Taiyo Yuden, a global leader in optical media technology, is dealing with a major financial blow by drastically reducing its inventory and workforce all during a time when there’s a growing market for Blu-ray.
The Japanese company has been struggling in the red with a predicted second straight year of net losses reaching as high as 2.8 billion yen. This data is gathered from the consolidated results for the six months that ended with this September. Previously the company had expected a 4.5 billion yen profit for the same time period.
The cause? The appreciation of the yen to the U.S. dollar is a contributing factor to slashing the production costs while there has been a simultaneous rise in the price of raw materials.
Moreover, according to a Taiyo Yuden executive, “While the market continues to contract, we have been put under pressure by cheap products from China and Taiwan.”
The plans to keep the optical media giant afloat include a reduction in the number of Taiyo Yuden jobs by 45 percent and a large cut in production from 110 million units per month to 65 million units per month. The formats CD-R, DVD-R, DVD+R and BD-R are included in this unit reduction. They have also cited 9.1 billion yen in optical media restructuring costs.
To meet demands, the company will likely outsource orders to less expensive overseas competitors, like Taiwanese manufacturers CMC Magnetics Corporation and Ritek Corporation, quite possibly according to insiders, as early as this year’s fourth quarter.
Taiyo Yuden hopes to eliminate its shortfall and turn around a profit from the fiscal year ending in March 2012 and gauge what’s next for their structural reforms through an updated earnings estimate.
Taiyo Yuden gained prominence in 1988 as a leading manufacturing innovator with the debut of the CD. In addition to recordable media, it develops other materials and electronics including Bluetooth modules, capacitors, inductors, resistors, piezoelectric speakers and simulation tools.