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1. Market Brief Japan
Electronic Components
& Semiconductor Industry 2008
2009

2. Summary
• Japan, with the second largest economy in the world, remains globally competitive by a strong and
dynamic electronics industry
• electronic components and semiconductors are an integral part of that industry
• the strong demand for digital consumer electronics and other high-end products featuring integrated chips
is driving production
• trends in semiconductor applications in
wireless and car electronics are especially
noteworthy
• despite the trend among Japanese firms
to outsource manufacturing to overseas
production centers, semiconductors
continue to be produced locally
• the Japanese market for chips, as
demonstrated by the phenomenon of
Sony’s Playstation 3, is vibrant and healthy
• also, chip applications in car electronics
for Japan are also on an upward trend
• local production in Japan for high-quality
items is remaiinng high
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3. Market Overview
• according JEITA, global production in the electronics and IT industries was forecasted to increase to
243 trillion yen ($2.4 trillion) in 2008
• Japanese companies are expected to account for one-fifth of this production
• as worldwide demand for digital products grows, the demand worldwide for electronic components
and semiconductors will also continue to increase
• global rates for Japanese made semiconductors and electronic components in consumer electronic
products are 77% and 38%, respectively
• currently in Japan, with consumer electronic equipment going “digital” and increasingly featuring more
sophisticated functions, the local demand for components and chips likewise keeps growing
• this is especially true for wireless equipment – such as cell phones, smart phones, and wireless LAN –
and wireless technologies – such as WiMAX and ZigBee.
• also, chip applications in car electronics for Japan are also on an upward trend
• local production in Japan is not shrinking  while the trend may be for manufacturing economies to
outsource production (Japan included), in Japan’s electronics industry, where higher-end products
require product reliability and close quality control, semiconductors for those products continue to be
manufactured in Japan (as opposed to lower-end general materials which tend to be manufactured
close to the overseas production centers)
• as Japanese consumer electronics manufacturers and telecommunications equipment manufacturers
move production (assembly) overseas, such as to China, components shipped to those production lines
count as “exports” from Japan
• Japanese market and demand for chips is quite healthy (see Chart 1)
• according to JEITA, domestic production of semiconductors and electronic components in Japan will
continue to increase in the future, with an expected growth rate of 5% in 2009.
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4. Market Size
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5. Domestic Production
The production of liquid crystal devices (LCDs) is still growing. With the Olympic Games in Beijing,
demand for LCD TVs was very strong in 2008. Because of this growth, consumers can benefit from
the economies of scale and the resulting lower prices. Japanese TV manufacturers, through
internal improvement in efficiencies and lowering of production costs, are financially stable and are
generating profits despite the lowering retail prices.
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6. Key Suppliers
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7. Market Prospects & Entry
Prospective Buyers
Consumer electronics and telecommunication
industries are the top prospective buyers in
Japan. More recently, the automotive industry
is proving to be a fast-growing prospective
market.
Market Entry
To enter into the Japanese market, foreign
suppliers are encouraged to consider the
following:
Japanese domestic production of car electronics products (2001 to 2012;
millions of units; orange = collision avoidance related, light blue = collision
safety related, pink = vehicle interior control related, darker blue = driving
 Product Localization/Customization is related, green = engine control related) Source: Yano Research
essential to capture the Japanese
market
 Recently, Japanese distributors tend to prefer multi-distributor systems, as opposed to exclusive
contracts. Many distributors have specializations, segmented by technology or geographic region
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8. Market Prospects
Next generation wireless technologies, such as WiMAX and ZigBee, are major areas for growth and the
Japanese mobile industry is actively seeking innovative hardware and software applications for these
technologies. One Segment Broadcasting (known as "One Seg") is a new type of digital terrestrial
broadcasting for mobile phones and car navigation systems. It was launched in Japan in April 2006. One
Seg allows users to view TV programming in high definition over their phones or in their cars. According
to the Fuji Chimera Research Institute, components related to One Seg applications will reach a market
level of $400 million by 2011. Components for fuel batteries are also showing tremendous growth.
According to JETRO, the Japanese fuel battery market will reach $900 million by 2010, up from $280
million in 2007.
Components for car electronics also offer opportunities, especially in the following applications:
• Electronic Stability Control Systems – In Japan, the percentage of cars with electronic stability
control systems is only 10%, whereas in the United States, all cars sold after September 2011 will
come with these systems installed, Japan is expected to follow this trend
• Adaptive Front Lighting Systems (AFS) – Given the Japan’s narrow and complex roads, AFS is a
useful application for the Japanese market
• Night Vision Systems – Globally, the number of cars with night vision systems in 2007 was only
270,000. This number is expected to increase, however, to 3,700,000 by 2010, according to the
Press Journal. As with AFS, it will be especially popular in Japan
• Portable TV Modules – The number of cars with portable TV modules was 255,000 in 2007 but will
increase to 4,620,000 by 2010, according to the Press Journal
• Other useful applications: Cruise Control Systems and Display Monitors
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9. Few key points in regards to Japanese customers
• Extreme focus on quality and on customer service (you will find the biggest claim rate worldwide in Japan)
• Need to show long term committement to Japan
• Excellent distribution and service network a must
• Some adaption to the Japanese market often required
• Extreme need and request for technical information and documentation
• Close and frequent communication to partner and customers necessary to maintain well-working long-
term relations
• Focus hard on hiring top people (a pool of very talented Japanese are available if you screen carefully).
Use recruiting agencies and headhunters rather than printed or internet ads
• OK to take a premium price still, although the market is becoming more competitive
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10. What we can offer to increase your sales in Japan ...
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• market research & marketing intelligence Japan
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• marketing & direct sales
Marketing
• logistics & import services Solutions
• e-commerce & web development
• start-up coordination & turn-around management
• HR recruiting & interim management
• firm representation & PR management
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