Industrial Devices Company Business Strategy · Power & optical devices BU Electronic components...

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Copyright (C) 2012 Panasonic Corporation All Rights Reserved.

Panasonic CorporationIndustrial Devices Company

President Toshiaki Kobayashi

Industrial Devices CompanyBusiness Strategy

May 23, 2012

Panasonic IR Day 2012

Notes: 1. This is an English translation from the original presentation in Japanese.

2. In this presentation, “fiscal 2012” or “FY 2012” refers to the yearended March 31, 2012. In addition, “fiscal 2013” or “FY 2013”refers to the year ending March 31, 2013.

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1. Industrial Devices Company Profile

2. FY 2012 Performance Summary

3. FY 2013 Business Strategy

4. Towards Future Growth





ContentsContents

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ContentsContents

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Company Name Industrial Devices Company (ID)

President Toshiaki Kobayashi

Business Lineup

Development, manufacture, and sale of electronic components, electronic materials, semiconductors,and optical devices

Headquarter Location 1006, Oaza Kadoma, Kadoma-shi, Osaka

Affiliated Companies Japan: 23 Overseas: 75

Sales

Electronic components and materials

48%

Semiconductors17%

Optical devices11%

Other business domain products24%

FY121.4 tril. yen

AVC Company

SNC Company

Automotive Systems

P Healthcare

HA Company

Lighting Company

PES

SC Company

PED

Energy Company

PFSC

Panasonic Welding Systems Co., Ltd.

Others

Panahome

SANYO Electric Co., Ltd.

Panasonic Electric Works Co., Ltd.

Former organization Industrial Devices Company

Industrial Devices Company ProfileIndustrial Devices Company Profile

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Business UnitBusiness Group

Ind

ustrial D

evices Co

mp

any

Flagship Products

Capacitor BU

Printed circuit board BU

Circuit components BU

Electromechanical components BU

Custom devices BU

Electronic materials BU

Automation controls BU

System LSI BUApplication specific standard products BU

Image sensor BU

Power & optical devices BU

Electronic com

ponentsand m

aterials

Sem

iconductors

Panasonic Precision Devices Co., Ltd.

SANYO Electric Co., Ltd.Optical pickup BU

Connectors, Relays

System LSIs

Microcontroller, ICs, Cameras modules

CCDs, MOS sensors

Lasers, LEDs, Power semiconductors

Optical disc drives, Ink-jets

Optical pickup units

Conductive capacitors (aluminum, tantalum) film capacitors

High-density PWBs, Build-up PWBs

Angular rate sensors, SAW, Resistors

Light touch switches, Automotive switches

Power supplies, Speakers

SC encapsulation materials, Circuit board materials

Compressors, IPS liquid crystal panels, Motors

Other business domain products

Industrial Devices Company Flagship ProductsIndustrial Devices Company Flagship Products

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●Provide customers with devices which cancontribute to improve their values

Global No. 1 Device CompanyObjective

ComfortEcology

Feeling safeSafety

Ease usageConvenience

Customers’perspective

●Top-market share group products; sales ratio > 70%

● Sustainable growth in sales and profit with double-digit percentage profit ratio

Business perspective

Industrial Devices Company Management VisionIndustrial Devices Company Management Vision

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ContentsContents

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Sales (Unit: bil. yen)◇ Decreased sales compared with last year due to slump

in finished goods market and disruption in supply chain ◇ Increased sales for growing markets such as mobile

(smartphone / tablet PC) and eco cars

[Main products growing in sales (y-y)]

Film capacitors for HEVs/EVs

High thermal conductive sheets

（PGS®)

Angular rate sensors

High-density PWBs（ALIVH

®）

Automotive speakers

High-heat-resistancemulti-layer

circuit board materials（MEGTRON

®）

HEV/EV relays MOS image sensors 12.7"SMDs

1,404.6(-16% y-y)

FY2011 FY2012

Mo

bile

Au

tom

otive

ele

ctronics

Environm

entally conscious P

roducts

（vehicles

and infrastructure)

App

liance

s

Indu

strial

AV

Fe

atu

re pho

ne

and

PC

rela

ted

1,671.0Changes in commercial

distribution (lithium-ion batteries)

FY 2012 Summary – SalesFY 2012 Summary – Sales

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9FY 2012 Overview – Operating ProfitFY 2012 Overview – Operating Profit

FY2011

Operating Profit (unit: bil yen)

-16.6(-1.2%)

69.9 (4.2%)

Restructuring in semiconductor business in FY 2012

Site integration

SystemLSI

Workforce reduction

・ Shifted to fabless– Impaired asset of

advanced sites・ ‘Selection and focus’

・ Integrated management in Hokuriku Plant・ Consolidated plant technology in Hokuriku

・ Downsized back office– Early retirement/transfer

=> FY 2013 benefit on profits: Approx. 35.0 bil. yen

FY2012

Impacts from

earthquake, flooding, etc.

Impact from

exchange rate

Price decline

Stream

lining

Fixed cost reduction, etc.

◇ Streamlining and fixed cost reduction failed to offset

negative impacts from earthquake, flooding, exchange rate,

price decline; and fell into loss

◇ Still in progress to establish strong management

structure for market fluctuations

(especially semiconductor business)

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4. Future Growth




4. Future Growth

ContentsContents

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◇ Sluggish overall in industry, despite prospect of recovery from earthquake and flooding◇ Significant growth in mobile and environmentally conscious products

(vehicles and infrastructure) markets

Forecast of demands for finished goods (vs FY2012)

Value

Total +1%

Mobile (Smartphone/Tablet PC) +23%

Automotive electronics +3%

Appliances +1%

Industrial +1%

AV -1%

Feature phone and PC related -3%

Unit Eco car (including idling stop) +48%

Environmentally conscious infrastructure(with solar photovoltaic + wind power) +13%

(on basis of power output)

FY 2013 Market TrendFY 2013 Market Trend

12FY 2013 Business PlanFY 2013 Business Plan

◇ Continuously grow in expanding key sectors (Mobile/Environment)◇ Further streamlining and increase sales besides having restructuring benefit

for V-shaped recovery in profitability

FY2013

Sales （bil. yen） Operating Profit （bil. yen）

FY2012 FY2013

▲16.6(▲1.2%)

40.0(2.8%)

Sales Increase

Exchange R

ate effect

Price D

ecline

Stream

lining

Fixed C

ost Reduction

Product M

ix Im

provement

Key Sector Expansion

Restructuring benefit in semiconductor business

Growth Rate

1,404.61,420.0

FY2012

+1%

130.0

+40%

180.0180.0Key SectorsKey Sectors

Mobile

Autom

otive Electronics

Appliances

AV

Environm

entally conscious products(V

ehicles and Infrastructure)

Feature phone/P

C related

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13FY 2013 Key InitiativesFY 2013 Key Initiatives

Polish

individual business

Create new values by combining our highly competitive products

Electronic components and materials business

Semiconductor business

Optics business

Industrial Industrial DeviceDevicess CompanyCompany

Shift from Shift from

AV and system AV and system LSIsLSIs

Lead Lead market market

toward thin modeltoward thin model

Return into blackReturn into black

ExExppanand key sectors: Mobile, d key sectors: Mobile, environmentenvironmentally conscious products ally conscious products (vehi(vehicles and infrastructure) cles and infrastructure)

CreatCreate synergies from sales, technology and production engineeringe synergies from sales, technology and production engineering

Expand withExpand with

new new businessbusiness

Make profit by expandingMake profit by expanding

overseas salesoverseas sales

CreatCreatee and expanand expandd pillar businesspillar businessIncrease profitability Increase profitability

14Semiconductor Business: Shift from AV and System LSIsSemiconductor Business: Shift from AV and System LSIs

Expand sensor, power and solution businesses, focusing on mobile devices/environmentally conscious products/automotive electronics

Main InitiativesMain Initiatives

・ Power Power devicesdevices- T-MOS: Expand power supplies for mobile devices andservers with low energy loss & compact products

- GaN*: Enter into solar power conditioner market

・ Image sensorsImage sensors

Sales Plan Sales Plan

・ Motion sensor control ICMotion sensor control ICss- Expand into smartphone market with compact and low energy-consumption design

MOS: Enter mobile market with thin modelCCD: Increase market share in medical and monitoring

products through high-sensitivity technology

FY2012 FY2013

260 bil. yen level+6% y-y

Autom

otive electronics

Environm

entally conscious products

Appliances

Mobile

Industrial, etc. ・ MCP*MCP*--DC/DC DC/DC - Increase sales shifting to MCP with T-MOS*

Sensor

Pow

er

・ Inverter microInverter microcontrollerscontrollers- Expand into Chinese appliance market by

strengthening solutions business

*T-MOS: Trench gate-type MOS-FET *GaN: Gallium nitride

・ Graphics processorGraphics processorss- Expand sales by linking image sensors and

automotive cameras

* MCP: Multi Chip Package AV

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15

0

100

200

300

FY2011 FY2012 FY2013 FY2014 FY2015

Optical Devices Business: Lead Market toward Thin Model Optical Devices Business: Lead Market toward Thin Model

Panasonic leading thin-

model technology

SANYOmassive

production volume

Maximize Panasonic/SANYO strengths to develop superior products => Capture new high-volume market

Introduce new products into 9.5mm market to lead market toward thin models

(H/H & 12.7mm)

FY2012 FY2013 SANYO share Current

high-volume market

Demand of optical pickup for DVD-Rewritable drivesDemand of optical pickup for DVD-Rewritable drives

(9.5mm)

Newhigh-volume

market

45%10%

64%

SANYO

Panasonic

48% 52%

* H/H (Half Height): for desktop PCs

Superior Products IntroductionSuperior Products Introduction

H/H※＆12.7㎜

9.59.5㎜㎜

(mil. units)

16Key Sector (1): Mobile Market Key Sector (1): Mobile Market

Achieve +38% (y-y) sales growth for mobile sector by leading of the trend of Downsizing and Multi-functionalization

MOS image sensors

ALIVH® Pyrolytic Graphite Sheets (PGSs)

Noise filters

Light touch switches

Capacitive touch panels

Narrow pitch connectors

Motion sensor control ICs

3-axis motion sensors

Mobile speakers

Optical (anti-reflection) film

Switch to thin and multifunction devices

⇒ Improve high-density implementation and low height/miniaturization technology

TopTop--market share group market share group productsproducts

LEDs for camera flash

Power supplies

I/O

Communications-related

Sensors

Noisemeasures

Heat measures

PWB

Connectors

Flat chip resistor

Future Future pillar pillar productsproducts

Products newly Products newly launchedlaunched

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17-Mobile Market- High-density Multi-layer PWB (ALIVH®)-Mobile Market- High-density Multi-layer PWB (ALIVH®)

Maximize ALIVH® technology for growing Any-Layer demand with shifting to high functionality

Capture mobile sector growth

Sales PlanSales Plan InitiativesInitiatives

◇ Newly launch Taiwan #2 Plant and production site in Vietnam

Strengthen overseas production structure

FY2012 FY2013

・Business scale: 25 bil. yen+ (+30% y-y)

・Market Share: 20%** As Any Layer PWB for smartphones

Overseas production ratio: 26% (FY2012) → 55% (FY2013)

◇ Technology licensing to overseas/domestic HDI PWBmakers

Create alliance through licensee expansion

Expand sales maximizing our superior*1 in HDI*2 PWB *1 Environmental compatibility / lead time / productivityFY2013

*2 HDI: High Density Interconnect

18-Mobile Market- MOS Image Sensors-Mobile Market- MOS Image Sensors

◇Development of proprietary sensor structure*

New MOS image sensor: SmartFSITM

・ Industry’s highest-class sensitivity・ Uniform color performance up through

periphery in thinner camera

30% thinner than back-side illuminated structure(camera module comparison)

Newly enter into mobile market

Sales PlanSales Plan

FY2012 FY2013

Achieved to have 30% thinner products (vs previous models) with growing demand for smaller finished devices

InitiativesInitiatives

・ Business scale: 15 bil. yen+ (+50% y-y)

・ Newly enter into market for smartphones

FY2013

* Improved front-side illuminated structure

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19Key Sector (2): Environmental MarketKey Sector (2): Environmental Market

Apply core competence in eco cars into environmental infrastructureGrow +45% in sales in environmentally conscious product field (cars/infrastructure) （y-y）

Environmental Environmental InfrastructureInfrastructure

Eco CarsEco Cars

PV power conditioner relays

Steady develop in transition to electronicsNew demand for safety and comfort

⇒Apply our strength inreliability

ZNR surge absorber

HMI display LSIs

Film capacitor forHEVs/EVs

▲

Power choke coils

EnvironmentallyConsciousness

SafetySecurity

ComfortConvenience

Automotive switches

In-vehicle camera module

Angular rate sensor

LED for in-vehicle DRL*

Future pillar productsFuture pillar products

Products newly launchedProducts newly launched

GaN power devices

T-MOS

Infrared array sensor Grid-EYE

Smart Meter

Photovoltaicpower generation

CapacitorSystem

Powerelectronics

SensorNetwork

LED Lighting

Apply high reliability technology cultivated in eco car business

Smart Meter relays

Eco Power meter

*DRL:Day Running LightANC

HEV/EV relays

ANC :Active Noise Control

Expanding renewable energymarket (solar/wind power)

▲

TopTop--market share group market share group productsproducts

20-Environmentally Conscious Product Market- HEV/EV Film Capacitors-Environmentally Conscious Product Market- HEV/EV Film Capacitors

Capture demand in US, EU, and emerging countries with high reliability cultivated in working with Japanese auto companies

Expand into new sectors (solar, railroad applications) supplied from China site

InitiativesInitiativesSales PlanSales Plan

FY2012 FY2013

・ Business scale: 10 bil. yen+ (+38% y-y)

・ Market Share: 85%◇ Apply product capabilities cultivated in working with

Japanese auto companies to US and EU autos / Tier 1*

◇ Build up the consistent production line from upstream to downstream processes (in China)

Expand sales at overseas & new business markets

Strengthen overseas production structure

* Primary suppliers

FY2013

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21-Environmentally Conscious Product Market- ECO RELAY-Environmentally Conscious Product Market- ECO RELAY

Sales PlanSales Plan InitiativesInitiatives

FY2012 FY2013

Build a pillar businesses of 10 billion yen sales in environmentally conscious products while maintaining top market share in eco car market

◇ Maintain No.1 position in functions and variety of products ・Expand into lithium-ion EVs・Sales development & promotion for new models

◇Thoroughly cover market for environmental infrastructure(photovoltaic power generation, smart meter)

・Launch equipment for photovoltaic use in FY2013

Capture global eco car market with ‘EV Relay’

Expand Energy Management Business

・Business Scale: 10 bil. yen+ (+45％ y-y)

・Market Share：75％*

FY2013

For HEVs/EVs

For EnergyManagement

*HEV/EV Relay Share

(FY2013)

22-Sales Synergy Creation- Global Sales Platform-Sales Synergy Creation- Global Sales Platform

Close to customers by reinforcing technology support/Take full advantage of PEW’s distributer channels on commoditized products

13,000 companies

8,000companies

2,000companies

17,000companies

DistributersDistributers

Number of Number of CustomersCustomers

EuropeEurope Asia Asia JapanJapan USUS

Direct sales channel(about 130 sites)

Distributer channel (about 600 companies)

Number of customers: appx. 40,000

Increase sales of commoditized products with advantage of sales channel for industrial sector

Global FAE groups supporting customers

26 Sites 17 Sites35 SitesSales/Direct SalesSales/Direct SalesSites Sites

Customers

49 Sites

North America(San Jose) JapanShanghai/

Taiwan Germany Singapore

FAE：Field Application Engineer

170 companies 15 companies300 companies 80 companies

FAE SitesFAE Sites

Greater ChinaGreater China

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4. For Future Growth




4. For Future Growth

ContentsContents

24For Future GrowthFor Future Growth

Energy ManagementTechnology

Electronic MaterialTechnology

Thin-film MEMS Technology

PWB mountTechnology

SemiconductorDevice Technology

Integration of Core Technologies

Integrate Panasonic’s technology asset and create new values

Solutions

ElectronicMaterials

Automation Control

Electronic Components

Semiconductors

Assembling

Optical Devices

Capture demand in new growing

fields

Strengthen individual products

ProcessesMaterialsValue-chain in device field

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25- Integrate Core Technology -

Expand into New Growing Field- Integrate Core Technology -

Expand into New Growing Field

Promote integration of core technology for key sectors

Key sectors

MobileEnvironmentally

conscious product (Automobile)

Environmentallyconscious product

(Infrastructure)

Value creation

Strengthen individual business

Capture demand in new growing fields

ALIVH®

Capacitive touch panels

Devices for vehicular monitoring sytems(B&C*/intrusion)

Next-generation high thermal conductivity resin PWB

Ultra-thin optical drives / optical pickup units

Gesture input devices

Vehicular combined sensors (angular rate +

acceleration)

Next-generation HMI* system

Power semiconductors(T-MOS, GaN, SiC*)

Photovoltaic inverters

Photoelectric composite PWB materials

Ultra-compact integrated power units

Ultra-low-energy consumption microcontroller

Conductive polymer capacitors

Data server power supplies

* Back and Corner

* Human Machine Interface

* SiC: Silicon carbide

26- Strengthen Individual Business -

Conductive Polymer Capacitors - Strengthen Individual Business -

Conductive Polymer Capacitors Mobile Sector

Core technology fusionCore technology fusion

Market trend

Strengthen pillar business through technological synergy

Technological synergy

Conductor material Conductor material technology technology

Conductive polymer Conductive polymer technology technology

LowLow--cost electrode cost electrode material technology material technology

Market share 57%Market share 57% ((FY2012FY2012) )

→→6060％％ ((FY2014FY2014) )

Application Market share

Tantalum Chip-typeUltra-thin PCs

Tablet PCsSmartphones

#1

Aluminum

Chip-type Ultra-thin PCs #1

Wind around-type

PCs #3

(Value)

Increase demand in high-performance conductive capacitor with growing number of finished devices and shifting to high functionality

■ Top market share in conductive capacitor market (57%)

Further expand into growing mobile market*

* Smartphones, tablet PCs, ultra-thin PCs

11年 12年 13年 14年

Conductive capacitor market (for communication devices and PCs)

+5%/year

◇ Smaller and thinner in product lineups ◇ Achieve high-reliability (longer product life)

FY2012 FY2013 FY2014 FY2015

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27- Capture Demand in New Growing Fields -

Data Server Power Supplies - Capture Demand in New Growing Fields -

Data Server Power Supplies Environmental Infrastructure Sector

Core technology fusion Core technology fusion

Technological synergy

Market trends

Enter into growing areas by integrating our highly competitive productsand core technology

Data server

◇ Demand for low-energy consumption in data servers with cloud computing expansion and increasing communication traffic capacity

Semiconductor device Semiconductor device technologytechnology

Power management technologyPower management technologyPWB mounting technology PWB mounting technology

◇ Ultra-compact, high-efficiency, high-reliability power supplies ・ Halve size/loss compared with competitors (FY2016) ・ Analytical support for heat measures; efficient design including semiconductors, PWBs, passive components; etc.

FYFY20120166 sales +10sales +10.0.0 bilbil. yen. yen

Enter into market of power supply solutions for

environmental infrastructure

Power supply component on each PWB⇒ Great demand for higher efficiency

Simulation technology

0

50

100

10年 15年 20年

+40%/year

Data communications volume forecast (domestic)

(Tbps)

CY2010 CY2015 CY2020 Source: METI

28Mid-term TargetMid-term Target

(billion yen)

180.0

FY2012 FY2013 FY2016

450.0

Average growth rate/ year

+37% FY2012→FY2016

130.0For Mobile

‘Top-Market Share Groups’ Groups

46%

50%

Non-Share-top Groups

70%

FY2012

FY2013

FY2016

Sales Target for Focused Business FieldsSales Target for Focused Business Fields Sales ratio of top market share group productsSales ratio of top market share group products

Environmentally conscious products(Cars/Infrastructure)

*Charts exclude other business domain products

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Disclaimer Regarding Forward-Looking StatementsThis presentation includes forward-looking statements (within the meaning of Section 27A of the U.S. Securities Act of 1933 and

Section 21E of the U.S. Securities Exchange Act of 1934) about Panasonic and its Group companies (the Panasonic Group). To the extent that statements in this presentation do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the Panasonic Group in light of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the Panasonic Group's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Panasonic undertakes no obligation to publicly update any forward-looking statements after the date of this presentation. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings with the U.S. Securities and Exchange Commission pursuant to the U.S. Securities Exchange Act of 1934 and its other filings.

The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan, China, and other Asian countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, the Chinese yuan, Asian currencies and other currencies in which the Panasonic Group operates businesses, or in which assets and liabilities of the Panasonic Group are denominated; the possibility of the Panasonic Group incurring additional costs of raising funds, because of changes in the fund raising environment; the ability of the Panasonic Group to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are highly competitive in terms of both price and technology; the possibility of not achieving expected results on the alliances or mergers and acquisitions including the business reorganization after the acquisition of all shares of Panasonic Electric Works Co., Ltd. and SANYO Electric Co., Ltd.; the ability of the Panasonic Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Panasonic Group to maintain competitive strength in many product and geographical areas; thepossibility of incurring expenses resulting from any defects in products or services of the Panasonic Group; the possibility that the Panasonic Group may face intellectual property infringement claims by third parties; current and potential, direct and indirect restrictions imposed by other countries over trade, manufacturing, labor and operations; fluctuations in market prices of securities and other assets in which the Panasonic Group has holdings or changes in valuation of long-lived assets, including property, plant and equipment and goodwill, deferred tax assets and uncertain tax positions; future changes or revisions to accounting policies or accounting rules; natural disasters including earthquakes, prevalence of infectious diseases throughout the world and other events that may negatively impact business activities of the Panasonic Group；as well as direct or indirect adverse effects of the Great East Japan Earthquake on the Panasonic Group in terms of, among others, component procurement, manufacturing, distribution, economic conditions in Japan including consumer spending and sales activities overseas, and direct or indirect adverse effects of the flooding in Thailand on the Panasonic Group in terms of, among others, component procurement and manufacturing. The factors listed above are not all-inclusive and further information is contained in Panasonic‘s latest annual reports, Form 20-F, and any other reports and documents which are on file with the U.S. Securities and Exchange Commission.

In order to be consistent with generally accepted financial reporting practices in Japan, operating profit (loss) is presented in accordance with generally accepted accounting principles in Japan. The company believes that this is useful to investors in comparing the company's financial results with those of other Japanese companies. Under United States generally accepted accounting principles, expenses associated with the implementation of early retirement programs at certain domestic and overseascompanies, and impairment losses on long-lived assets are usually included as part of operating profit (loss) in the statement of income.

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