Review of Operations
Share of Net Sales
Operations
at a glance
Telecommunications
22%
Plastics, Cables and Wires
23%
Annual Report
2003
The
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Telecommunications
Plastics,
Cables and Wires
Nonferrous Products
38%
Nonferrous
Products
Electronics-Related
Products and Others
Electronics-Related Products
and Others
17%
Major Products
Strategy
Topics
• Optical fibers and cables
• Optical components
• Optical fiber cable
accessories and
installations
• Network equipments
····etc.
In the area of optical fibers
and cables, we will
accelerate our global
strategy to concentrate our
resources into developing
new products for the Metro
market. In the area of
photonics and network
solutions, we will build on
our overwhelming
advantage by developing
innovative technologies that
are the most advanced in
the world.
< Optical Fibers and Cables >
• Development of an ultra-miniature optical fiber fusion splicer for
FTTH (January 2003)
• Commencement of sales for advanced-function optical cables for
broadband WDM systems (August 2002)
• Bare wires
• Aluminum wires
• Insulated wires
• Magnet wires
• Power cables
• Power transmission
cable accessories and
installations
• Plastic products such as
power cable conduit
material and foam sheet,
and thermoelectric
products
····etc.
We will endeavor to add
higher value to our products
and pursue alliances with
other companies to
undertake a fundamental
restructuring of the business.
• Commencement of sales for two Sunsunny®-brand electric floor
heating systems for multi-unit residential buildings
(November 2002)
• Establishment of a joint venture company in Jiangsu, China, for the
production of optical compound overhead ground wires
(OPGW) (August 2002)
• Installation in Okinawa of Japan’s largest-scale submarine power
distribution cable system while preserving the environment
(August 2002)
• Acquisition of approval from the Ministry of Land, Infrastructure
and Transport for a fire-retardation kit for cable through-holes in
building walls; a first in Japan (June 2002)
• Copper pipes and rods
• Electrolytic copper foils
• Shape memory alloys
• Aluminum sheets
• Extruded aluminum
products
• Cast and forged
products
····etc.
We will further enhance
profitability through cost
reductions and new product
development.
• Commencement of copper pipe manufacturing operations by
Shanghai Sunshine Copper Tube, Ltd. (October 2002)
• Establishment of a company in China for the plating of connector
terminals with precious metals (September 2002)
• Basic agreement reached with SKY Aluminum regarding
integration of aluminum business (August 2002)
• Establishment of copper strip manufacturing company in Wuxi,
China (April 2002)
• Automotive
components and electric
wirings
• Heat pipes
• Aluminum circuit boards
for memory discs
• Electronic component
materials
• Battery products
····etc.
We will bolster our drive to
globalize our manufacturing
and marketing systems.
< Automotive Components Business >
• Establishment of an automotive parts company in Indonesia
(March 2003)
< Photonics and Network Solutions >
• Development of the world’s smallest 2.5-Gbps cooled laser
module for signal light sources (March 2003)
• Installation of a digital terrestrial broadcast transmitting antenna on
Tokyo Tower (November 2002)
• Development of two FITELnet-F series network router models
(December 2002)
< Electronic Components Business >
• Development of “Crimp Fin” high-performance heat radiating
parts for cooling MPUs (December 2002)
• Commencement of sales of chip antennas for mobile devices
(October 2002)
• Commencement of sales of antenna units for car-mounted ETC
equipment (July 2002)
• Establishment of reflow furnace manufacturing and sales company
in Suzhou, China (June 2002)
Annual Report
2003
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Review of Operations
Telecommunications
Strengthening the Global Competitiveness
of Our Business and Products
The telecommunications operations of the Furukawa Electric Group help
establish the infrastructure required to support today’s broadband
networks, with cutting-edge technologies for optical fiber, optical cable,
optical communication (photonic) components, network equipment,
CATV systems, and wireless communication systems.
Results of Operations
Sales of photonic components, optical fibers, optical cables, and other
telecommunications products fell in North America. As a result,
consolidated net sales in the telecommunications segment were down
27.0% from the previous year, to ¥164.1 billion.
Annual Report
2003
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Optical Fibers and Cables
Focusing on the Metro Access Market and
Sharpening Our Competitive Edge by
Collaborating with OFS
AllWave®
The slowdown in the North American
telecommunications market has dampened demand
for optical fiber for long-haul networks. It is clear,
however, that the coming years will see widespread
use of optical fiber around the world in the
construction of broadband networks. Our aim is to
focus on the fast-growing access network and Metro
markets while boosting our ability to develop highly
competitive technologies and products for tomorrow’s
increasing broadband demand. To achieve this, we are
strengthening our collaboration with Optical Fiber
Solutions (OFS), a consolidated subsidiary that holds
some 2,000 patents in the field. An example of these
efforts can be found in Allwave® fiber, which we
introduced to the Japanese market in August 2002.
This fiber can be used for a wide wavelength range
and thus supports the design of networks ranging from
access networks to long-haul network applications. We
will energetically promote Allwave® in North America,
Asia, and Europe, stressing its adaptability to future
advanced technologies and possible bandwidth change.
With Japan’s growing trend in FTTH (fiber to the
home), the Furukawa Electric Group plans to expand
sales of small optical fiber fusion splicers that allow
efficient, low-cost cable connection. In addition to
offering products, we will offer total solutions that take
advantage of our know-how in network monitoring
and management software. While aggressively
promoting sales, we will carefully review our
production systems and find ways to improve
efficiency to cope with the tightening market
conditions around the world.
To that end, we have already discontinued optical
fiber production at our Chiba Operations Center and
optimized our production system globally based on
our Mie Operations Center and OFS. In our optical
cable business, we have implemented the “selection
and concentration” policy in a wide range of
operations in an effort to streamline our metal cable
business and boost our production capacity for accessnetwork cable.
Photonic Solutions
Restructuring to Solidify Our Foundation and
Maintain Our World-Class Technical
Development Capabilities
The prolonged sluggishness in demand for optical
communications equipment has forced accelerated
reorganization in the field. As a result, the Furukawa
Electric Group’s relative position in the market has
Network Solutions
Expanding Our Lineup of High-Performance
Routers and Developing Unique Products to
Support the e-Japan Strategy
become stronger. Our mainstay products - the 1,480nm and 980-nm pumping lasers - continue to enjoy
solid market share. To meet the needs of the domestic
FTTH market and Metro market, we also plan to add
DFB (distributed feedback) and other light-source
lasers, as well as PLCs (planar lightwave circuits) and
amps. These strategies will help us solidify our position
in the industry. As an example of Furukawa Electric’s
world-class research and development capabilities, in
March 2003 we introduced the world’s smallest 2.5Gbps cooled laser module for signal light sources. We
are also focusing on strengthening our business
foundation by restructuring the Group to cope more
effectively with today’s harsh market conditions. We
have transferred a major part of our manufacturing
functions to our manufacturing subsidiary in Thailand
and reorganized our domestic production system. The
result is a production system that is optimized on a
global level. In product design, we are looking into the
possibility of procuring parts from overseas as part of a
cost-cutting strategy in this area.
The growth of the e-Japan Strategy, which was
mapped out by the government’s IT Strategy
Headquarters, and the growing trend toward FTTH
are fueling rapid growth in broadband networks in
Japan. To capitalize on this opportunity, the Furukawa
Electric Group introduced the FITELnet-G series
routers with gigabit capacity, the FITELnet-R10 route
reflector, the FITELnet-F series secure-network router,
and a host of other innovative products.
In 2003 we released the newest model in the
FITELnet-F series: the FITELnet-F100 broadband access
router, which is compatible with the industry-wide
IPsec* standard for virtual private networks (VPNs).
The FITELnet-F100 has attracted keen attention for its
suitability in constructing corporate networks.
The Group is also exploring demand for products
other than routers. Recently, we applied for a patent
for a terrestrial digital broadcast transmitting antenna
that is scheduled to begin operation in Japan in 2003.
Our ability to continue creating new products and
technologies keep us at the forefront of the industry.
* IPsec: Industry-standard technology for the construction of high-security virtual
private networks (VPNs). IPsec was established by a working group of the Internet
Engineering Task Force (IETF) charged with standardizing Internet technologies.
Laser Modules
FITELnet-G80 gigabit router
Annual Report
2003
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Review of Operations
Plastics, Cables and Wires
Dramatic Restructuring of Our Operations: Strengthening
Overseas Strategies and New Product Development
The Furukawa Electric Group develops and manufactures bare
wire, aluminum wire, insulated wire, magnet wire, power cables,
power cable accessories, power cable conduit materials, foam
sheets, plastic products, and thermoelectric products. Our power
transmission systems and distribution cables help bring a reliable
supply of electricity to homes and businesses throughout Japan and
around the world.
Annual Report
2003
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Results of Operations
While sales of magnet wire and tape for semiconductors rose, sales of
power cables and other products fell. As a result, consolidated net sales
of the plastics, cables and wires business dropped 9.0% from the
previous year, to ¥171.6 billion.
Power Cables
Reducing Costs by Streamlining Operations
and Forming Strategic Alliances
Power cables
With conditions remaining harsh in the power cable
market, the Furukawa Electric Group has energetically
pursued strategic alliances and worked to streamline
our organizational structure with an eye toward
reducing costs. As one example of our strategic
alliances, we teamed up with Fujikura Ltd. to establish
Viscas Corporation as a joint venture company in
October 2001. In this and other efforts, the Group is
continually seeking opportunities to develop mutually
beneficial relationships with other companies. As an
example of organizational reform aimed at reducing
costs, we transferred our low-to-medium-voltage
parts business, which has seen declining sales, to two
Group companies - Inoue Manufacturing Co., Ltd. and
Tianjin Furukawa Power Component Co., Ltd.
While working to streamline existing operations, we
are also strengthening our emphasis on ecologically
oriented products and activities. In July 2002 we began
sales of the “Eco Bus Duct,” an environment-friendly,
low-voltage insulated bus duct. And in Okinawa in
August 2002, as part of the largest installation of
submarine power distribution cable lines in Japan, we
introduced a method of laying underwater line that
avoids damaging fragile coral reefs; a first in Japan.
Furukawa Electric remains committed to following
environmentally sound business practices and to
creating products and technologies that minimize
environmental impact.
In our bare wire business, the Furukawa Electric
Group is focusing on optical compound overhead
ground wire (OPGW), a product that has seen
growing demand around the world. In April 2002 we
absorbed Phillips Fitel Inc., a joint venture company in
Canada, as a wholly owned subsidiary. In August 2002
we teamed with a company in Jiangsu, China, to
establish Suzhou Furukawa Power Optic Cable Co.,
Ltd. Now with bases in Japan, Canada, and China,
Furukawa Electric has established a tri-polar
international system for OPGW production. This,
combined with the hot-line work method developed
by FE Engineering & Consultancy Sdn. Bhd. (FEEC),
our engineering and construction company, which has
bases in Malaysia, India, and the Philippines), will allow
us to compete effectively in the global market.
Domestically, we will focus on developing value-added
copper wire and adopting the “selection and
concentration” strategy for mass-producing wire for
both Japan and markets overseas. We are also
working energetically to restructure our operations.
As one step in these efforts, we transferred our
Annual Report
2003
The
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overhead wire parts business to Asahi Electric
Works, Ltd.
Magnet Wire and
Industrial Materials
Developing High-Value-Added Products for
Electronics Applications
In the magnet wire business, we are working to
expand sales of our TEX series triple-insulated wires.
We are also launching new products and businesses,
including the commercialization of non-contact IC
cards developed through the application of planar coil
technology. With the market demand structure
shifting from heavy electric components to more
advanced electronic components, we are focusing
more closely on power transmission products, such as
rectangular thin enamel wire.
In the industrial materials field, we are concentrating
on developing high-value-added products and on
introducing our existing products to new markets. We
are striving to expand sales of our MCPET microcellular high-reflection foamed sheet, which is now
used in display devices, by promoting its use as the
backlight reflection board in LCD products. With an
eye toward stimulating market demand, we are
improving the functions of our tape for
semiconductors and improving the workability of our
METRON water supply piping systems. At the same
time, in an effort to both reduce costs and explore
new markets, the Group has transferred the
manufacturing and sales of existing products to
Furukawa Dengyo (Tianjin) Co., Ltd. in China.
UV-Tapes for semiconductor
processing
Review of Operations
Nonferrous Products
Establishing Optimal Production Systems
to Sharpen Our Global Competitiveness
The main products in our materials business segment include
copper pipes and rods, electrolytic copper foil, shape-memory
alloys, aluminum sheets, extruded aluminum products, and forged
aluminum products. By combining our advanced new technologies
with proprietary technologies we have accumulated in more than a
century of operations, the Furukawa Electric Group is developing
exciting new materials that meet emerging demand in areas from
consumer products to high-tech components.
Annual Report
2003
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Results of Operations
The nonferrous products business saw brisk sales of wrought copper
lead frames for semiconductors, copper strips for electronic connector
parts, aluminum beverage cans, and extruded materials for automobiles.
As a result, consolidated net sales rose 4.1% from the previous year, to
¥267.9 billion.
Wrought Copper and
Electrolytic Copper Foils
Fortifying Our Overseas Production Facilities
and Focusing on New Products and
New Technologies
Several years ago the Furukawa Electric Group
began shifting production of wrought copper
products and copper pipe mainly to China, leading
to today’s achievement of globally optimized
production system. In October 2002 production of
copper pipe began at Shanghai Sunshine Copper
Products Co., Ltd., a company we established jointly
with Hitachi Cable, Ltd. This new company is not
only helping to meet China’s growing demand for
copper pipe, it also works with our Osaka
Operations Center and FMT in Thailand to provide
the Group with an optimal manufacturing system. In
December 2001 we established Furukawa Metal
(Wuxi) Co., Ltd. in Jiangsu, China, to produce
wrought copper strips. This new company allowed
our Mie wrought copper plant in Japan to specialize
as a coil center that handles preliminary processing
only. As a result, the Nikko Operations Center and
Furukawa Metal (Wuxi) focus on meeting domestic
Copper strips for lead frames
and overseas demand for copper strips used in
electronic parts. In September 2002 Furukawa
Electric and Furukawa Precision Engineering Co.,
Ltd. jointly established Furukawa Precision (Zhong
shang) Co., Ltd., a company that manufactures
precious-metal plating materials for connector
terminals. The new company began full-scale
operations in January 2003.
While transferring production to China, in Japan
we are focusing on developing next-generation
copper alloys, with efforts spearheaded by our
Metal Research Center. We have already
successfully developed means of mass-producing
high-performance phosphor bronze alloys. Sales of
these materials, which are used in mobile
equipment, are now under-way.
Annual Report
2003
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Flat-Rolled Aluminum
Products
Establishing Furukawa-SKY: Aiming to
Become a Leader in the Aluminum Industry
Since 1988 the Furukawa Electric Group has
worked closely with SKY Aluminium Co., Ltd. to
optimize production and sales. The relationship
between our aluminum business sector and SKY
Aluminium will take on an entirely new form in
October 2003, with the establishment of FurukawaSKY Aluminum Corp. This new company will
collaborate with our sheet plants in Fukui, Nikko,
and Fukaya to further optimize production and
strengthen our product supply capability. Overall,
this move will boost our competitiveness by
reorganizing production models, improving
distribution efficiency, and streamlining operations.
Furukawa SKY will combine with our extruded
products department, which operates bases in
Oyama, Shiga, and Indonesia, and with our cast and
forged products department, which meets
worldwide demand in the IT field, to make
Furukawa SKY one of Japan’s leading general
aluminum manufacturers.
Material for aluminum cans
Review of Operations
Electronics-Related Products
and Others
A Global Vision in Product Development,
Production, and Sales
In the electronics and automotive fields, the Furukawa Electric
Group’s product lines include batteries, parts, harnesses, heat
pipes, aluminum plates for memory discs, and materials for
electronic parts. Found in the most advanced devices and
components, our products and technologies support continued
progress in the electronics and automobile industries.
Results of Operations
Annual Report
2003
The
New
Formation
Consolidated net sales of electronics-related parts and other products
climbed 4.9% from the previous year, to ¥145.2 billion, thanks to strong
demand for aluminum blank plates for memory discs and higher sales of
automotive parts.
27
Electronic Components
Developing New Products and Restructuring
Production to Reduce Costs
Heat-reducting parts
for electronic devices
The Furukawa Electric Group commands the largest
share in the world market for heat radiation parts
for electronic equipment, such as heat pipes and
heat sinks. With this success as a foundation, we
offer a wide range of heat-reducing parts and
components for use in products from heavy
machinery to the CPUs in personal computers.
Products we have recently developed include PeraFlex, the world’s thinnest heat sink, and highperformance, heat-radiating crimped fins for cooling
MPUs (micro-processor units). With these and
other products, the Company offers “total thermal
solutions” for heat dissipation in electronic
equipment. The Group also boasts the world’s top
market share for aluminum blank plates for memory
discs, and we have begun sales of new products
such as antennas for ETC (electronic toll collection)
and wireless LANs.
In the area of re-flow ovens (high-performance
automatic soldering machines) that offer improved
compatibility with lead-free solder, Furukawa Electric
is working to meet demand by expanding our line
of cream solder printers and our “Salamander”
series. In a move to reduce costs, the Company
transferred mass-production to Furukawa
Electronics (Suzhou) Co., Ltd., which was
established in China in May 2002.
Automotive Parts
Strengthening Technology and Establishing
a Global-Scale Manufacturing System
In the automotive parts field, the Furukawa Electric
Group is focusing on high-function electronic and
modular parts such as SRCs (steering roll
connectors) for air bags and steering angle torque
sensors. While we already command the largest
share of the SRC market, we are aiming to further
expand our share by improving the functions of our
products. To optimize our production system, we
Annual Report
2003
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28
are transferring harness production overseas.
Furukawa Automotive Parts Inc. and Permintex
Holdings Sdn. Bhd. in Malaysia teamed up to jointly
establish P.T. Furukawa Permintex Autoparts
Indonesia in December 2002 for the manufacture
and sales of automotive wire harnesses. We are also
increasing the capacity of our plant in the Czech
Republic and moving our manufacturing plant in the
United States to Mexico. With these moves we are
establishing and fortifying global production bases to
meet market needs in the world’s five key regions.
In the battery field, Furukawa Electric is
concentrating resources on lead-acid automobile
batteries and working to improve profitability by
trimming manufacturing and distribution costs.
Parts for automotive air-bag systems
Overseas Major Affiliates
Europe
UNITED KINGDOM
Furukawa Electric Europe Ltd. (FEEL)
HUNGARY
Furukawa Electric Institute of Technology Co.,Ltd. (FETI)
FCI Furukawa Composite Insulator Ltd. (FCI)
THE NETHERLANDS
Furukawa Finance Netherlands B.V. (FFN)
CZECH REPUBLIC
Furukawa Electric Autoparts Central Europe s.r.o (FACE)
Asia
MALAYSIA
FE Magnet Wire (Malaysia) Sdn. Bhd. (FEMM)
FE Engineering & Consultancy Sdn. Bhd. (FEEC)
Alpha Industries Sdn. Bhd. (ALPHA)
Foam Ace Trecellen Malaysia Sdn. Bhd. (FATM)
Annual Report
2003
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SINGAPORE
Furukawa Electric Singapore Pte. Ltd. (FES)
Furukawa Electric Engineering Pte. Ltd. (FEE)
INDONESIA
P.T. KEL Indonesia (KEL)
P.T. Furukawa Supreme Optical Cable (FSOC)
P.T. Tembaga Mulia Semanan (TMS)
P.T. Furukawa Indal Aluminum (FIA)
P.T. Asiabumi Furukawa (ABF)
P.T. Furukawa Permintex Autoparts Indonesia (FPAI)
VIETNAM
CFT Vina Copper Co., Ltd. (CFT)
Furukawa Automotive Parts (Vietnam) Co., Ltd. (FAPV)
PEOPLE’S REPUBLIC OF CHINA
Shanghai Sunshine Copper Products Co., Ltd. (SSC)
Shianfu Optical Fiber & Cables Co., Ltd. (SHIANFU)
Tianjin Jinhe Electric Engineering Co., Ltd. (JINHE)
Shenyang Furukawa Cable Co., Ltd. (SHENYANG)
Furukawa Dengyo (Tianjin) Co., Ltd. (FDC)
Furukawa GP Auto Parts (HK) Ltd. (FGP)
Furukawa Electric Hong Kong Ltd. (FEHK)
Furukawa Shanghai, Ltd. (FSL)
Nichimen Furukawa Circuit Foil (HK) Co., Ltd. (FCFHK)
Yunnan Copper Furukawa Electric Co., Ltd. (YCFC)
Furukawa Metal (Wuxi) Co., Ltd. (FMW)
Furukawa Precision (Zhong Shang) Co., Ltd. (FPZ)
Furukawa Electronics (Suzhou) Co., Ltd. (FEZ)
Suzhou Furukawa Power Optic Cable Co., Ltd. (SFPOC)
Tianjin Furukawa Power Component Co., Ltd. (TFPCC)
North America
UNITED STATES
Furukawa Electric North America, Inc. (FENA)
Lear Furukawa Corporation (LFC)
FEMCO Magnet Wire Corporation (FEMCO)
Furukawa America, Inc. (FAI)
Furukawa Electric North America APD, Inc. (FENA APD)
Optical Communication Products, Inc. (OCP)
Fitel USA Corporation (FUSA)
OFS FITEL, LLC
OFS Brightwave, LLC
OFS Brightwave Carrollton, LLC (BWC)
CANADA
FEJ Holding Inc. (FEJH)
FEJ Sales Inc. (FEJS)
Phillips Fitel Inc. (PFI)
PHILIPPINES
C.M. Furukawa Phil, Inc. (CMF)
Furukawa Electric Autoparts (Philippines) Inc. (FEAP)
T.H. Furukawa Electric Philippines Corporation (TFEP)
Furukawa Development Inc. (FDI)
THAILAND
Bangkok Telecom Co., Ltd. (BTC)
FEC Thai Holding Co., Ltd. (FTH)
Furukawa FITEL (Thailand) Co., Ltd. (FFT)
Thai Fiber Optics Co., Ltd. (TFOC)
Thai Furukawa Unicomm Engineering Co., Ltd. (TFU)
Furukawa Metal (Thailand) Public Co., Ltd. (FMT)
Thai Metal Processing Co., Ltd. (TMP)
Furukawa Precision Thailand Co., Ltd. (FPT)
THE REPUBLIC OF KOREA
Shin Chang Connector Co., Ltd. (SCC)
STF Co., Ltd. (STF)
TAIWAN
Asia Vital Components Co., Ltd. (AVC)
Taho Engineering Co., Ltd. (TAHO)
Circuit Foil Taiwan Corporation (C.F. TAIWAN)
Taiwan Furukawa Electric Co., Ltd. (TWF)
Central America
MEXICO
Furukawa Mexico, S.A.De C.V. (FURMEX)
South America
BRAZIL
Furukawa Industrial S.A. Produtos Eletricos (FISA)
Furukawa Empreendimentos Engenharia E Construcoes Ltda (FE)
MBK Furukawa Sistemas S.A. (MFS)