In response to the changes in the economic environment, we have reviewed the Passion Project and worked out the “Passion Extension,” under which we will strengthen growth businesses while carrying out structural reforms.
Concepts of Passion Project and Passion Extension
Under the Passion Project, the Showa Denko Group aims to further increase its value, meeting the expectations of all stakeholders and contributing to the sound growth of international society. The Group is working to realize its “image” in 2010.
Based on the achievements in the 2006-2008 period, and in consideration of the changes in the environment, we will carry out the Passion Extension in 2009 and 2010. While maintaining the basic line of the Passion Project, we will accomplish structural reforms in response to market changes and identify the market segments that promise high growth.
“Image” of Showa Denko Group in 2010
The Showa Denko Group will carry out the following to ensure its contribution to the sound growth of international society:
- First, we will continue developing individualized products (useful and high-value products with originality) through a market-oriented approach and provide them to our customers.
- Second, we will establish ourselves as a unique chemical company with individualized products and achieve long-term sustainable growth, thereby increasing corporate value and meeting the expectations of all stakeholders.
To achieve the above goals, we will improve our wide-ranging material technologies using newly developed and acquired technologies, and establish individualized and competitive businesses. At the same time, we will aim to increase our financial strength and earn the full trust and confidence of the market and society.
Major tasks under Passion Extension
The Passion Extension is our business plan for 2009 and 2010. While maintaining the basic concept under the Passion Project that calls for contribution to the sound growth of international society, we will take various measures to cope with the changes in the social/economic environment. Specifically, we will aim to aggressively carry out structural reforms in a short period of time and accomplish the basic goals under the Passion Project. Major tasks under the Passion Extension will be the following six items:
1. Increase cash flows
2. Improve financial strength
3. Establish efficient operations
4. Carry out drastic cost reductions
5. Reorganize business portfolio by clarifying growth/exit strategies
6. Strengthen R&D to ensure future growth
Business strategies for sustainable growth under Passion
Project and Passion Extension
The Passion Project has defined a business cycle as shown in the drawing below. Under the Passion Extension, we will continue to pursue growth by carefully controlling this business cycle.
Business strategy under the Passion Project
In our business portfolio strategy under the Passion Project and the Passion Extension, we classify our respective operations into two categories: growth businesses; and base businesses, which serve as “cash cow” to support growth businesses. The growth businesses are further classified into “growth driver” and “new growth driver” businesses.
Business portfolio under the Passion Project and Passion Extension
| Growth businesses | Base businesses | ||
|---|---|---|---|
| New growth drivers | Growth drivers | Cash cows | |
| Petrochemicals | Olefins; Organic chemicals; Specialty polymers |
||
| Chemicals | Life science; Fine chemicals |
Ammonia; Industrial chemicals (Industrial gases, Inorganic industrial chemicals) |
|
| Electronics | Ultrabright LEDs; Capacitors | Hard disk media; Specialty gases for semiconductor processing |
Existing compound semiconductors; Rare earth magnetic alloys |
| Inorganics | Fine carbons | Graphite electrodes; Commodity-type ceramics |
|
| Aluminum and others | High-purity foils for capacitors; Aluminum beer cans; Heat exchangers; Commodity and functional aluminum parts |
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As for major businesses of respective categories, SDK will implement the following strategies:
1. Growth drivers with established business models
1) Hard disk (HD) media
Showa Denko was the world’s first to produce HD media based on the perpendicular magnetic recording (PMR) technology. Fully utilizing such technical advantages, we will continue to launch advanced products ahead of competitors. In particular, we will consolidate our leading position in the area of quickly growing glass-based HD media.
2) Semiconductor-processing materials
In the area of high-purity specialty gases for production of advanced semiconductors, we have a 30% share in the world’s high-purity ammonia market. We will further strengthen our lineup of high-performance, high-value products, developing new materials and providing total solutions.
2. Creation of new growth drivers through concentration of resources in selected areas and strengthening of marketing activities
1) Ultrabright LEDs
Showa Denko has become the first company in the world that can provide ultrabright LEDs for all wavelengths from ultraviolet to infrared. We will expand this business for such new applications as LCD backlight, car headlights and general lighting by developing larger wafers and increasing brightness based on our proprietary technologies.
2) VGCFTM carbon nanofiber
Showa Denko is the world’s first commercial producer of VGCFTM carbon nanofiber. This product enhances the durability of lithium ion batteries and enables the generation of heavy current. We will develop new applications for VGCFTM, centering on resin composites in which high market growth is expected.
3. SMU (Strategic Marketing Unit) for creation of new businesses
Under the Passion Project and the Passion Extension, we are developing new businesses that will become new growth drivers. We are allocating resources to selected areas and increasing the speed of R&D through six SMU projects.
SMU strategy
The six SMU projects mainly consist of the following items:
- Semiconductor devices (SiC power device)
- Energy devices (fuel cells, electric double-layer capacitors, etc.)
- Displays and lighting modules (Organic electroluminescent materials, LED lighting, etc.)
- IT chemicals (film-forming materials, photoresist, optical materials, etc.)
- Automotive parts (high-performance heat exchangers, components and materials that enable the production of lighter cars, etc.)
- Environment and energy (CO2 utilization technology, catalyst technology, etc.)
4. Base businesses: Further strengthening their competitive positions to ensure their roles to support growth businesses
1) Petrochemicals
We will further diversify cracker feedstock, increase the value of cut, and improve our catalyst technology. Thus, we aim to make our Oita Petrochemical Complex one of the most profitable complexes in Asia.
2) Graphite electrodes
We will further improve product quality and cost competitiveness, which are already at the highest level in the world. We will also consolidate our volume production setup for large-diameter graphite electrodes to ensure stable profitability.
3) Aluminum
In view of the declining profitability in the aluminum sector, we will carry out drastic structural reforms, anticipating reorganization of the aluminum industry.