The yen has slid to its lowest level in almost seven months compared to the US dollar. The latest exchange rate is 104 yen to one US dollar, a 5% depreciation from last month. Less than a year ago, the exchange rate was 80 yen to the dollar. Year-over-year, the value of the Japanese yen declined more than 30%.
The Japanese stock market is soaring as a result of the Yen tumbling in value. The Nikkei Stock Average closed at 15,870 – a 52% increase year to date. Those who are fortunate enough to be invested in the Japanese stock market are enjoying some new found wealth.
Japanese based companies with overseas business are also reaping benefits from a weakening yen. Automobile manufacturers will post record profits for fiscal 2013. They are spreading the wealth among their employees by paying out year-end bonuses. The companies communicated that this is a one-time bonus based on a profitable year, and salaries will not increase next year because of uncertainties in the market.
Unfortunately, there are some negative consequences of a weakening yen. Costs of imported materials increased steadily throughout the year. Hardest hit were electric power companies that buy large amounts of oil and natural gas. Japan’s energy imports surged after the nuclear crisis in 2011 forced the shutdown of the country’s nuclear reactors. The declining value of the yen pushed up energy costs significantly. Japan recorded record negative trade for the year.
Japanese electronics companies are not reaping any benefits from a weakening yen. They have slowly outsourced most of their manufacturing needs to China and other Asian countries over the past two decades. It is extremely difficult to flip the switch and return manufacturing to Japan. Printed circuit manufacturers and parts manufacturers are in the same boat, and remain pessimistic over future market trends. Financial companies have a very optimistic forecast for the new year – I too will have a very optimistic forecast for 2014!
Dominique K. Numakura, This email address is being protected from spambots. You need JavaScript enabled to view it.
DKN Research, www.dknresearchllc.com
DKN Research Newsletter #1334, Dec. 22, 2013. For back issues of the newsletter, visit http://www.dknresearchllc.com/DKNRArchive/Newsletter/Newsletter.html
Headlines of the week (Contact This email address is being protected from spambots. You need JavaScript enabled to view it. for further information.)
1. Mitsubishi Material developed a DBA printed circuit board with thick copper conductors for the next generation power modules.
2. Panasonic developed a new evaluation equipment for the large scale fuel cells applied for automobiles.
3. AIST developed a flexible dye sensitized photovoltaic cell with an 8% conversion rate by room temperature process available for RTR.
4. Fujitsu Semiconductor developed a new hybrid package technology for DDC technology and flash memory cell for low energy consumption devices.
5. Solar Frontier achieved a new record (12.6%) of the conversion rate with the CZTS photovoltaic cell devices.
6. AIST developed a new in-plant wiring process with carbon nanotube for TSV of semiconductor chip providing a higher conductivity.
7. Hirosaki University & Tohoku University co-eveloped a magnetostrictive material for vibration power generators and wireless sensors.
8. TSMC increased its bumping process capacity to 150k 300 mm wafers/month. It could be valuable for the wastewater treatment trouble of ASE.
9. Foxconn plans volume production of middle and small size OLED in 2015 at Innolux plant in Taiwan.
10. Toray Dow Corning commercialized a new silicone rubber adhesive resin with high heat conductivity for automobile electronic devices.
Find the full articles at http://www.dknresearchllc.com/DKNRArchive/Articles/Articles.html.
