17 TOSHIBA CORPORATION A VIEW TO THE FUTURE timedia products and technologies. Mobile phones with cameras, digital still cameras and replacement HDDs are expected to continue to be in high demand. Toshiba’s basic strategy is to build on its technological strengths and to lead the way in mass-producing high-value- added products while promoting measures to further raise cost competitiveness, especially using multi-level cell process technology ahead of competitors. One advantage that we will fully leverage is the fact that Toshiba invented NAND flash memory and owns essential IP rights. This will provide us with positive sup- port in many areas, including efforts to enhance multi-chip packages (MCP) for mo- bile phones that integrate NAND flash, NOR flash, SRAM and PSRAM in a single package. A further plus will come from the construction of 300mm wafer lines at Yokkaichi, scheduled to start in 2005 and to begin mass production in 2006. Investment in the facility and its equipment is expected to total around ¥150 billion. Toshiba is determined to focus on two areas: digital consumer and mobile. Advanced SoC now accounts for a little over 25% of Toshiba’s system LSI business. Our goal for 2005 is to take that to beyond 30%. We are working to fortify new product proposals and constantly searching for new markets for SoC products. Our commitment to integrating cutting-edge technologies and realizing new levels of func- tionality are exemplified by an image processing LSI that support high-capacity, high-speed processing. Our concentration on such value-added products and differentiated technologies also supports us in forging alli- ances with leading companies in our target areas. For instance, in the CMOS image sensor business, we have maintained strategic collabo- rations with major phone manufacturers and increased market share as the market for mo- bile phones with cameras has grown to become the mainstream. Another undoubted asset is our ability to pio- neer new levels of process technology—the secret to advances in miniaturization and device func- tionality. We were first in the industry to deploy 90nm process technology and we have already gone beyond that to realize 65nm process tech- While Toshiba remains the clear No. 1 in the world discrete devices market, that does not mean any relaxation in our efforts or commit- ment. On the contrary, we will continue efforts to expand business and improve cost competitiveness. Toward these goals, we are pushing for a stronger presence in the Chinese and Korean markets, today’s two main growth markets, developing differentiated core prod- ucts and transferring assembly to China. nology. These capabilities will be further en- hanced by fabrication of 300mm wafers at our new LSI facility at Oita Operations, our LSI pro- duction facility. Construction of this advanced facility started in June 2003 and mass production is scheduled for the first half of 2004. Once full capacity is reached output will climb to 12,500 wafers a month. Investment is expected to total around ¥200 billion, with the first ¥40 billion directed to construction of the building and clean room in this fiscal year. The main product of the facility will be advanced broadband pro- cessors, a product area where we anticipate high demand in future. Production will draw on our strengths in system LSI with embedded DRAM process technology. While first-generation prod- ucts will be manufactured with 65nm process technology, we will make an early transition to the 45nm design rule in the future. Discretes System LSIs