In response to vigorous demand for compound semi-conductor material, we have decided to upwardly revise the amount invested in facilities in this area, this year from the planned 7.2 billion yen to 12 billion Yen and have further reinforced our manufacturing capabilities.
Our compound semi-conductor business, mainly the GaAs has been supporting heightened demand and from the end of last year has been growing steadily. Sales in this area will increase from 13 billion Yen in fiscal 2000 (actual) to more than 20 billion yen in fiscal 2001 (forecast) and more than 30 billion Yen in fiscal 2003 (forecast) and rapid expansion is expected. Under such conditions, by expanding the production capabilities of compound semi-conductors for both electronic devices and optical devices, we will reinforce both areas through facility investment and meet this new higher demand. These facilities are being built to be effective one after another and we expect to have made final completions by June 2001.

Material for electronic devices

In this area, LEC (*1) substrates and MOVPE (*2) epitaxial wafers (here on written as: MO epitaxial wafers) that are applied to microwave devices for use in mobile communication equipment are continuing to experience growth in demand due to the global proliferation of mobile telephones.
Therefore, using our newly reinforced facilities, we are going to concentrate on the mass production of the 6 inch diameter (150mm) large scale substrates and the HBT (*3) applied MO epitaxial wafers and also on the development and mass production of a variety of new epitaxial wafers that use InGaP thin epitaxial layers. With demand for semi-insulating VGF (*4) wafers also forecast to rise in the future, we are pushing ahead with the development of a wafer with a larger diameter.

Production capability at time of completion (forecast):
Substrates: LEC substrate, production capability: 45,000 pieces per a month (4 inch diameter wafers will be at approx. 2.3 times current capacity).
Epitaxial wafers: MO epitaxial wafer, production capability: 24,000 pieces per a month (4 inch diameter wafers will be at 3 times current capacity).

Material for optical devices

In this sector, growth in demand is exceeding initial expectations for the semi-conductive wafers, MO epitaxial wafers grown by the boat method and VGF method and LPE (*5) epitaxial wafers. By using our new improved facilities, we intend to forge ahead with the strengthening of production capabilities for: AlGaAs epitaxial wafers for high brightness LEDs, AlGaInP epitaxial wafers and epitaxial wafers for LDs for use in CD-ROM and CD-R, etc.

Production capability at time of completion (forecast):
Substrates: Boat grown substrate, VGF substrate, total production capability: 95,000 pieces per a month (1.5 times current capacity).
Epitaxial wafers: LPE epitaxial wafer, MO epitaxial wafer, total production capability: 59,000 pieces per a month (1.7 times current capacity).
In the future, in order to meet the requirements of both the electronic device market and the optical device market, we are going to consistently offer high quality products by continuing to be an all round GaAs compound semi-conductor maker and handling the product all the way from the crystal growth stage to the epitaxial wafer stage.
Depending on future market trends, we are considering the possibility of making additional investments in this area.

Facility investment amount for current fiscal year:

Plant: 2.2 billion Yen
Equipment: 9.8 billion Yen

Location of compound semi-conductor manufacturing plant:

TAKASAGO WORKS, 880 Isagosawa-cho, Hitachi-shi, Ibaraki Prefecture, 319-1418 Japan.

Glossary:

*1	LEC = Liquid Encapsulated Czochralski
*2	MOVPE = Metal Organic Vapor Phase Epitaxy
*3	HBT = Hetero-junction Bipolar Transistor
*4	VGF = Vertical Gradient Freezing
*5	LPE = Liquid Phase Epitaxy