Due to the superior reliability of our state-of-the-art technologies, the demand for our GaAs products is rapidly growing, and our sales have established a new record of 10 billion yen in fiscal year '98. The requirement for boat grown substrates by horizontal Bridgman method (HB) and liquid phase epitaxial (LPE) wafers, has increased, owing to the growth of light emitting diodes (LED) and laser diodes (LD). The demand for our liquid encapsulated Czochralski (LEC) grown substrates and metal organic vapor phase epitaxial (MOVPE) wafers has also been increasing dramatically, due largely to the growth of the microwave devices market, e.g. devices for cellular phones.

The first phase of expansion saw the increase in production of all GaAs products to fully meet the above demand. We are now continuing with the second phase of our expansion which includes the addition of a newly built factory to be used in conjunction with our existing factory. The construction of this new three story building commenced in February '98 and was completed in August '99. We now have 13,500 square meters of clean-room area.

Our expansion will focus on the following three products:
-MOVPE wafers for high frequency devices such as metal semiconductor field effect transistor (MES-FET), pseudomorphic high electron mobility transistor (P-HEMT), double hetero high electron mobility transistor (DH-HEMT) and hetero junction bipolar transistor (HBT). Our current capacity is equivalent to 8000 4-inch wafers per month and will increase to 12,000 wafers per month in the next phase, which includes the increase of 5 and 6 inch wafers.
-LEC substrates with larger diameters of 5 and 6 inch. With the completion of the mass production line for the large wafers, our production quantity has now increased dramatically. We are expecting quantities of 25,000 to 30,000 wafers per month (an increase on the current 20,000 wafers per month) in the next phase.
-New products for optical devices. We have commenced sales of AlInGaP epitaxial wafers for high brightness LEDs and AlGaAs epitaxial wafers for LDs both by MOVPE method.

We have been actively developing new materials for higher frequency devices, such as millimeter wave devices and new optical devices, and will continue investing in our production facilities while expecting the realization of new sales record of 15 billion yen in a couple of years.