Fujitsu to Establish LSI Subsidiary

Tokyo.— Fujitsu Limited announced today that it will reorganize its LSI business into a wholly owned subsidiary, Fujitsu Microelectronics Limited, to be incorporated through a company split on March 21, 2008. The decision was made at a Board of Directors meeting held today.

As a separate entity, the LSI business will undertake a range of reforms to raise its corporate value. With greater management independence, the subsidiary will implement a new management cycle aimed at accelerating its decision-making process. In addition, to strengthen its product offerings, the subsidiary will augment its mainstay ASIC(1) and COT(2) products with an expanded lineup of general-purpose products including ASSP(3) , microcontroller, and analog products, the market for which has grown rapidly in recent years, especially in Asia. Through these initiatives, Fujitsu Microelectronics will aim to increase the proportion of high value-added products among its offerings and build a stronger, more stable management foundation that can better adapt to change in the LSI industry.
1. Purpose of the Company Split

The core competencies of the LSI business include advanced process technologies, an abundant library of competitive intellectual property, design technologies for “first-shot full operation(4)” of system LSIs, and a strong customer base. Fujitsu has leveraged these competencies to develop a strong business foundation focused primarily on ASICs, COT, and a growing lineup of promising ASSP products, with software development capabilities as a key competitive component of the business.

In order to flourish amid intense competition and implement a strategic plan for growth, however, the LSI business requires greater independence and a new management structure which can facilitate the kind of rapid and timely decision-making needed to compete in the LSI industry. Under these circumstances, the Board of Directors made the decision on January 21, 2008 to pursue the reorganization of the LSI divisions into a separate entity.

As a result of detailed consideration on the structure of the LSI business, the Board of Directors made a decision today to split off the LSI business into a new, wholly owned subsidiary, Fujitsu Microelectronics Limited, to be incorporated on March 21, 2008.

As part of the company split, a number of LSI subsidiaries and affiliates, including subsidiary Fujitsu Electronics Inc., will become subsidiaries of Fujitsu Microelectronics. Fujitsu Component Limited, Shinko Electric Industries Co., Ltd., and Fujitsu Media Devices Inc., which manufacture electronic components, will remain Fujitsu Limited subsidiaries.

As a specialized LSI business, Fujitsu Microelectronics will adopt a new management cycle optimized for the industry. In addition to ASIC and COT products, which have been a mainstay of the LSI business, the subsidiary will seek to expand the lineup of ASSPs, microcontrollers, analog products and other general-purpose products, while enhancing its sales structure to focus on high-growth regions like Asia. These measures will enable the company to increase the proportion of high value-added products among its offerings and ensure a stable capacity utilization, which in turn will improve the profit structure.

As a management goal, Fujitsu Microelectronics plans to achieve a consolidated operating income margin of at least 5% for fiscal 2009 ending March 31, 2010.