Sony 2001 Annual Report Download - page 83

Sony Corporation Annual Report 2001
81
Reorganization of the Group Headquarters and the Electronics Business
In April 2001, Sony divided its former headquarters organizations into three units; “the Global Hub”, a new group
headquarters which focuses on overall group strategy; “the Electronics HQ”, a headquarters which unifies all of
its electronics-related businesses; and “the Management Platform”, a unit which offers common staff support
throughout the group. In the Electronics business, Sony reorganized its former five Network Companies into
seven Network Companies, corresponding to the places in which Sony’s products are utilized. In Japan, Sony
established in April 2001 “Sony EMCS Corporation”, a platform company for finished electronic products, by
integrating business units including 12 manufacturing subsidiaries relating to final assembly. Sony also established
in April 2001 “Sony Semiconductor Kyushu Corporation”, a semiconductor platform company, by integrating three
semiconductor fabrication subsidiaries. Moreover, as part of its reorganization of manufacturing facilities, Sony
intends to consolidate by the end of September 2001 a facility where portable audio equipment is manufactured
with a facility where home-use audio equipment is manufactured. In the U.S., Sony terminated the manufacture
of CRTs for computer displays at the end of April 2001 and the facility is focusing on the manufacture of CRTs for
televisions. The manufacturing equipment for CRTs for computer displays is being transferred to other regions
for reutilization. On the other hand, Sony is establishing new manufacturing facilities in areas where demand is
expected to increase. In Japan, aiming at expanding manufacturing capacity of LCDs and CCDs, Sony is construct-
ing a semiconductor-related manufacturing facility, targeting to start operations in October 2001. Cumulative
capital expenditures for the facility are expected to be approximately 100 billion yen by the end of the fiscal year
ending March 31, 2006, approximately 10 billion yen of which was invested in the fiscal year ended March 31,
2001. In China, a manufacturing facility, which was established for local manufacture and supply of lithium-ion
polymer rechargeable batteries, is expected to start operation in the fiscal year ending March 31, 2002.
Recent Strategic Developments and Business Alliances
In an environment where technologies progress rapidly, Sony is proceeding with alliances with other companies,
aiming at prompt and efficient business development despite limited managerial resources.
In the area of digital televisions/digital set-top-boxes, Sony acquired in December 2000 approximately 3%
of the outstanding shares of Canal+ Technologies, which is a unit of Canal+, the largest pay-television operator in
Europe. Sony and Canal+ Technologies are jointly proceeding with application and standardization of software
related to interactive digital televisions.
In the area of mobile terminals, Sony and Ericsson of Sweden signed in April 2001 a non-binding Memorandum
of Understanding with the intention to create “Sony Ericsson Mobile Communications”, a new company in which
Sony and Ericsson will equally invest, to proceed with a mobile phone business worldwide. Sony and Ericsson
intend to start operation in October 2001, after completion of definitive documentation and satisfaction of
applicable regulatory requirements. Sony plans to account for this investment under the equity method. Sony and
Ericsson intend that the new company, to which the mobile phone businesses of the parties will be transferred,
will be responsible for product research, design, and development, as well as marketing, sales, distribution, and
customer service.