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22 December 2008


Fujitsu to sell stake in Eudyna to JV partner Sumitomo Electric

A basic agreement has been reached on the transfer of Tokyo-based Fujitsu Ltd’s 50% stake in joint venture Eudyna Devices Inc to JV partner Sumitomo Electric Industries Ltd. The firms say that they will continue negotiations following the basic agreement and plan to complete the transfer of Fujitsu’s 29,680,000 shares on 1 April 2009. Eudyna will become a subsidiary of Sumitomo Electric.

Eudyna was established in April 2004 as a 50:50 joint venture between Fujitsu Quantum Devices Ltd (FQD) and Sumitomo Electric Industries' Electron Devices Department (SEI-EDD), consolidating the two firms' compound semiconductor optical and electronic device manufactures businesses. However, due to the accelerated commoditization of high-end products (where the JV has been particularly strong) as well as other changes in the market, there is an increased need to reinforce Eudyna’s business foundation, the firms say.

As wireline and wireless networking technologies evolve, systems equipment makers expect suppliers to provide new and expanded product portfolios, and are concerned about the long-term stability of critical components within their supply chain. Sumitomo Electric says that it is therefore acquiring Eudyna in a strategic move that should increase market share by adding new products and technologies to better serve Sumitomo Electric's large customer base. Furthermore, the additional R&D resources, together with larger-scale manufacturing operations, should ensure a more competitive and sustainable business for the future, the firm adds. Sumitomo Electric believes that the take-over will provide a synergistic combination of technologies and markets to better support its customers worldwide, as new fiber-to-the-home (FTTH), next-generation network (NGN) and WiMAX services fuel ongoing demand for higher and more flexible bandwidth channels.

The firm reckons that operating Eudyna and Sumitomo Electric under a unified governance structure should enable more managerial resources to be channeled into Eudyna, while its management base will be strengthened. Sumitomo Electric also believes that, by combining the two firms’ management resources and utilizing them effectively, the development and launch of new products should be accelerated and competitiveness in cost, quality and marketing should be enhanced.

Sumitomo Electric says that Eudyna should enhance its optical device/transceiver and electronic device businesses, as well as reinforcing the business infrastructure of the whole Sumitomo Electric Group.

Fujitsu Group says that it plans to maintain a strong business relationship with Eudyna after the stock transfer. Incorporating Eudyna’s compound semiconductor products into Fujitsu’s range of optical modules and wireless systems should support the expansion of these businesses, the firm adds.

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