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Japan's electronics manufacturers: "mono zukuri"

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Japan's electronics manufacturers combined are about as large as the Netherlands economically and are facing a period of restructuring, while at the same time they acquire companies abroad in an effort to globalize. Japan's electronic component sector occupies about 30% - 40% of the global electronic devices market, and are generally better positioned than Japan's electrical conglomerates, although these also face their own challanges. The report reviews and analyses Japan's top 8 electrical companies, and Japan's top 7 electronic component makers, as well as several related companies, and an analysis of the industry sectors. Subscribe to receive regular updates.

The report is a companion to our interview series on CNBC and BBC

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  • thank you for your interest. Yes, you can download this 230 page report here: http://www.eurotechnology.com/store/j_energy/sample.shtml
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  • @kbtokyo Thank you for your interest and comment. Great you are in Tokyo, so maybe we can meet sometime.
    Yes, you can purchase and download this report here: http://www.eurotechnology.com/store/j_energy/sample.shtml
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  • Great Slide,

    I have often created scenarios of the big 8 on red oceans and disruptive innovation.
    Japans electronics manufacturers are still operating in a red ocean with a product based mentality Business Model. There is a need to shift to a customer centric and jobs to be done focus on needs of the customer and ehnance or come up with new business models with compelling Value Propositions. Would it be possible to obtain a copy of your presentation. karlburrow@gmail.com or karl.burrow@karllestonecapital.com
    I am located in Tokyo.
       Reply 
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Japan's electronics manufacturers: "mono zukuri"

  1. 1. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’S ELECTRONICS MANUFACTURERS “MONO ZUKURI” 25th Edition, June 18, 2015 by Gerhard Fasol, PhD, Eurotechnology Japan KK http://www.eurotechnology.com/ fasol@eurotechnology.com this is a preview version with selected pages from the full report. download the full report here: http://www.eurotechnology.com/store/j_electrical/ 1
  2. 2. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’S ELECTRONICS MANUFACTURERS -VERSIONS 2 Subscribe to this report, and we will regularly send you the latest versions regularly. subscription, monthly payment, you can end the subscription any time (no refunds): http://store.eSellerate.net/s.asp?s=STR0576176470&Cmd=BUY&SKURefnum=SKU76634120266 subscription, annual payment, you can end the subscription any time (no refunds): http://store.eSellerate.net/s.asp?s=STR0576176470&Cmd=BUY&SKURefnum=SKU20943117748 Version Date Changes 1 February 19, 2009 2 March 17, 2009 3 March 22, 2009 4 March 23, 2009 5 July 3, 2009 6 7 July 4, 2009 8 July 5, 2009 9 July 10, 2009 10 11 January 18, 2011 12 October 1, 2012 13 November 13, 2012 14 November 15, 2012 15 November 18, 2012 16 January 4, 2013 17 January 28, 2013 document management companies: Ricoh and XEROX
  3. 3. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’S ELECTRONICS MANUFACTURERS -VERSIONS 3 Subscribe to this report, and we will regularly send you the latest versions regularly. subscription, monthly payment, you can end the subscription any time (no refunds): http://store.eSellerate.net/s.asp?s=STR0576176470&Cmd=BUY&SKURefnum=SKU76634120266 subscription, annual payment, you can end the subscription any time (no refunds): http://store.eSellerate.net/s.asp?s=STR0576176470&Cmd=BUY&SKURefnum=SKU20943117748 Version Date Changes 18 19 May 9, 2013 SONY updated, financial results updated 20 May 16, 2013 FY2012 data for Big-8 electronics makers added 21 May 18, 2013 Analysis added 22 August 4, 2103 Analysis added 23 September 25, 2013 Tokyo Electron / Applied Materials merger added 24 25 June 17, 2015 financial data, revision and updates
  4. 4. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 LICENSE • Thank you for purchasing licenses to our reports, and for your cooperation with our licensing conditions. • Only through your purchases can we continue to produce high-quality market reports from Japan • INTHE CASE OF SINGLE LICENSE: If you have purchased a single copy license of this report, you are not permitted to copy this report except for a single back-up copy • INTHE CASE OF CORPORATE LICENSE: in the case that your company has purchased a corporate license, you may distribute this report inside your company including protected corporate information servers locked to the outside, but you cannot distribute this report outside your company • ANNUAL SUBSCRIPTION: we offer annual subscriptions for a particular report, and also for all our reports in one single transaction at a great discount - please contact us for details. Corporations subscribing will receive all updates at the time of publication, so that you can be sure to have the latest up-to-date information • This research report comes without any warranty of any kind.The authors and Eurotechnology Japan K. K. do not warrant that the information in this report is without error, nor that the information serves any particular purpose. For legal advice please consult properly licensed legal professionals, for investment advice please consult properly licensed financial advisors.Trademarks mentioned are the property of their owners.
 Eurotechnology is a trademark or registered trademark in Japan and other countries. 4
  5. 5. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 EXECUTIVE SUMMARY: JAPAN’S ELECTRONICS MANUFACTURERS 5 Japan’s “Big 8” electronics companies (Hitachi, Panasonic, SONY, Sharp,Toshiba, Mitsubishi Electric, Fujitsu, NEC) combined have about US$ 600 Billion in revenues (sales), of similar economic size as the Netherlands, and have an important position in the global economy. Especially SONY is often described as “iconic”. While these top 8 Japanese electronics companies were dominating global electronics markets in the 1980-1990s, during the last 15 years they have not grown- combined compound annual growth rate is approximately zero, and their combined total profits over the last 15 years has been also approximately zero: essentially zero growth and zero profits for more than 15 years. While these companies still file very large numbers of patents, produce very important products, and their components are important for global supply chains, possess important technology, for a combination of factors, they have not succeeded to achieve their potential. Recently, the financial position of SONY, Sharp and Panasonic have deteriorated substantially, and Sharp management has announced that the survival of the company is in danger. 
 Overall these companies present extraordinary opportunities for improvement of performance. The second part of this report focuses on Japan’s top 7 electronic component makers (Murata, Kyocera,TDK,Alps Electronics, Nidec, Nitto Denko, Rohm).The financial position (growth and profits) of this group of companies is very much better positioned, they represent about 30%-40% of the global component market.The global electronics components market is estimated at around US$ 140-170 billion in 2012 and growing at an annual rate of around 10% to US$ 220 billion in 2017. However margins of Japan’s electronic component makers are overall declining, indicating increasing competition especially from China and South Korea, and that changes of business models, faster innovation or other action is necessary. Japanese electronics parts companies react in several ways to these challenges, especially also by overseas acquisitions of technology rich companies. Japan’s electrical companies embrace and celebrate “mono zukuri” (= craftsmanship, making things, the art of making things) as their core virtue.They emphasize manufacturing perfection as a competitive advantage.
  6. 6. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’S ELECTRICAL INDUSTRIES 6 This report focuses on 15 companies (plus a few other companies, such as Nintendo and Canon) (numbers in brackets are the code numbers at theTokyo Stock Exchange): •Japan’s 8 major consumer electronics makers •Hitachi Seisakusho (6501) •Panasonic (6752) •SONY (6758) •Mitsubishi Electric (6503) •Sharp (6753) •Toshiba (6502) •Fujitsu (6702) •NEC (6701) •Japan’s 7 major electronics component makers •Murata (6981) •Kyocera (6971) •TDK (6762) •Alps Electronics (6770) •Nidec (6594) •Nitto Denko (6988) •Rohm (6963)
  7. 7. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 AGENDA - LIST OF CONTENTS 7 •Executive summary •“mono zukuri” (= making things) as a philosophy and business model •Branding •“Galapagos effect”, Japan-Focus vs. globalization, and business model issues •Keiretsu industrial family bonds •Japan’s 8 major consumer electronics manufacturers •Industry sector overview, financial analysis and trends •Company overview and analysis •Japan’s 7 major electronic component makers •Industry sector overview, financial analysis and trends •Company overviews and analysis •Other companies covered in this report •Nintendo •Canon, RICOH •Oki •Citizen •Summary
  8. 8. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 “MONO ZUKURI”= THE ART OF MAKINGTHINGS 8
  9. 9. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’S ELECTRICAL CONGLOMERATES NEED A CHANGE OF BUSINESS MODEL 10
  10. 10. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’S ELECTRONICS PARTS MAKERS SHOW STRONG INCOME,WHILETHETOP-8 ELECTRONICS GROUPS COMBINED HAVE CLOSETO ZERO INCOME 12 •Japan’s top-7 electronics parts (right hand side figure) makers show strong income growth •Japan’s top-8 electronics groups (left hand side figure) combined show almost zero income over 17 years 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -2000 -1000 0 1000 netincome(YENbillion) Japan's 8 electronics manufacturers (annual net income) US$ -25 billion US$ -20 billion US$ -15 billion US$ -10 billion US$ 5 billion US$ 10 billion US$ 15 billion Hitachi Panasonic Sony Mitsubishi Electric Sharp Toshiba Fujitsu NEC Lehman shock (c)2015EurotechnologyJapanKK www.eurotechnology.com 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -200 0 200 400 600 netincome(YENbillion) Japan's 7 major electronics component makers (annual net income) US$ -2 billion US$ 2 billion US$ 4 billion US$ 6 billion Murata Kyocera TDK ALPS NIDEC NITTO ROHM (c)2015EurotechnologyJapanKK www.eurotechnology.com
  11. 11. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 GLOBALIZATIONVS JAPAN’S “GALAPAGOS EFFECT” 16
  12. 12. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’S “GALAPAGOS EFFECT” 17 “Galapagos effect” is a term which has been used since about 2005 even by Japanese Government to describe a situation, where Japanese companies develop new technologies, and bring new services and business models to Japan’s market, but fail to capture global value. The term “Galapagos effect” is often used to characterize Japan’s pioneering development of mobile internet and mobile internet phones starting with DoCoMo’s i- Mode in 1999, while Japanese mobile phone handset makers failed to capture global market share. Another similar example is electronic money and mobile payments, which Japan introduced much earlier than other countries, but where Japanese companies failed to make global impact or capture global value. Recently this term is used much more broadly in many areas, and is also used to characterize the current crisis of Japan’s electronics industry, especially SONY, SHARP and Panasonic.
  13. 13. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 “POST GALAPAGOS STUDY GROUP” 25 JAPANESE LEADERS + 1 FOREIGNER (GERHARD FASOL) WORKING FOR ONEYEAR ON CONCEPTSTO OVERCOME JAPAN’S “GALAPAGOS EFFECT” 20 see: http://www.eurotechnology.com/2013/10/07/galapagos/ and: http://www.eurotechnology.com/2013/08/05/galapagos-2/
  14. 14. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 “POST GALAPAGOS STUDY GROUP” 25 JAPANESE LEADERS + 1 FOREIGNER (GERHARD FASOL) WORKING FOR ONEYEAR ON CONCEPTSTO OVERCOME JAPAN’S “GALAPAGOS EFFECT” 21 see: http://www.eurotechnology.com/2013/10/07/galapagos/ and: http://www.eurotechnology.com/2013/08/05/galapagos-2/
  15. 15. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 RESULTS OFTHE GALAPAGOS WORKING GROUP 22 Recommendations to: 1. telecom operators 2. equipment makers 3. content companies Critical factors for success: 1. people and diversity 2. focus (restructuring) 3. international from day 1 4. speed
  16. 16. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 THE KEIRETSU FAMILY BONDS NEEDTO RELAX WITH HISTORY - BUT KEEPTHE GOOD PARTS 24
  17. 17. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 BRAND 26
  18. 18. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 BRANDS 27 Japanese electrical companies have underestimated the importance of brands. Panasonic is ranked No. 78 by Interbrand 0 10 20 30 40 50 60 70 80 90 100 BrandvalueUS$Billion CocaCola1 IBM2 NOKIA5 Toyota6 SONY25 Nintendo40 Blackberry73 Panasonic78 Motorola87 Brand value 2008, Source: Interbrand
  19. 19. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’S “TOP-8” ELECTRONICS MANUFACTURERS 29
  20. 20. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’STOP-8 ELECTRONICS MANUFACTURING GROUPS 30 •Japan’s “top-8” electronics manufacturers combined have about US$ 450 billion in sales, similar in size to the economy of the Netherlands. •Hitachi •Panasonic •SONY •Mitsubishi Electric •Sharp •Toshiba •Fujitsu •NEC •Combined, the “big 8” electronics companies have •revenues = ¥ 42,444.3 billion (US$ 414 billion) •net losses = ¥-909 billion (US$ -8.9 bill) •combined market cap = ¥ 14,732 billion (US$ 144 billion) (compare to:Apple’s market cap of US$ 410 Billion, and GE’s market cap of US$ 240 Billion).
  21. 21. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’S ELECTRONICS SECTOR HAS SHRUNK IN GLOBAL IMPACT AND MARKET CAP 33 Because Japan’s electronics sector has little prospect for growth unless dramatic restructuring and management changes are done, currently market capitalization is comparatively low. In the current smart-phone battles between the Apple camp and the Google/Samsung camp, Japanese electrical makers have little impact. The combined market cap of all Japanese electronics makers is very much smaller than Apple’s, Samsung’s, Microsoft’s or Google’s alone. The challenge for Japan is to either create sufficient new companies such as SoftBank, and/or to revive the traditional “Big-8” and other large corporations to create growth and value comparable to Google, Samsung,Apple, Microsoft et al. Apple & MS camp Google Android camp Japan's Big 8 0 200 400 600 800 1000 1200 marketcapUS$Billion Apple $ 407 B Microsoft $ 281 B Oracle eBay Google $ 301B Samsung $ 202B HTC LG Motorola Mobility Hitachi Panasonic SONY Mitsubishi Electric SHARP Toshiba Fujitsu NEC market caps May 15, 2013 c2013EurotechnologyJapanKK www.eurotechnology.com Apple & MS camp Google Android camp Japan's Big 8 0 200 400 600 800 1000 1200 marketcapUS$Billion Apple $ 625 B Microsoft $ 250 B Oracle eBay Google $ 246B Samsung $ 177B HTC LG Motorola Mobility Hitachi Panasonic SONY Mitsubishi Electric SHARP Toshiba Fujitsu NEC market caps Oct 2012 c2013EurotechnologyJapanKK www.eurotechnology.com
  22. 22. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’S 8 MAJOR ELECTRONICS MAKERS 36 Japan’s top 8 electrical groups combined and averaged over the last 17 years have achieved essentially zero net profit (actually net average annual losses ofYEN 12 billion/year). Losses in difficult years wipe out the profits achieved in good years. This fact demonstrates that the business model of these groups is not sustainable, and will need to be changed via restructuring.At the same time, these groups own excellent technologies, therefore represent “hidden value”. 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -2000 -1000 0 1000 netincome(YENbillion) Japan's 8 electronics manufacturers (annual net income) US$ -25 billion US$ -20 billion US$ -15 billion US$ -10 billion US$ 5 billion US$ 10 billion US$ 15 billion Hitachi Panasonic Sony Mitsubishi Electric Sharp Toshiba Fujitsu NEC Lehman shock (c)2015EurotechnologyJapanKK www.eurotechnology.com
  23. 23. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 NO REVENUE GROWTH FOR 17YEARS 41 Japan’s top-8 electronics groups show no growth over 17 years - combined and each separately, except for moderate growth of Hitachi. ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● 2000 2005 2010 2015 2020 0 10000 20000 30000 40000 50000 60000 70000 sumofannualrevenues(BillionYEN) US$ 100 Bill. US$ 200 Bill. US$ 300 Bill. US$ 400 Bill. US$ 500 Bill. US$ 600 Bill. Sum of annual revenues of Japan's top 8 electronics makers mean annual revenue (FY1997 - FY2014) (c)2015EurotechnologyJapanKK www.eurotechnology.com
  24. 24. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 HITACHI “INSPIRETHE NEXT” 44
  25. 25. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 201545 HITACHI Hitachi = named after Hitachi town, where the company was founded. part of the historic Dai-Ichi Kangin keiretsu Founded 1910 by Namihei Odaira as a repair shop, and to produce Japan’s first electrical motors Founder Namihei Odaira Headquarters Chiyoda-ku,Tokyo Stock Exchange TokyoTSE 6501 Consolidated sales YEN 9,665.8 Billion (US$ 122 Billion) (FY2011, ended March 31, 2012) Number of employees 323,540, consolidated (March 2012) Major share holders Major business areas industrial infrastructure.Trains, power stations, medical equipment.
  26. 26. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 HITACHI- ANNUAL GROWTH RATE = 0.9% OVER 17YEARS 46 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● 2000 2005 2010 2015 2020 0 2000 4000 6000 8000 10000 12000 14000 annualrevenue(YENBillion) US$ 50 Bill. US$ 100 Bill. Annual revenues of Hitachi (c)2015EurotechnologyJapanKK www.eurotechnology.com Over the period FY1997 - FY2014 Hitachi’s revenues (sales) have grown fromYEN 8416.834 Billion toYEN 9761.970 Billion, ie by an annual compound growth rate CAGR of 0.9%.
  27. 27. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 HITACHI - PRESIDENT HIROAKI NAKANISHI 49 President Hiroaki Nakanishi was appointed President of Hitachi in April 2010. Hiroaki Nakanishi set out to “rebuild a strong Hitachi”, and transform Hitachi into a truly global company, with the “Hitachi SmartTransformation Project”. Hitachi now focuses on “social innovation business”, creating sophisticated social infrastructure based on information technology. Social infrastructure here means transportation, smart cities, electrical industry, and related social infrastructure. In particular, extremely unusual for a traditional Japanese corporation, Hitachi recently proposed three non-Japanese, foreign Board-Members (one internal, Hitachi Europe Chairman, Sir Stephen Gomersall), and two outside foreign Board Members (PhilipYeo and George Buckley)
  28. 28. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 HITACHI’S BUSINESS SECTORS 50 Hitachi includes a very wide variety of business segments. Hitachi includes a very strong IT segment, therefore targets “social infrastructure” as a core business, where Hitachi can combine strengths in IT with products such as railways, or white goods, or smart grids and electricity infrastructure This very wide spread of business segments is an advantage and it’s lack of focus can also be a disadvantage. IT 16 Power systems 8 Infrastructure 11 Electronics 10 Construction Machinery 7 Materials 13 Automotive 8 Devices 7 Consumer products 8 Financial Services 3 other 9 Hitachi business sectors
  29. 29. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 BENCHMARKING 56 In the past Hitachi only compared it’s performance with other Japanese companies. Only now, 2011/2012 did Hitachi start benchmarking with the best global companies: This figure compares Hitachi’s cost structure with two Japanese competitors (A, B) and five non-Japanese companies (companies C, D, E, F). Japanese companies including Hitachi have: •much higher costs of sales (high production costs) •lower R&D spending than some competitors •much lower operating income than non-Japanese competitors Hitachi decided on a drastic cost-reduction program to increase income to enable growth (source: Hitachi public presentation) Hitachi Japanese A Japanese B company C company D company E company F company G 0 10 20 30 40 50 60 70 80 90 100 costs Benchmarking Hitachi vs Japanese and global competitors Cost of sales administrative R&D Operating income previous to 2011 only benchmarking with Japanese competitors was done Japanese competitors non Japanese competitors c2013EurotechnologyJapanKK www.eurotechnology.com
  30. 30. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 PANASONIC SLOGAN:“IDEAS FOR LIFE” 58
  31. 31. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 201559 Panasonic (before Oct 1, 2008: Matsushita) Matsushita=name of founder Founded March 7, 1918 as Matsushita Electric Industries Co. Founder Konosuke Matsushita, first selling lamp sockets, then bicycle lamps under the brand “National” Headquarters Kadoma, Osaka, Japan Stock Exchange TokyoTSE 6752 Consolidated sales YEN 8693 Billion (US$ 110 Billion) (FY ending March 2011) Number of employees 366,937 (consolidated March 2011) Major share holders Major business areas 88 business units. Home appliances,TVs and white goods, components and devices, digital cameras
  32. 32. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 -0.9%: NEGATIVE NET MARGIN ON AVERAGE OVER 17YEARS 63 •Panasonic margins averaged over the period FY1998-FY2014 are: •average operating margin = 2.8% •average net margin = -0.9% ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ 2000 2005 2010 2015 2020 -15 -10 -5 0 5 10 annualoperatingmargin(YENBillion) Panasonic Panasonic operating margin = 2.8% Panasonic net margin = -0.9% Sanyo operating margin (c)2015EurotechnologyJapanKK www.eurotechnology.com
  33. 33. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 PANASONIC STRENGTHS 64
  34. 34. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 SANYO, NOW PART OF PANASONIC SLOGAN:“THINK GAYA” 67
  35. 35. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 SANYO’S SOLAR ARC, NOW PANASONIC SOLAR ARC 71 •Sanyo’s Solar Ark has 5046 single crystal solar cell battery panels, achieves up to 630kW of solar power output and delivers about 530,000 kWh of energy per year.The Solar Ark is about 315m long and weighs 3000 tons. •Corresponds to a CO2 reduction of 95 tons-C/year •You can see Sanyo’s Solar Arc from theTokaido-Shinkansen line, if you are seated on the right hand side of the train between Kyoto and Nagoya station, when taking theTokaido Shinkansen fromTokyo to Osaka (or left hand side seat when traveling from Osaka toTokyo).
  36. 36. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 MITSUBISHI ELECTRIC SLOGAN:“CHANGES FORTHE BETTER” 72
  37. 37. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 SHARP FOUNDERTOKUJI HAYAKAWA: “MAKE PRODUCTSTHAT OTHERS WANTTO IMITATE” 76
  38. 38. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 SHARP: MARGINS 85 •SHARP achieved consistently high margins – until the crisis 2009, and aimed for recovery from FY2010, and now aims for recovery in FY2013…FY2015… ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 2000 2005 2010 2015 2020 -30 -20 -10 0 10 20 30 annualoperatingandnetmargin(%) Annual margin SHARP (%) operating margin (%) net margin (%) (c)2015EurotechnologyJapanKK www.eurotechnology.com
  39. 39. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 TOSHIBA SLOGANS: JAPAN:“LEADING INNOVATION” GLOBAL:“COMMITTEDTO PEOPLE. COMMITTEDTOTHE FUTURE” 86
  40. 40. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 TOSHIBA’S ACCOUNTING RESTATEMENTS, SPRING 2015 91
  41. 41. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 TOSHIBA’S ACCOUNTING RESTATEMENTS SPRING 2015 92 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 2000 2005 2010 2015 2020 -300 -200 -100 0 100 200 300 400 annualoperatingincome(YENBillion) US$ -2 Bill. US$ -1 Bill. 0 US$ 1 Bill. US$ 2 Bill. US$ 3 Bill. Toshiba operating income restatement original op. income restated op. income (c)2015EurotechnologyJapanKK www.eurotechnology.com •In spring 2015, in a series of announcements,Toshiba declared that some part of their revenues and income announcements needed restatement.Toshiba announced an internal and an external independent commission investigating the accounting restatements. •We have read some of the restatement announcements, and to be honest, find them hard to understand.We made a best effort to show our understanding ofToshiba’s income restatements in the figure above. •At this stage the total value of the restatements seems to be on the order of US$ 0.5 billion. •The underlying reasons for the restatements seems to be underestimation of costs for public infrastructure contracts, and issues with the accounting for different stages of completion of multi-year projects.
  42. 42. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN EXCHANGE CEO ATSUSHI SAITO USESTOUGH WORDS REGARDINGTOSHIBA’S ACCOUNTING RESTATEMENT 93 •In a press conference on June 12, 2015 Mr Atsushi Saito, the CEO of the Japan Exchange Group, which includes theTokyo and Osaka Stock Exchanges, questioned aboutToshiba’s income restatements, said that “he felt very ashamed forToshiba”, and he felt “very puzzled whyToshiba is so lazy to check their accounting”. •Read a full record of Mr Atsushi Saito’s Press Conference here: http://www.eurotechnology.com/ 2015/06/14/japan-exchange-group-ceo/
  43. 43. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 FUJITSU SLOGAN:“THE POSSIBILITIES ARE INFINITE” 94
  44. 44. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 NEC SLOGAN:“EMPOWERED BY INNOVATION” 98
  45. 45. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 NEC 99 •August 31, 1898 by Kunihiko Iwadare andTakeshiro Maeda, and WalterTenney Carleton, using facilities bought from Miyoshi Electrical Manufacturing Company. •July 17, 1899 converted into Joint-Venture with Western Electric Company (US) (the day a new US- Japan treaty allowed such joint-ventures).Was the first Japanese joint venture with foreign capital. First products: telephones and switches
  46. 46. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015100 NEC Nippon Electric Company (renamed NEC in 1983) Part of Sumitomo keiretsu Founded August 31, 1898 by Kunihiko Iwadare andTakeshiro Maeda and Walter Tenney Carleton. July 17, 1899 converted to JV with Western Electric Founder Kunihiko Iwadare,Takeshiro Maeda and WalterTenney Carleton Headquarters Tokyo, Minato-ku Stock Exchange TokyoTSE 6701 Consolidated sales YEN 3115 Billion (US$ 39 Billion) (FY2010 ending March 31, 2011) Number of employees 115,840 consolidated (March 31, 2011) Major share holders Major business areas IT/network solutions, mobile/personal solutions, electronic devices
  47. 47. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 NEC HEADQUARTERS INTOKYO 101
  48. 48. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 NEC: REVENUES AND INCOME 102 •NEC’s revenues (sales) have been sliding downwards continuously since their peak in 2001. •NEC’s income averaged over the 17 year period FY1998-FY2014 is •average annual operating income =YEN 35 billion (US$ 350 million)/year •average annual net loss =YEN -29 billion (US$ 290 million loss)/year ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● 2000 2005 2010 2015 2020 0 1000 2000 3000 4000 5000 6000 annualrevenue(YENBillion) US$ 10 Bill. US$ 20 Bill. US$ 30 Bill. US$ 40 Bill. US$ 50 Bill. Annual revenues of NEC (c)2015EurotechnologyJapanKK www.eurotechnology.com ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ 2000 2005 2010 2015 2020 -400 -200 0 200 400 annualoperating/netincome(YENBillion) US$ -2 Bill. 0 US$ 2 Bill. Annual income NEC operating income = ¥ 35 billion net income = ¥ -29 billion (c)2015EurotechnologyJapanKK www.eurotechnology.com
  49. 49. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 NEC- MARGINS 103 •NEC’s income/profit margins averaged over the period FY1998 - FY2014 are: •average operating margin = 1.1% •average net margin = -0.6% (loss) ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ 2000 2005 2010 2015 2020 -10 -5 0 5 10 annualoperating/netmargin(%) Annual operating/net margin NEC (%) average operating margin = 1.1% average net margin = -0.6% (c)2015EurotechnologyJapanKK www.eurotechnology.com
  50. 50. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 SONY SLOGAN:“SONY. LIKE NO OTHER.” 104
  51. 51. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 SONY: INCOME BY SEGMENT 113 •SONY’s fortunes have declined dramatically since the core value moved from device makers to networks - ie from SONY to Apple/Google/Facebook, and SONY fell back compared to Samsung. •in the financial year ending March 2013, SONY recorded the first profit in several years, however, much of this profit is profit on asset sales as shown in the right-most column. 2009 2010 2011 2012 2013 300 200 100 0 100 200 300 400 500 operatingincomeBillionYEN SONY operating income by segment Billion YEN years are Financial Years ending March 31 consumer products & services CPS professional devices, solutions PDS pictures movies music financial services mobile SOMC other pictures music financial Mobile MP&C other Imaging Products IP&S game Home Entertainment and Sound HE&S Devices US HQ M3 Osaki HQ DeNA c2013EurotechnologyJapanKK www.eurotechnology.com
  52. 52. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’S 7 MAJOR ELECTRONIC COMPONENTS MAKERS 114
  53. 53. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’S 7 MAJOR ELECTRONIC COMPONENTS MAKERS GROW! 115 While Japan’s electrical groups largely face financial difficulties, low market capitalization, and are faced with the need of restructuring and search for new business models, Japan’s major electronic component makers (with the exception of ROHM) are generally in a much better situation. One major reason for the much better position of Japan’s electronic component makers, is that the component makers typically have a much more focused business model.They focus on a segment of devices, e.g. ceramic capacitors in the case of Murata, and aim to achieve a very high global market share and high margins in their chosen segment. While Japan’s top 8 electrical groups in total represent about US$ 600 Billion/year in sales, the top 7 electronic parts makers represent a smaller industry sector, in total approx. US$ 60 billion/year in sales. In this section we focus on the top 7 electronic parts makers (numbers in brackets are theTokyo Stock Exchange codes): •Murata (6981) •Kyocera (6971) •TDK (6762) •Alps Electronics (6770) •Nidec (6594) •Nitto Denko (6988) •Rohm (6963)
  54. 54. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPANESE MANUFACTURERS AND APPLE’S I-PHONE 119 Apple costs 23.4 Apple margin 49.1 Japan 9.4 Germany 4.6 S Korea 3.6 USA 1.7China 1 other 7.4 iPhone value analysis WSJ Dec 15, 2010 Asymco Japan 34 Germany 17S Korea 13 USA 6 China 3.6 other 27 iPhone production WSJ Dec 15, 2010 Asymco Based on reports we estimate that about 25% of the total price (approx. US$ 800) of each iPhone is for non-Apple components and assembly. Out of this 25% segment, Japanese companies are estimated to supply about 34%, mainly components, such as ceramic capacitors, antenna and displays.This Japanese segment corresponds to approximately 9.4% of end sales price of the i-Phone. Since Japanese electronic component makers in the best case achieve a 10% profit margin, this Japanese profit amount corresponds to about 0.9% of each i-Phone, compared to Apple’s approx. 50% profit margin.
  55. 55. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’S 7 MAJOR ELECTRONIC COMPONENTS MAKERS 123 Net incomes of Japanese electronic component makers are positive and overall growing except during downturns (9/11 terror attacks, and Lehman-Shock led to business downturns). 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -200 0 200 400 600 netincome(YENbillion) Japan's 7 major electronics component makers (annual net income) US$ -2 billion US$ 2 billion US$ 4 billion US$ 6 billion Murata Kyocera TDK ALPS NIDEC NITTO ROHM (c)2015EurotechnologyJapanKK www.eurotechnology.com
  56. 56. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 JAPAN’S 7 MAJOR ELECTRONIC COMPONENTS MAKERS 131 average operating margins over the period FY1998-FY2014 is 9.7% average net margin over the same period is 4.8% ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ 2000 2005 2010 2015 2020 -30 -20 -10 0 10 20 30 totaloperatingandnetmargin(%) Total margin (%) of Japan's top 7 electronic components makers (c)2015EurotechnologyJapanKK www.eurotechnology.com
  57. 57. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 MURATA “INNOVATOR IN ELECTRONICS” “THE WORLD’S NO. 1 SUPPLIER OF PASSIVE ELECTRONIC COMPONENTS” 132
  58. 58. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 MURATA HEAD QUARTERS BUILDING IN KYOTO 133
  59. 59. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015134 Murata Manufacturing Co Ltd family name of the founder Akira Murata Founded started in October 1944 by Akira Murata in Kyoto December 1950 reorganized as Murata Manufacturing Co Founder Akira Murata Headquarters Kyoto Stock Exchange TokyoTSE 6981 Consolidated sales YEN 584 Billion (US$ 7.3 Billion) (FY2011 ending March 31, 2012) Number of employees 35,337 consolidated (March 31, 2011) Major share holders Major business areas passive electronics components: ceramic capacitors (worlds smallest), ceramic filters, ceramic resonators, dielectric filters
  60. 60. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 MURATA: RECENT ACQUISITIONS 135 •RF Monolithics (announced April 14, 2012) •www.frm.com •wireless connectivity solutions ranging from wireless sensor networks to machine-to-machine (M2M) technology •TOKO Inc. (announced March 22, 2012) •Manufacture of coil products, module products, excellence in metal alloy products •Purpose: investments from Murata inTOKO will be used for R&D and investment in manufacturing facilities for power inductors •Amount of Murata investment inTOKO •Third party share allocation:YEN 2000 million (US$ 25 million) •Bonds with share warrants:YEN 1500 million (US$ 19 million) •Renesas Electronics, Power Amplifier Business and semiconductor Nagano device business unit, (announced March 1, 2012) •Purpose is to strengthen Murata’s position in mobile phone front-end modules (FEM) •Renesas Eastern Japan Semiconductor Nagano will become Komoro Murata Manufacturing Co., Ltd. •Total acquisition price wasYEN 10,740 million (US$ 150 million) •VTITechnologies Oy (Vantaa, Finland) (announced Oct 11, 2011) •Total acquisition price wasYEN 18,533 million (US$ 226 million) •VTI is global leader in MEMS technology, particularly for low-G accelerometers and cardiac rhythm management (CRM) systems
  61. 61. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 YEN 1000 BILLIONTARGET FOR 2015 ACHIEVED! 136 •In 2008, Murata announced the sales (Annual Revenues) target of YEN 1000 Billion (YEN 1Trillion) for 2015.While many Japanese electronics companies fail to achieve such targets (e.g. CANON), Murata did achieve and exceed thisYEN 1000 Billion sakes target already one year early in FY2014. •Murata not only achieved this sales target, but also maintained income growth and high margins. •Murata supplies ceramic capacitors for smartphones, and the growth of the smartphone market, and their increasing sophistication is driving Murata’s success. ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ◆ 2000 2005 2010 2015 2020 -100 0 100 200 300 400 500 annualoperating/netincome(YENBillion) US$ 1.0 Bill. US$ 2.0 Bill. US$ 3.0 Bill. US$ 4.0 Bill. Annual income Murata operating income net income (c)2015EurotechnologyJapanKK www.eurotechnology.com ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● 2000 2005 2010 2015 2020 0 200 400 600 800 1000 1200 1400 annualrevenue(YENBillion) US$ 2 Bill. US$ 4 Bill. US$ 6 Bill. US$ 8 Bill. US$ 10 Bill. US$ 12 Bill. US$ 14 Bill. Annual revenues Murata (c)2015EurotechnologyJapanKK www.eurotechnology.com
  62. 62. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 MURATA: HEALTHY OPERATING MARGIN 137 •Murata’s operating margin has been traditionally high – around 20%, which Murata manages to maintain, except for the post-Lehman Shock period. ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 2000 2005 2010 2015 2020 -10 0 10 20 30 40 annualoperating/netmargin(%) Annual margin Murata (%) operating margin net margin (c)2013EurotechnologyJapanKK www.eurotechnology.com
  63. 63. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 KYOCERA = KYOTO CERAMICS SLOGAN:THE NEWVALUE FRONTIER MOTTO:“RESPECTTHE DEVINE AND LOVE PEOPLE 138
  64. 64. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 KAZUO INAMORI FOUNDER OF KYOCERA 139 •born January 30, 1932 •1955 graduated from Kagoshima University with B.Sc. in Applied Chemistry •April 1, 1959 founded Kyoto Ceramics •1984 founded DDI, today part of KDDI •1984 founded Inamori Foundation which awards the Kyoto Prize •2010 CEO of Japan Airlines, turns around Japan Airlines after bankruptcy
  65. 65. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 TDK (+ EPCOS) “CONTRIBUTETO CULTURE AND INDUSTRYTHROUGH CREATIVITY” 148
  66. 66. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015149 TDK abbreviation of original company name:Tokyo Denki Kagaku Kogiyou Founded founded December 7, 1935 asTokyo Denki Kagaku Kogiyo KK as first company to commercialize ferrite materials, invented in Japan Founder Kenzo Saito (based on Ferrite, invented byYogoro Kato andTakeshiTakei) Headquarters Tokyo Stock Exchange TokyoTSE 6762 Consolidated sales YEN 815 Billion (US$ 10.3 Billion) (2011, ending March 31, 2012) Number of employees 80,590 consolidated (March 31, 2010) Major share holders Major business areas passive electronic components, acquired EPCOS (formerly the passive component division of SIEMENS)
  67. 67. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 ACQUISITION OF EPCOS 150 •On July 31, 2008TDK and EPCOS signed an agreement, wherebyTDK launched an offer to buy all outstanding shares of EPCOS, thus acquiring 100% of EPCOS. •Value of the acquisition transaction was on the order ofYEN 200 Billion (approx. US$ 1.859 billion) •EPCOS was created in 1999 from Siemens-Matsushita Components, which was a joint venture between SIEMENS and Matsushita, created in 1989. •The transaction was completed on October 1, 2009, and the companyTDK-EPC was created. •TDK-EPC has approx. 36,000 employees globally, and global sales are approx. EURO 1.8 Billion (in FY 2012). •Products are mainly passive electronic components, including: •capacitors •ceramic components •EMC filters •inductors •resistors •RF modules •surface acoustic wave components (ASW filters) •surge arresters •ferrites •For more details: http://eu-japan.com/2008/07/tdk-epcos/
  68. 68. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 TDK MARGIN 152 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 2000 2005 2010 2015 2020 -20 -10 0 10 20 annualoperatingandnetmargin(%) Annual margin TDK (%) operating margin net margin (c)2015EurotechnologyJapanKK www.eurotechnology.com •TDK’s margins are steady and in the 10% range except for the September-11 and the Post-Lehman Shock crisis periods.
  69. 69. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 ALPS “PERFECTINGTHE ART OF ELECTRONICS” 153
  70. 70. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 NIDEC MOTTO:ALL FOR DREAMS “FOR EVERYTHINGTHAT SPINS AND MOVES” “AIMINGTO BETHE WORLD’S NUMBER 1 MANUFACTURER OF COMPREHENSIVE DRIVETECHNOLOGY” 157
  71. 71. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 LONGTERMVISION ANDTARGETS 164 •FY2020 targets: •YEN 2 trillion sales (US$ 20 billion) •15% operating income ratio/margin •FY2025 targets: •YEN 5 trillion sales (US$ 50 billion) •FY2030 targets: •YEN 10 trillion sales (US$ 100 billion)
  72. 72. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 PLANS 165 •Nidec Business School top open in FY2016 •Corporate University to teach “Nagamori-ism” to future executives (Nagamori Shigenobu is the founder of Nidec) •Nidec R&D Center in Japan, opened in June 2012 •Production Engineering Laboratory, to open in FY2016 •to realize optimum production engineering methods for Industrie-4.0
  73. 73. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 NITTO DENKO “ALWAYS ONE STEP AHEAD IN MAKING GOOD THINGS HAPPEN WITH SHEETS AND FILMS” 166
  74. 74. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 ROHM 172
  75. 75. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 OTHER ELECTRICAL COMPANIES COVERED INTHIS REPORT 177
  76. 76. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 IMAGING AND DOCUMENT MANAGEMENT COMPANIES 178
  77. 77. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 CANONVS RICOHVS FUJI-XEROX 179 •This section compares Japan’s top imaging and document management companies.These are: •Canon •RICOH •Fuji-Xerox •While the traditional photo-copying business is dropping, CANON has several business segments based on imaging. •Fuji-Xerox is the longest standing and successful joint-venture between an US and a Japanese company. •In this section we focus on comparing Canon, RICOH and XEROX. •We will expand this section in future editions of this report. Please subscribe to be sure to receive updates of this report.
  78. 78. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 CANON 180
  79. 79. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 RICOH 185
  80. 80. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 COMPARING CANON, RICOH AND XEROX 189
  81. 81. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 NINTENDO 194 For a detailed report on Nintendo and Japan’s game sector see: http://www.eurotechnology.com/jgames/
  82. 82. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 OKI ELECTRIC INDUSTRIES SLOGAN: OPEN UPYOUR DREAMS 202
  83. 83. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 CITIZEN “MICRO HUMANTECH” 208
  84. 84. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 TOKYO ELECTRON ANDTHE MERGER WITH APPLIED MATERIALS HAS BEEN CANCELLED DUETO OBJECTION BY REGULATORY AUTHORITIES 212
  85. 85. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 TOKYO ELECTRON 213
  86. 86. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 APPLIED MATERIALS 217
  87. 87. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 ACQUISITION OFTOKYO ELECTRON BY APPLIED MATERIALS - HAS BEEN CANCELLED 220
  88. 88. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 SUMMARY 226
  89. 89. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 SUMMARY: JAPAN’S ELECTRICAL MANUFACTURERS 227 Japan’s “top-8” electrical companies (Hitachi, Panasonic, SONY, Sharp,Toshiba, Mitsubishi Electric, Fujitsu, NEC) combined have about US$ 500 Billion in revenues (sales), of similar economic size as the Netherlands, and have an important position in the global economy. While these companies were dominating global markets in the 1980-1990s, during the last 15 years they have not grown, and their combined profits over the last 15 years has been approximately zero. While these companies still file very large numbers of patents, possess important technology, for a combination of factors, they have not succeeded to achieve their potential. Recently, the financial position of SONY, Sharp and Panasonic have deteriorated substantially, and Sharp management has announced that the survival of the company is in danger. 
 Overall these companies present extraordinary opportunities for improvement of performance. The second part of this report focuses on Japan’s top 7 electronic component makers (Murata, Kyocera,TDK,Alps Electronics, Nidec, Nitto Denko, Rohm).The financial position (growth and profits) of these group of companies is better positioned, they represent about 30%-40% of the global component market, which grows at 10% / year.The global electronics components market is estimated at around US$ 140-170 billion in 2012 and growing at an annual rate of around 10% to US$ 220 billion in 2017. However their margins are overall declining, indicating that change of business model is necessary. Japan’s electrical companies embrace “mono zukuri” (= making things, the art of making things) as a virtue.They emphasize manufacturing perfection as a competitive advantage.
  90. 90. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 GLOSSARY 228
  91. 91. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 GLOSSARY: JAPANESE FINANCIALYEARS 229 Japanese financial year Heisei (current Emperor) Period FY2007 H19 平成19年度 April 1, 2007 - March 31, 2008 FY2008 H20 平成20年度 April 1, 2008 - March 31, 2009 FY2009 H21 平成21年度 April 1, 2009 - March 31, 2010 FY2010 H22 平成22年度 April 1, 2010 - March 31, 2011 FY2011 H23 平成23年度 April 1, 2011 - March 31, 2012 FY2012 H24 平成24年度 April 1, 2012 - March 31, 2013 FY2013 H25 平成25年度 April 1, 2013 - March 31, 2014 FY2014 H26 平成26年度 April 1, 2014 - March 31, 2015 FY2015 H27 平成27年度 April 1, 2015 - March 31, 2016
  92. 92. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 EUROTECHNOLOGY JAPAN KK 230
  93. 93. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 EUROTECHNOLOGY JAPAN KK FOUNDED: FEBRUARY 1997 INTOKYO 231 Services and products - focus areas are high-technology, telecommunications, software, middle-ware, environmental technology and medical equipment: - Market entry to Japan for European and US high-tech companies, turn-round, reshaping, planning and building of distribution networks - European business development and strategy for Japanese companies - M&A (European and US companies acquiring Japanese companies, Japanese companies acquiring or investing in Europe) - Turn-round preparations and management of foreign business in Japan - Market research and strategy - Due diligence of high-tech companies, environmental due-diligence - Advisory services for investment fund managers and investors in technology fields - we publish a series of market reports for about 10 years, which are purchased world-wide, distributed direct and via distribution partners: http://www.eurotechnology.com/store/
  94. 94. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 EUROTECHNOLOGY JAPAN KK 232 - Leading high-technology business development boutique inTokyo, working globally - Founded in 1996/1997 - 14 years experience, relationships, cooperations and success record. - CEO works with Japan’s high-tech / telecom sector since 1984 - 27 years experience, resources, cooperations. - Wide network of cooperations in Governments, Embassies, trading companies, distributors, finance, VCs, traditional corporations, venture start-ups, industry associations - Experience: market-entry, restructuring, M&A, acquisitions, due-diligence Customers include: - More than 100 investment fund managers - Industrial customers: - NTT-Communications, SIEMENS, DeutscheTelekom, Cubic, Unaxis (now: Oerlikon), CITI Group, CLSA Asian Markets, Genscape, Google, IKEA, Isabellenhuette, Landis+Gyr, National Instruments, Swisscom,TechnoCom, - Government - NewYork Police Department, European Union,TEKES (Technology Research funding organization of the Government of Finland) Deep Japanese technology market knowledge - we publish a series of market reports for about 10 years, which are purchased world-wide.You can purchase our reports via eSellerate: http:// store.eSellerate.net/s.aspx?s=STR0576176470 and from http://www.eurotechnology.com/store/
  95. 95. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 GERHARD FASOL PROFILE: HTTP://WWW.FASOL.COM/PROFILE/ 233 - Worked successfully with Japan’s high-tech sector since 1984 - 27 years. Came first to Japan in 1984 to help build NTT’s first international R&D cooperation on semiconductor lasers - Entrepreneur inTokyo since 1996, Eurotechnology Japan KK worked with many large corporate groups (e.g. SIEMENS, NTT, DeutscheTelekom,Asahi Glass...), more than 100 investment fund managers - Assoc. Professor of Electrical Engineering atTokyo University. Record of Fasol-Laboratory atTokyo University: http://www.fasol.com/tokyo_university/ - Elite “Sakigake” (Pioneer) R&D project on Spin-Electronics of Japanese Government Science and Technology Agency.This work was evaluated by US National Science Foundation and US Department ofTrade: http://www.wtec.org/loyola/erato/ch7_5.htm - Co-initiator of spin-electronics device research in Japan, one of the first to start work on spin- electronics in Japan in 1991 - Tenured Faculty member at Cavendish Laboratory/University of Cambridge. - Assoc. Professor of Electrical Engineering atTokyo University - PhD in Solid-State Physics (Cambridge University,Trinity College, UK) - Diplom-Physiker, Ruhr-University Bochum (Diplom-Thesis on Superconductivity) - Publication list (Books, patents and publications, several publications are specifially concerning electron-spin and spin-electronics): http://www.fasol.com/profile/publications.shtml - Languages: English, German (native), French, Japanese, and some Swedish
  96. 96. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 GERHARD FASOL WITHTETSUZO MATSUMOTO, EXECVP OF SOFTBANK MOBILE CORPORATION 234
  97. 97. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 “POST GALAPAGOS STUDY GROUP” 25 JAPANESE LEADERS + 1 FOREIGNER (GERHARD FASOL) WORKING FOR ONEYEAR ON CONCEPTSTO OVERCOME JAPAN’S “GALAPAGOS EFFECT” 235
  98. 98. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 “POST GALAPAGOS STUDY GROUP” 25 JAPANESE LEADERS + 1 FOREIGNER (GERHARD FASOL) WORKING FOR ONEYEAR ON CONCEPTSTO OVERCOME JAPAN’S “GALAPAGOS EFFECT” 236
  99. 99. (c) 2015 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (25th edition) June 18, 2015 CONTACT AND MORE INFORMATION 237 Contact •Gerhard Fasol PhD •Eurotechnology Japan KK,Tokyo, Japan •http://www.eurotechnology.com/ •Mobile +81-90-8594-6291 •fasol@eurotechnology.com •gfasol@gmail.com More information: •reports:http://www.eurotechnology.com/store/ •twitter: http://twitter.com/gfasol/ •website: http://www.eurotechnology.com/ •personal site: http://fasol.com

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