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To: Helios who wrote (41811)	6/7/1999 8:43:00 PM
From: John Rieman	Read Replies (1) \| Respond to of 50808

Matsuhita claims 40% market share of DVD player chip sales.......... digitaltheater.com Matsushita, Sony Focus On System Chips For Digital Electronics Age Date:07-Jun-99 Nikkei English News via NewsEdge Corporation : TOKYO (Nikkei)--Matsushita Electric Industrial Co. (6752) aims to make a comeback as a leading semiconductor manufacturer with the introduction of system chips, reversing its disappointing business performance since the mid-1980s. Yoshiteru Hosokawa, head of Matsushita's system solution development center, is leading the company's drive to become an industry leader at a time when home electronics products are increasingly digitized. The center was set up in 1997 with 150 staff after Matsushita absorbed the design section of a semiconductor subsidiary. Personnel at the center have doubled in the past two years as a result of Hosokawa's in-house recruitment. Matsushita President Yoichi Morishita supports the center, and says the company cannot maintain its leading position as a final products maker unless it establishes itself as a major producer of system chips. Successes attest to corporate resolve. Matsushita now boasts a 40% share of chips for digital video disc (DVD) players in the world market, after it started selling the technology-intensive products to other manufacturers in 1998. "We aim to become the world's top manufacturer of system chips for mainstay products such as digital television sets. We will not be satisfied with anything less than top place," says Susumu Koike, director of Matsushita's semiconductor development headquarters. Sony Corp. (6758) is another major Japanese electronics company focusing on system chips. President Nobuyuki Idei believes the chips will lead the company's semiconductor operations into the next millennium. The firm integrated its component divisions into an in-house company called the core technology and network company in April, as part of sweeping reorganization. It set up a mobile system division the same month to conduct research and development of system chips for next-generation mobile terminals, jointly with another in-house firm. Suehiro Nakamura, senior managing director in charge of the semiconductor business, is confident that in-house companies will generate synergy effects. The almost simultaneous decisions by Matsushita and Sony to focus on semiconductor operations are motivated by the huge potential of system chips, the core component of digital home appliances. Sales of system chips for digital home electronics are estimated to be worth 2-3 trillion yen in the early 2000s. The Matsushita group has been reduced to a secondary maker of semiconductors since the mid-1980s, as the group failed to single out strategic products. Sony still lags behind Sanyo Electric Co. (6764) and Sharp Corp. (6753) in the semiconductor business, although the company was the first Japanese maker to develop a transistor in 1954. Philips Semiconductors SMST GmbH of Holland and ST Microelectronics, a French-Italian joint venture, have transformed into highly-profitable businesses in the past few years through close cooperation with their home electronics parent companies. In contrast, Japan's five largest semiconductor makers are struggling to become less dependent on memory chips as a primary source of revenue. Ironically, Matsushita and Sony are free to pursue bold strategies precisely because their weak positions in the industry prevented them from investing heavily in memory output facilities. It remains to be seen whether the two firms successfully revamp their semiconductor and finished product operations, and possibly help put the staggering Japanese economy back on its feet, analysts said. (The Nikkei Industrial Daily Thursday edition) <> [Copyright 1999, Nikkei America]