It’s hard to believe the first quarter of 2015 is almost over!
The Japanese Ministry of Economy, Trade and Industry (METI) released the final 2014 performance data for the electronics industry. Analysts and forecasters are pouring over the data hoping to project business trends for the New Year. I studied the data released from METI, and will share some of my findings as well as some market trends I see for 2015.
Total domestic production for the electronics industry in 2014 was 11.8 trillion yens (about $100 billion), a 2.6% increase from the previous year. This is slightly less than most companies predicted. There are three major segments defined by the METI -- consumer electronics that includes TVs and digital cameras, industrial electronics that includes computers and cellular phones, and electronic components, which includes semiconductors and LCD display panels.
The consumer electronics segment posted revenue of 693 billion yen in 2014, down 15.7% from the previous year. Sales of flat panel TVs declined 6.1% compared to the previous year, but 2013 was one of the worst years for this segment (Japanese manufacturers have almost zero production). Digital cameras are still a major source of income for the industry, but sales declined 30% in 2014. Car navigation systems accounted for almost 51% of revenue for consumer electronics. The navigation segment decreased 5.9% compared to the previous year. Consumer electronics was the bulk of exports in Japan years ago. Nowadays, it makes up less than one-tenth of exports, and there is no sign of it returning to its heyday.
The industrial electronics segment posted revenue of 3.6 trillion yen in 2014, a 3.1% decline from the previous year. Sales of cellular phones decreased 38% and are no longer considered a significant contributor for industry revenue. Japan’s cellular market was called “Galapagos Phenomena” in the global cellular phone industry because it was isolated from foreign manufacturers. Nowadays, Apple’s iPhone has the largest share of the smartphone market and continues to grow. Personal computers including tablet PCs decreased 1.6%, but Japan has less than a 2% share in the global market. The manufacturing and testing equipment categories continue to show steady growth.
The electronic components segment posted revenue of 7.5 trillion yen in 2014; this is a 7.8% increase from the previous year. Passive components recorded the largest growth at 14.7%, and discrete semiconductors grew by 8.5% compared to the previous year. Both are maintaining a relatively large market share in the global arena, especially the high-end segments. Growth from integrated circuits increased 4.6%, but it is no longer a major player in the global market. Printed circuit boards lost another 2.7% in 2014. This is a domino effect from a lack of business in Japan.
There were no surprises for me with the 2014 data for the Japanese electronics industry. I follow the industry extensively, and the performance in 2014 is understandable and reasonable. Consumer electronics giants such as Panasonic and Sharp made several decisions that did not pan out for them. They underestimated their new competitors in Asia. Unfortunately, I have not seen any signs of recovery for these two companies over the past few months.
On the other hand, component manufacturers Murata and TDK are growing. Their business plans were solid and executed properly. They continue to make decisions that are keeping them ahead of the pack in the global market. The increase in business is not earth shattering, but their sales are steady and show positive growth month over month. I believe they will continue to grow in the competitive global consumer electronics market.
DKN Research, www.dknresearchllc.com
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Headlines of the Week
1. DNP has started volume production of templates for the next generation nano-imprint lithography.
2. Canon is developing next-generation semiconductor manufacturing systems with 20nm resolution, introducing nano-imprint technologies.
3. Toppan Printing developed a large size (55”) touch panel module with copper conductors for digital signage boards.
4. Toda Kogyo founded a joint venture with BASF for manufacturing cathode materials for lithium ion batteries.
5. SCREEN Holdings developed an evaluation system of photovoltaic cells introducing LTEM (Laser Tera-Herz Emission Microscope).
6. Kinpo Group (Cal-Comp) is building a manufacturing plant in the Philippines for manufacturing calculators and LED devices.
7. RIKEN codeveloped low-cost equipment for measuring radioactive cesium in food.
8. Toshiba started field test of a next-generation hydrogen fuel cell system in Yamaguchi Prefecture.
9. Rohm decided to build a plant in Malaysia to expand manufacturing capacity of diode and other discrete components.
10. OKI Printed Circuits established a manufacturing process for ultra high layer counts (up to 102 layers and 6.8mm thick) for probe cards of wafer testers.