KTI Semiconductors' recently expanded facility for the production of 64-megabit DRAMs features 4,800 square meters of clean rooms and a monthly production capacity of 15,000 chips.

The LSI Department markets LSIs manufactured by Texas Instruments, develops and markets LSIs, and designs software for digital signal processors.

Note: These figures include inter-segment sales.

During the year under review, despite brisk demand inour information systems operations, sales in the Electronics and Information Sector plunged 35.2%, to 76.3 billion yen, due to a sharp deterioration of prices and the supply-demand situation for memory chips.
In semiconductors, a rapid deterioration of the market environment, mainly for memory chips, resulted in a striking decline in our business results. Under these circumstances, our LSI Center concentrated on expanding its business in logic devices, primarily in the expanding field of digital signal processors (DSPs). KTI Semiconductor, Ltd., a joint venture with Texas Instruments Inc., implemented measures to improve cost efficiency and completed investments to expand facilities for production of next-generation semiconductors. On another front, Genesis Technology Inc., a subsidiary engaged in integrated circuit (IC) testing, continued to expand the scope of its business.
In information systems, we concentrated on expanding our business in systems integration, focusing on increasing sales of real-time operating systems and related application systems. Primarily through Kobelco Systems Co., Ltd., we are steadily expanding our business in general and open systems. We are also participating in the establishment of a digital information planning company that will serve as a core company in a telecommunications project centered in the Kobe area. In addition, we are active in several other projects aimed at meeting the needs of an advanced information-based society.
In fiscal 1997, we aim to develop new products and improve our cost competitiveness as we strive to increase the profitability of the Electronics and Information Sector. Under our new management plan, we intend to strengthen this sector's position as the fourth pillar of our operations along with Iron and Steel, Aluminum and Copper, and Machinery by making concentrated and strategic investments, particularly in the semiconductor and information fields. In doing so, we aim to strengthen our business foundation to meet the challenges of the coming century.