Q: What are your strategies for system LSIs and dis- crete devices? A: In system LSIs our focus is on system-on-chip (SoC). I know this is a highly competitive field, but we will deploy four strate- gies designed to make Toshiba a winner in this sector in the years ahead. First of all, we will strengthen design technology and pro- cess development capabilities. We will pay particular attention to design technology, and plan to invest an additional ¥10 bil- lion (US$75 million) a year to strengthen our capabilities. We are also strengthening our product lines. In addition to the TX series, our MIPS-based processor cores, we are working to reinforce and expand sales of embedded memory and analog SoC with powerful processor cores. These efforts are supported by quickened development of the “Cell,” a new and powerful microprocessor core we are currently developing with IBM Cor- poration and Sony Computer Entertainment Inc. And, of course, Toshiba will also continue to develop DRAM technologies neces- sary for SoC. In our third strategy, Toshiba will concentrate on four areas where significant growth can be reasonably anticipated: digital consumer products, mobile products, intelligent offices, and automotive devices. We will also support the networks that will link these four, and do all we can to strengthen our relations with leading customers. A: That is very possible, if we just stand pat and do not act. But we will not do that. We have advanced plans to quickly build a solutions-provider business. One aspect of this will be provi- sion of controller technologies that promote the optimal use of NAND flash memories in individual applications. Our strategy here is to avoid a focus on just selling memories themselves, as that is easily affected by price competition. Finally, we will reorganize our manufacturing in two ways. We will increase outsourcing of our wafer fabrication and as- sembly processes, and expand overseas production, particu- larly in China, where we are building up our manufacturing struc- ture and capabilities and increasing product assembly. In discrete devices, we will take full advantage of our supe- riority in small and multi-pin-count packages and low-voltage operation to sustain our worldwide No. 1 market share and main- tain high profitability. At the same time, we will work for superior cost competi- tiveness, using multi-level cell process technology to do so. That will allow us to realize lower costs and lower prices that can support an expansion of applications for NAND. Even as we do that, we want to avoid stimulating the cutthroat competition that plagued our commodity DRAM business, by securing IP, includ- ing patents, and by developing leading-edge technologies and a steady stream of distinctive products our competitors cannot easily match. I think I can safely say that we have no concerns for a repeat of the situation that occurred with commodity DRAMs. Q: You are now concentrating on NAND flash memo- ries. Will this sector also see severe competition? 7