Dominique Numakura's Newsletter from Japan

The third stage for the MP3 battle in Japan

MP3 is still maintaining more than 50% growing rate in the global market. A market research firm expects that 50 million units of the audio products will be consumed this year but the competition in the market  has become more severe for the manufacturers.

As I reported few months ago, the first stage of the battle was opened by iPod of Apple computer.  iPod’s  innovation in the audio market allowed it to enjoy capturing the business  for the first year as the pioneer. However, many electronics companies in Asia, especially in Japan, entered the market in the second stage of the battle.  Not only the  major AV companies such as Sony, Panasonic and JVC but also small venture companies entered because of the low technical hurdle to design and produce. Certainly, they caused a serious price war to get the market share.  Now all of  the manufacturers have been entering the third stage of the MP3 battle. Minor venture companies could not survive the serious competition and they already dropped out from the battle. The battle is now between the two leading companies.

Apple computer rolled out a new product, "iPod Nano" September 8th. The size of the new iPod is only one fifth of the first generation iPod. Sony also unveiled the new Walkman September 8th.  The Japanese medias have been reporting the new battle between Apple and Sony. Apple, for the moment, has retained their leader position. The strength of these two companies is the great distribution systems they have. Apple provides 2 million items to the music industry. Sony has been building the same capabilities with its family companies.  The other suppliers have been building a common music source to compete against the two giants however, the gap of the second tier companies has been expanding.  

It appears Apple and Sony will keep the leading position in the market.  It should be noted that both companies do not make the products by themselves.  The main source are Taiwanese EMS companies assembling the products in China.  They purchase most of the circuit boards and some of the components from Taiwanese suppliers.  Who will emerge as the leader in this booming product?

Dominique Numakura

Headlines of the week

Toshiba (Major electronics company in Japan)
Will cooperate with Elpida Memory to produce MCP (Multi-Chip Package) of NAND type flash memory and DRAM for cellular phone applications to compete against Samsung Electronics.

Ushio Electric (Equipment manufacturer in Japan)
Will open a new customer service facility, "Optical Laboratory"  for the exposure process of various substrates of wafer, glass and plastic materials.

TOK (Major photo resist manufacturer in Japan)
Start the volume production of the photo resist at the JV in China for the manufacturing process of LCD and semiconductor devices.

Sumitomo 3M(Electronic material supplier in Japan)
Rolled out a new carbon fluoride material, HFE (Hydro Ether Fluoride) as the eco-friendly cleaning regent. HFE has the highest B.T. (98 degree C)
 
Sharp (Major electronics company in Japan)
Has introduced a small size packaging for the power supply IC of the camera modules. The new package reduces the SMT space 80%.

Nikkei BP (Industry media in Japan)
Taiwanese manufacturers of digital camera have been increasing the global market share. They will have 23.9% share in 2006.

FDK (Recording device manufacturer in Japan)
Has unveiled the new high-speed recording technology, MOSLM (Magnetic-Optic Special Light Modulator) with a holographic process.

FDK (Device manufacturer in Japan)
Has started the volume production of the new low cost inverter transformer for the LCD TV.

FDK (Device manufacturer in Japan)
Has been developing an ultra small size DC-DC converter (3.25 x 2.6 x 1.0 mm) for the portable electronics.

FDK (Device manufacturer in Japan)
Has been developing a small size stepping motor "SMS4.3" (4.3 mm diameter, 3.9 mm long) for cellular phones and digital cameras.

Nippon Electric Glass (Major glass manufacturer in Japan)
Will terminate the production of the glass materials for CRT. The company will shift the business to FPD applications.

Murata (Major device manufacturer in Japan)
Rolled out a new small-size SMT noise filter "BNX022 Series". (12 x 9 x 3 mm)

Casio (Major electronics company in Japan)
Had a business alliance with Hann Star Display in Taiwan. Casio licenses the TFT LCD technology and Hann Star produces and supplies the LCD device to Casio.

LG Chem. (Major chemical company in Korea)
Has developed a new low cost manufacturing process for the color filter of LCD devices.  The new process reduces the manufacturing cost more than 50%.

STATS ChipPAC (Semiconductor packaging company in Singapore)
Will expand the full-turnkey business of the flip chip packaging. The company will increase the 300 mm wafer bumping capacity to several million units per month by the first quarter of 2006.

Fuji Film (Major photo film manufacturer in Japan)
Will re-organize the manufacturing divisions of the materials of the flat panel displays.  The manufacturing division of Ashigara Plant will be transferred to its manufacturing subsidiary F.P.M.

Mitsui Metal Smelting (Major copper foil supplier in Japan)
Will increase the manufacturing capacity of the ED copper foil 11% to 3000 tons per month to cover the strong demands of flexible circuits.