Japan expects rough year, with second-half
recovery
By Yoshiko Hara
EE Times
February 7, 2002 (6:57 p.m. EST)
TOKYO — The Japanese electronics
industry is looking at another tough
year, with no appreciable growth
expected until the second half. The
Japan Electronics and Information
Technology Industries Association
(JEITA) this week predicted scant 0.7
percent growth in 2002, while the
Committee of Silicon, a wafer
manufacturers' association, expects 7
percent growth for that sector,
bolstered by a strong 30 percent rise in
the second half.
"Total domestic production dropped by
more than 15 percent last year," said
JEITA chairman Yoichi Morishita, the
chairman of Matsushita Electric Industrial
Co. Ltd. In 2002, he said, "The first half
will stay in the same severe situation [as
last year]," followed by "an indication of
a solid recovery in the second half." But
that won't be enough to raise the annual
growth rate above flat, to about $166
billion by JEITA's estimate.
Morishita pointed to "some bright spots
[that] have started appearing in
semiconductors, components, cellular
phones and digital consumer products," but said they will not be
enough to produce more than spotty growth this year.
JEITA divides the industry into consumer; industrial products,
including personal computers; and components and devices.
Of the three, the components category, which includes
semiconductors, is foreseen as growing 2.1 percent in 2002
production, owing to recovery in some sectors such as discrete
components, connectors and LCDs.
"The semiconductor industry is now getting back worldwide,
except for Japan," said Takashi Ogawa, principal analyst of the
Japanese semiconductor group at Gartner Group Japan KK. Japan
lags the rest of the industry by about a quarter, he said,
"because of its slow action. Japan fails to catch the timing,
which makes the wound worse." As a result, Ogawa
characterized this year's IC outlook as "not bright."
JEITA expects the industrial electronics segment will rise a mere
0.1 percent this year. PCs, one of main products in this
segment, are expected to stay weak, with domestic production
decreasing 2 percent, according to the forecast. Portable phone
production, which showed 38 percent growth in 2000 and a 17
percent increase even last year, is projected to slow due to
saturation, recording just 2 percent growth, JEITA said.
Japanese manufacturers have shifted a large part of consumer
electronics production overseas. Digital consumer products are
still produced here and are expected to see some growth this
year. Overall, however, consumer electronics production in
Japan is forecast to slip 2 percent from the estimated 2001
production total.
Brighter forecast
A brighter forecast came from the Committee of Silicon, formed
by eight wafer manufacturers under the Japan Society of Newer
Metals, with a prediction of a sharp rise in production and sales
in the second half. The committee members, who claim to supply
90 percent of the world's wafers, said that single-crystalline
silicon wafer production in Japan will increase by 7 percent from
last year, to 3,800 tons.
"The semiconductor industry has almost got through inventory
adjustment but has not got a feeling of a strong recovery yet.
Conspicuous recovery will appear from July and after," said
Tadashi Wakayama, representative director of Toshiba Ceramics
Co. Ltd., who is chairman of the committee this year.
Wafer production plunged 34 percent and sales 31 percent in
2001, the largest drops on record, the committee said. Both
production and sales hit bottom in the fourth quarter. The group
expects recovery to start slowly this quarter, a period when
demand is usually weak, dragging production totals into the
minus column for the first half of 2002.
After that, the committee sees strong growth of 30 to 40
percent in the second half over the same period last year, in
tandem with the expected recovery of the semiconductor
industry, especially overseas. Exports are projected to grow 10
percent on the full year; domestic sales are expected to stay at
5 percent growth.
JEITA chairman Morishita said that the year will affect
companies differently, depending on whether they have
successfully restructured. Indeed, in third-quarter results
(October through December) reported within the past few
weeks, a handful of companies managed to eke out profits even
in a brutal 2001.
In the winner's circle were Sony Corp., reporting growth of 7
percent for the quarter, and Canon Inc., which racked up a 7.8
percent increase in sales for its fiscal 2001, which ended in
December. However, Fujitsu Ltd. was down 12.7 percent,
Toshiba Corp. down 13 percent and NEC Corp. down 9 percent
for the period.
Parade of losses
Matsushita, which will announce third-quarter results late this
month, anticipated it will be in the red for this fiscal year. "We
have taken all the steps needed to restructure our operation,"
said Kunio Nakamura, president of Matsushita. "We'll complete
our reorganization by March 2003."
Sanyo Electric Co. Ltd. and Sharp Corp. do not report quarterly
result, but both said they expect to see profits for the fiscal
year ending in March. "Orders coming in give us a feeling that
the market will start moving in February to March," said Yukinori
Kuwano, president of Sanyo.
Fujitsu, NEC and Toshiba all again revised downward their
projections for the full fiscal year.
Fujitsu said it expects a 12.7 percent drop in sales, to about
$9.1 billion, and a $342 million operating loss in the third quarter
due to slack in its semiconductor and communications
businesses. Semiconductor sales dropped 41 percent from the
same period the prior year.
Fujitsu revised sales projections downward for the full fiscal
year, to $37 billion, with an operating loss of $560 million. Fujitsu
expects that its semiconductor business will continue to have a
hard time and does not foresee a solid recovery in calendar
2002, said Takashi Takaya, senior executive vice president.
Toshiba's third-quarter sales of $9.1 billion marked a 13 percent
decline from the year before. Its operating loss was $520 million.
Toshiba's revised projection for the fiscal year was $40 billion in
sales, $900 million lower than expected, and an operating loss of
$1 billion. Still, "The worst time has gone, and there is a sign of
recovery," said Kiyoaki Shimagami, corporate senior executive
vice president. Toshiba expects demand to pick up in March for
discrete components, driver ICs and bipolar parts, all sectors in
which the company is strong.
"Semiconductor has hit bottom, and some segments are going
into short supply," concurred Koji Nishigaki, president of NEC.
The company's third-quarter results showed sales of $8.4 billion,
a 9 percent drop from the year before, and an operating loss of
$479 million. The full-fiscal-year projection was revised to $38
billion, with an operating loss of $425 million.
Nishigaki said that "NEC is carrying out a restructuring to make
sure of recovery in the next fiscal year, starting April."
Buoyed by the highest quarterly sales on record, $17 billion, and
a 10 percent rise in operating profits, to $1.2 billion, Sony has
revised is fiscal-year estimates slightly upward. It expects sales
for the year to reach $56.3 billion.
Even Sony is taking a beating in semiconductors and
components, however. "We anticipate a severe situation for
semiconductors in the fourth quarter [January through March],
because the operating rate of the lines is low," said Teruhisa
Tokunaka, executive deputy president and chief financial officer.
"But on the other hand, we have a feeling of hitting to the
bottom, though it is difficult to expect a quick recovery."
Canon, for its part, reported record-high operating profits in
fiscal 2001. Sales grew 7.8 percent to $21.76 billion and profits
rose 20 percent to $2.11 billion. |
