance. The dividing line, it seems, lay in whose capital spending that capacity had been built to match.

The same facilities came to mean opposite things depending on which way demand ran. Consolidated sales grew from $1.5B (¥158bn) in the year to June 2004 to $2.3B (¥241bn) in the year to June 2008, and for as long as panel and memory investment continued, the Aichi plant and the Taiwanese assembly base were the capacity needed to take every order. Those same assets, in a year when investment stopped, remained as fixed cost with nothing to run. The net loss for the year ended June 2012 reached $626.4M (¥50bn). Between the assets that made the growth and the assets that made the loss there is no difference at all. Capital converted into equipment, one might say, comes back only on the cycle of the industry it was converted for.