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To: maceng2 who wrote (399)	9/2/2003 5:10:46 PM
From: maceng2	Read Replies (1) \| Respond to of 1417

(OT)Canon Continues R&D Commitment (lithography) reed-electronics.com [note from pb. lots of red ink in this technology. I think my one inch wafer idea is a good one. Time will tell] A Canon U.S.A. spokesman confirmed this morning reports out of Tokyo that Canon Inc. plans to spend some $847 million (100 billion Japanese yen) over the next three years in its bid to become the No. 1 lithography supplier. The company has already spent that much in the past three years on lithography tool development. The announcement that it plans to continue its rate of R&D spending for its semiconductor equipment division, which accounts for less than 10 percent of the conglomerate's overall revenue comes as no surprise. The No. 3 player in the stepper/scanner market announced earlier this year that its goal is to become the No. 1 supplier, surpassing Japanese rival Nikon and Dutch supplier ASML, currently the top supplier. While not part of an electronics conglomerate like Canon, ASML nevertheless has critical mass of its own. In 2002 alone, for example, it spent $320 million in R&D. For its part, Canon says it is leveraging its R&D dollars company wide by utilizing overseas as well as domestic R&D operations, and using what it calls "prototype-less design" through the use of 3D-CAD systems, eliminating physical design prototypes from the design process as much as possible. Canon Depends on its Critical Mass Being such a large conglomerate, Canon has the deep pockets to spend on R&D for its various core businesses, even one that is losing money at the moment, like semiconductor equipment. While semiconductor-related equipment shipments are down year-over-year for Canon, its other segments have buoyed the company, including production aligners for LCDs, but principally by digital camera sales. Canon's consolidated net sales for the first half of this year increased 10.9 percent over 2002 to $12.8 billion (1.5 trillion JY), leading to net income of $1.1 billion (127.8 billion JY), a 75 percent year-over-year increase and an all-time high, the company said. On a per share basis, the company recorded earnings of $1.21 (145.6 JY), an increase of 52 cents (62 JY) per share year over year. Canon's overall R&D expenditures increased by $126 million (15.1 billion JY) to $1 billion (125.7 billion JY) in the six month period, along with an increase in advertising and sales promotion. In the optical and other products segment, which includes its semiconductor lithography tools, sales increased by 22.1 percent to $1 billion (123.8 billion JY), boosted by LCD aligners. The company shipped 6 more LCD aligners in Q2 of this year than it did last year, and 29 more in the first half, for a total of 47 in the period. By comparison, the company shipped four less IC steppers in Q2 than it did in Q2 2002, and at 35 shipped for the first half of 2003, one less than it did in the prior year period. In contrast, ASML shipped 28 new and 13 refurbished systems in Q2 alone, up from Q1's 27 new and 6 refurbished tools. ASML still remains in the red, however. Canon's optical and other products group remains in the red as well, despite the jump in FPD equipment. It posted an operating loss of $10 million (1.2 billion JY), narrowed slightly from the year ago period. For the current quarter, Canon projects overall sales of $6.3 billion (756 million JY), a year-over-year increase of 8.9 percent, producing net income of $540 million (65 billion JY). For the year, the company expects net sales of $26.4 billion (3.2 trillion JY) and net income of $2.2 billion (263 billion JY). But Canon expects its optical and other products group to be down about $183.5 million (22.1 billion JY) on the year. Back in March, when it revealed its goal of becoming the No. 1 litho tool supplier, Canon had forecast that the total market for 2003 would see stepper/scanner shipments of 400 units, but later acknowledged that the market wouldn't be quite that robust. Today it expects about 380 units total to be shipped throughout the globe this year.