Dominique Numakura's Newsletter from Japan

Major Electronics Club in Japan

In the last two weeks, major Japanese electronics companies have released their financial performance of the second quarter, 2005. All of the companies except Panasonic (Matsushita) reported negative incomes for the quarter. They increased shipments of major products including flat panel TV and MP3 during the quarter compared to the same period last year.  However the market price of theses major products declined significantly after Christmas affecting the margins for the manufacturers. Only Panasonic was successful in reducing manufacturing costs to generate profit but are unsure of the next two quarters of the year.

There are about a dozen of major electronics companies in Japan consisting of Panasonic, Sony, Toshiba, Sharp, NEC, Fujitsu, Hitachi, Mitsubishi, Canon, Pioneer, Sanyo and few more.  Each has had either unique products or technologies in the past.  Sony has been the leader in developing new and innovative products such as Walkman; however no one company in the past decade has emerged as the industry leader.  Nearly all have the same manufacturing capabilities and products in the major markets.  I can list up many examples: cellular phones, digital cameras, flat panel TV, DVD, MP3 and more.

When one electronics company commercializes a new product the other companies commercialize a similar product within a few months. They all compete in an open market but cross license their technologies to each other. When they are not ready to start their own production they turn to OEM providers and outsource the production when it is economically advantageous. It is very possible that one Taiwanese EMS company produces similar products for several different Japanese electronics companies. It means they have almost the same quality and same costs for the products. When the market is booming everybody enjoys the business and when the market is declining every body looses money.  Only in-house manufacturers such as Matsushita can manage their own costs.

There are serious battles but on the other hand they keep a mysterious balance in the market, everyone has some market share.  No one drops out and it looks like a special membership club.  Probably, it is not easy for the foreign electronics companies to have the membership.

Dominique Numakura

Headlines of the week

Panasonic Electronic Device (Component supplier in Japan)
Has developed a new touch panel switch "EMU601" with a low reflection rate (<5%) for the automobile application.

Hitachi Chemical (Electronic material supplier in Japan)
Will increase the price of the copper laminates of the printed circuit boards 10 to 15% from September 1st because of recent cost up of the raw materials.

Samsung electronics (Major electronics company in Korea)
Has increased the manufacturing capacity of the 7G LCD line to 30 thousand sheets per month.

North Corporation (Engineering firm for PWB in Japan)
Started the volume production of the basic materials for the NMBI process of Sony Chemical.

Dai-Nippon Printing (Major printing company in Japan)
Has developed a new manufacturing technology for multi-layer rigid/flex utilizing the B2it technology.

E.S.P. (Equipment manufacturer in Japan)
Has an aggressive business expansion plan for the ultra sound head module of the flip chip bonding machines.

Sumitomo Chemical (Major chemical company in Japan)
Has acquired the organic EL business "LUMATION" from Dow Chemical.

Konica-Minolta (Major camera supplier in Japan)
Is considering a new manufacturing plant of TAC films for TFT-LCD in Kobe area to cover the booming demands.

Toyo Gosei (Fine chemical supplier in Japan)
Will invest 3 billion yen for the R&D and manufacturing of the photo-  sensitive materials.

Komatsu (Major silicon wafer supplier in Japan) 
Will increase the manufacturing capacity of 200 mm wafer in Taiwan for the booming demands in Greater China.

STATS ChipPAC (Semiconductor packaging firm in Singapore)
Will expand the Shnghai plant to increase the manufacturing capacity. The plant will be able to process 300 mm wafers and 3D package for SiP.
 
Oki Data (Equipment manufacturer in Japan)
Has completed the preparation of the dot printers for the RoHS.