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Mizuho 1038 electronics

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Mizuho 1038 electronics

  1. 1. Japan Industry Outlook / 38 2012 No.1 Table of Contents1, Comprehensive Industry - Japan 15, Broadcasting (Japanese only)2, Iron and Steel - Japan 16, Marine Shipping (Japanese only)3, Non-ferrous Metals - Japan 17, Logistics - Japan4, Paper and Pulp (Japanese only) 18, Electric Power - Japan5, Cement - Japan 19, City Gas (Japanese only)6, Chemicals - Japan 20, Retail - Japan7, Pharmaceuticals - Japan 21, Food and Beverage - Japan8, Petroleum - Japan 22, Food Service Industry - Japan9, Automobiles - Japan 23, Construction (Japanese only)10, Shipbuilding (Japanese only) 24, Real Estate and Housing - Japan11, General Machinery (Japanese only) 25, Travel and Tourism - Japan12, Electronics - Japan 26, Nonbank (Credit Cards & Credit) (Japanese13, IT Services - Japan only)14, Telecommunications - Japan 27, HR Service Industry (Japanese only) Contact: Industry Research Division Mizuho Corporate Bank, Ltd. mizuho.ird@mizuho-cb.co.jp
  2. 2. FY2012 Japan Industry Outlook (Electronics) ELECTRONICS Summary ■ In 2011, as the global economy struggled to grow and as the dissemination process of major set products largely completed among the wealthy in both developed and emerging countries, the markets except those for smartphones saw flat or contracting market size. Especially, the weak growth of flat-screen televisions and personal 未更新 sales made a significant impact on the related device markets, such as computer semiconductors and displays. ■ In 2012, while smartphones continue to drive the market, Ultrabooks, developed to compete with media tablets and personal computers, awaiting the release of the “Windows 8” new operating system, are expected to recover from the second half. Additionally, in emerging countries, which will continue to drive growth, markets such as those in Latin American countries and India are expected to follow China as new driving forces. ■ Regarding the corporate earnings for FY2011, although household appliance manufacturers saw significantly reduced profits on reduced sales partly because of the sluggish sales of flat-screen televisions and other consumer electronics products, electronic manufacturers seemed to enjoy the relatively solid social/communications infrastructure businesses. For FY2012, since the progress in the restructuring of consumer electronics companies and the continued solid growth of the social infrastructure business can be expected, both household appliance and electronic manufacturers are forecast to see increased profits on increased sales on an annual basis.I. INDUSTRY TRENDS1. Consumer Electronics(1) Audio-visual equipment (flat-screen televisions) The Chinese Global shipments of flat-screen televisions (liquid-crystal displays and plasma market became display panels) are expected to be around 223 million units (up 6.1% year-on- the largest in the year) in 2011 (see Fig. 12-1). In 2011, the developed markets, namely Japan, global flat-screen TV market, the U.S., and Europe, all saw negative growth for the first time. The Japanese while every market was affected by the significant fall after the termination of the eco-point developed system at the end of last March and the complete shift to digital terrestrial market suffered television in July to see an over 20% annual decline in shipments. The U.S., from negative growth in 2011. where the dissemination process was largely completed, and Europe, which suffers from uncertainty surrounding the economy, also saw negative growth. In the emerging markets, the Chinese market, which has been driving the global growth so far, surpassed the U.S. market as the world’s largest flat-screen television market. However, rapid dissemination in the coastal areas leads to a clear deceleration of growth. Note that global shipments in dollar terms were 1 Mizuho Corporate Bank, Industry Research Division
  3. 3. FY2012 Japan Industry Outlook (Electronics) 111 billion dollars (down 1.9% year-on-year); this was the first negative growth since the full launch of the flat-screen television market. With regard to 2012, global shipments are forecast to reach 228 million unitsGrowth isslowing down in (up 2.4% year-on-year) (see Fig. 12-1). With the dissemination process largely2012, with the completed in developed markets, the special demand effect of the Londoncenter of such Olympic Games could be limited partly because of the uncertainty of thegrowth shifting business sentiment. In the Japanese market, as over 60% of the number of unitsfrom China toAsia, South owned in the country was purchased in the past three years, shipments areAmerica, and forecast to decline in Japan by 60% from the all-time peak recorded in 2010 andAfrica. will just flatten out in the European market. In the Chinese market, the growth rate is expected to slow down to the middle of one digit partly because the dissemination process largely completed in the coastal areas and home appliance subsidy program for rural areas was phased out. As the average unit price of flat-screen televisions keeps falling, the center of the market expansion seems to be shifting to emerging markets other than China, such as India, Latin America, and East Europe. The global shipments in dollar terms are forecast to be 107 billion dollars (down 3.6% year-on-year). Figure 12-1: Global flat-screen television shipment forecasts Volume (millions) M arket growth rate 300 70% 63.8% 250 60% 50% 200 40% 150 33.5% 32.1% 31.6% 30% 100 20% 50 10% 6.1% 6.5% 4.6% 2.4% 0 0% 2007 2008 2009 2010 2011e 2012e 2013e 2014e Japan North America (CY) Europe China Others Market growth rate (right axis) Source: Compiled by MHCB Industry Research Division based on various materials. The figures for 2011 through 2014 are based on MHCB Industry Research Division forecasts. 2 Mizuho Corporate Bank, Industry Research Division
  4. 4. FY2012 Japan Industry Outlook (Electronics) (2) Household appliances (white goods) Domestic shipments of household appliances (white goods, excluding single- In 2011, room air conditioners) are expected to be around 1.5155 trillion yen (down shipments slowed down in 1.9% year-on-year) in 2011. While the demand for energy-saving household August and later appliances, with the growing awareness of energy consumption, along with the and are expected demand for air conditioners in summer, were strong, the monthly growth turned to decline negative on an annual basis in August and later in 2011, and the annual slightly on an annual basis. shipments are likely to slightly decline year on year. Based on the industry structure, the market for the major products, namely refrigerators, washing machines, and air conditioners, has matured, thus its focus is actually put on replacement. Additionally, given that the market reached its peak over the last five years in 2010, thanks to the positive effects from the heat wave in the summer and the eco-point system, the expected year-on-year flat-level landing for 2011 can be considered a rather good result. In 2012, the The market levels for 2010 and 2011 considerably reflected the aspect of the market size may forward-spending of replacement demand. In 2012, domestic shipments of revert to the household appliances (white goods, excluding single-room air conditioners) are prior 2008 level depending on air forecast to revert to the prior 2008 market level of 1.48 trillion yen (down 2.3% conditioners in year-on-year), although it will depend on air conditioner demand in summer. the summer.Figure 12-2: Value of domestic consumer electronics shipments Figure 12-3: Value of domestic single-room air conditioner shipments (JPY billions) (%) JPY (billions) (%) 250 180500 180 170 170 160 160 200400 150 150 140 140 150 130300 130 120 120 100 110200 110 100 100 90 90 50100 80 80 70 70 0 60 0 60 4Q11E 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11E 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 Shipment value Year-on-year (right axis) Shipment value Year-on-year (right axis) Source: Compiled by MHCB Industry Research Division based on Source: Compiled by MHCB Industry Research Division based materials published by the Japan Electrical Manufacturers’ on materials published by the Japan Refrigeration and Air Association (JEMA). The figures given for the fourth quarter of Conditioning Industry Association (JRAIA). The figures given for 2011 are based on MHCB Industry Research Division forecasts. the fourth quarter of 2011 are based on MHCB Industry Research Note: Excludes single-room air conditioners, which are not Division forecasts. classified as consumer electronics 3 Mizuho Corporate Bank, Industry Research Division
  5. 5. FY2012 Japan Industry Outlook (Electronics) Figure 12-4: Summary of consumer electronics demand and supply (FY2000 actual/FY2011 estimate/FY2012 forecast)[Actual] FY10 FY11 FY12 FY11/1H FY11/2H FY12/1H FY12/2H (Unit) (Actual) (Estimate) (Forecast) (Actual) (Estimate) (Forecast) (Forecast) Domestic JPY billions demand 5,064.1 4,153.4 4,070.0 2,153.4 2,000.0 2,100.0 1,970.0 Exports JPY billions 1,189.9 1,090.3 990.0 560.3 530.0 500.0 490.0 Imports JPY billions 1,723.1 1,624.9 1,610.0 844.9 780.0 800.0 810.0 Output JPY billions 4,530.9 3,618.8 3,450.0 1,868.8 1,750.0 1,800.0 1,650.0[Rate of Increase and Decrease] FY10 FY11 FY12 FY11/1H FY11/2H FY12/1H FY12/2H (Unit) (Actual) (Estimate) (Forecast) (Actual) (Estimate) (Forecast) (Forecast) Domestic % demand 14.5% - 18.0% - 2.0% - 13.2% - 22.5% - 2.5% - 1.5% Exports % - 2.7% - 8.4% - 9.2% - 8.5% - 8.2% - 10.8% - 7.5% Imports % 30.0% - 5.7% - 0.9% 5.8% - 15.6% - 5.3% 3.8% Output % 4.9% - 20.1% - 4.7% - 18.6% - 21.7% - 3.7% - 5.7% Source: Compiled by MHCB Industry Research Division based on materials published by the Ministry of Economy, Trade and Industry, as well as those from the Ministry of Finance. The figures given for FY2011 and FY2012 are based on MHCB Industry Research Division forecasts. Note 1: Consumer electronics refer to AV equipment and white goods. Note 2: Domestic demand equals output minus exports plus imports (apparent domestic demand inclusive of inventory fluctuations). 2. Industrial Electronics (1) Personal computers The weak The annual global shipments of personal computers are expected to total around economy as well 355 million units (up 0.3% year-on-year) in 2011 (see Fig. 12-5). By region, the as the popularity decline in Europe and other developed markets was balanced by the growth in of smartphones China and other emerging countries. However, in terms of structure, partly due to and media tablets caused personal computer replacement being delayed by smartphones and media tablets, sluggish PC demand for personal computers remained weak, as corporate demand was also demand in 2011. sluggish. Furthermore, the Thailand floods in July caused short supply of hard disk drives, and the annual shipments ended up flatting out year-on-year. With regard to 2012, global shipments of PCs are forecast to reach 370 million Ultrabooks and units (up 4.9% year-on-year) (see Fig. 12-5). While corporate demand is Windows 8 will support PC expected to remain sluggish due to a weak economy in developed countries, the demand in 2012. short supply of hard disk drives caused by the Thailand floods is expected to be normalized in April or later. Thus, the PC distribution inventory can be assumed to be normalized. The launch of Ultrabooks, 1 developed conscious of media tablets, and the release of Windows 8 in the second half of the year, are predicted 1 A new concept promoted by Intel; its features include: (1) high-speed start-up, (2) an under-1-inch (21 mm) thin body, and (3) high-speed response and low power consumption realized by the second-generation Core CPU. 4 Mizuho Corporate Bank, Industry Research Division
  6. 6. FY2012 Japan Industry Outlook (Electronics) to support PC shipments. Media tablets Global shipments from the media tablet market in 2011 are expected to total from the around 60 million units (up 350% year-on-year). Currently, excluding iPad, Android camp which accounts for approx. 75% of the segment, media tablets seem to be could be put under a severe betraying the expectations of manufacturers. Global shipments of media tablets competition in 2012 are forecast to be around 85 million units (up 141% year-on-year). The environment. catch up of the Android camp can be expected with the usability improved through the integration of operating systems for media tablets and smartphones starting from Android 4.0, although it will be affected by the release schedule of iPad 3. However, especially media tablets from the Android camp could be put under a severe competition environment, depending on the trend in Ultrabooks, to be released as a competing product, and Windows 8. Figure 12-5: Global PC shipment forecasts Volume (m illions) Market growth rate 500 18% 450 16.5% 16% 400 13.8% 14% 350 12% 11.3% 300 10.4% 10% 250 8% 7.5% 200 6% 150 4.9% 4% 100 3.6% 50 2% 0 0.3% 0% 2007 2008 2009 2010 2011e 2012e 2013e 2014e (CY) Japan US Western Europe Asia-Pacific Others M arket growth rate (right axis) Source: Compiled by MHCB Industry Research Division based on various materials. The figures given for 2011 through 2014 are based on MHCB Industry Research Division forecasts.(2) Mobile phones The annual global shipments of mobile phones are expected to total around After leading the 1.768 billion (up 10.7% year-on-year) in 2011 (see Fig. 12-6). While the market in 2011, European market saw an over 10% decline in shipments due to weak demand, smartphones the market expanded in other regions supported by increased demand for eventually surpassed smartphones from both developed and emerging countries. In emerging personal countries, conventional low-end terminals still sold well, but demand for low- computers in end smartphones also expanded, causing emerging countries to surpass shipments. developed countries in smartphone shipments. As a result, the decline in the average unit price of mobile phones became moderate. Note that the global shipments of smartphones are expected to reach 470 million units (up 56.7% 5 Mizuho Corporate Bank, Industry Research Division
  7. 7. FY2012 Japan Industry Outlook (Electronics) year-on-year), eventually surpassing those of personal computers. Smartphones are With regard to 2012, global shipments of mobile phones are forecast to be expected to 1.910 billion (up 8.0% year-on-year). Smartphones are expected to continue continue leading driving the growth, with developed and emerging countries accounting for a the market in 2012, but the little less than 70% and a little more than 20%, respectively, of the shipments, growth rate is which are forecast to reach 600 million units (up 27.7% year-on-year) likely to decline. Figure 12-6: Worldwide mobile phone shipment forecasts Volume (millions) M arket growth rate 2,500 35% 31.8% 30% 2,000 25% 21.4% 20% 1,500 16.3% 15% 1,000 10.7% 10% 8.0% 5.9% 6.0% 6.6% 5% 500 -0.9% 0% 0 -5% 2006 2007 2008 2009 2010 2011e 2012e 2013e 2014e (CY) Japan North America Western Europe Asia-P acific Others Market growth rate (right axis) Source: Compiled by MHCB Industry Research Division based on various materials. The figures given for 2011 through 2014 are based on MHCB Industry Research Division forecasts.(3) Semiconductors In 2011, the Global shipments of semiconductors are expected to amount to 299.8 billion growth of dollars (up 0.5% year-on-year) in 2011 (see Fig. 12-7). Shipments of smartphones semiconductors for smartphones and media tablets, such as NAND flash and the memory and application processors, are likely to rapidly expand to 31.8 billion contraction of PCs are largely dollars (up 55.9% year-on-year), but shipments of semiconductors for balanced, conventional mobile phones and personal computers such as DRAM are leaving expected to fall to 24.0 billion dollars (down 13.8% year-on-year) and 56.0 expectations for billion dollars (down 11.3% year-on-year), respectively. semiconductors to flatten out. Global shipments of semiconductors are forecast to be 307.0 billion dollars (up 2.4% year-on-year) in 2012 (see Fig. 12-7). Although the growth of semiconductors for smartphones will slow down, the market is likely to see strong figures, with a growth rate of over 20%. Semiconductors for personal computers are expected to moderate the decline in the growth rate through the 6 Mizuho Corporate Bank, Industry Research Division
  8. 8. FY2012 Japan Industry Outlook (Electronics) elimination of supply shortage for hard disk drives and support by UltrabooksSemiconductorsfor and Windows 8, which is scheduled to be released in the second half of the year.smartphones However, with the full recovery of semiconductors for personal computerswill continue to assumed in 2013, their contribution to shipments in 2012 is likely to be limited.grow in 2012, As a result, the market size of NAND flash memory is expected to reach atwhilesemiconductors around 30 billion dollars and catch up with that of DRAM for the first time.for PCs areexpected to be Figure 12-7: Global semiconductor shipment forecastson a track to (Unit: USD billions)recovery. 400 40% 350 31.8% Sensor 30% 300 Optoelectronics 20% Discrete 250 MOS Memory 200 8.9% 10% Logic 150 6.9% MOS Micro 3.2% 0% 2.4% 2.5% -2.8% 100 0.5% Analog -9.0% -10% Market growth rate 50 (right axis) 0 -20% 2006 2007 2008 2009 2010 2011e 2012e 2013e 2014e Source: Compiled by MHCB Industry Research Division based on official World Semiconductor Trade Statistics (WSTS). The figures given for 2011 through 2014 are based on MHCB Industry Research Division forecasts.(4) Displays While displays Global shipments of the major flat-panel display (FPD) products: thin-film for smartphones transistor (TFT) liquid-crystal displays (LCDs), PDPs, and organic ELs in 2011 grew steadily in are expected to amount to around 104.9 billion dollars (down 5.8% year-on- 2011, large-sized TFT-LCDs for year) (see Fig. 12-8). While small- to medium-sized TFT-LCDs for TVs and PCs smartphones grew steadily, the fall in the television price and sluggish demand struggled. for personal computers as well as oversupply, accompanying the start of the operation of a large-sized TFT-LCD plant in China, all are likely to result in negative growth for the first time in two years. Small- to medium-sized Global shipments of major FPDs in 2012 are forecast to be 111.7 billion dollars TFT-LCDs are (up 6.5% year-on-year) (see Fig. 12-8). Small- to medium-sized TFT-LCDs and forecast to grow organic ELs for smartphones will continue to lead the market. For large-sized steadily, but large-sized ones TFT-LCDs, the price is falling under the cash cost level. If production could be put adjustment at the manufacturers works, the price is likely to hit bottom. under production adjustment in 2012. 7 Mizuho Corporate Bank, Industry Research Division
  9. 9. FY2012 Japan Industry Outlook (Electronics) Figure 12-8: Global FPD shipment forecasts Mark et value (USD Market growth rate 140 billions) 30% 27.5% 24.3% 25% 120 20% 100 15% 80 10% 6.5% 60 5% 2.9% 2.7% 1.4% 0% 40 -5.8% -5% 20 -10% -11.5% 0 -15% 2007 2008 2009 2010 2011e 2012e 2013e 2014e (CY) Large TFT-LCDs Small- and medium-sized TFT-LCDs PDP Organic Els M arket growth rate (right axis) Source: Compiled by MHCB Industry Research Division based on various materials. The figures given for 2011 through 2014 are based on MHCB Industry Research Division forecasts.(5) Heavy electric machinery Production Capital spending among Japanese power producers in FY2011 is likely to increased in increase to around 2.5 trillion yen (up 18.7% year-on-year), thanks to the FY2011 thanks restoration demand for power supply facilities and transmission & distribution to reconstruction demand for networks. Given this increase, heavy electric machinery production (excluding transmission and motors for power generation) is expected to increase to around 2.9 trillion yen distribution (up 2.9% year-on-year). networks, etc. The market in Capital spending among Japanese power producers in FY2012 is forecast to FY2012 is decline to 2.4 trillion yen (down 3.3% year-on-year), partly affected by the expected to see deferment of non-urgent capital spending. However, given the assumed overseas demand related to social reconstruction demand for social infrastructure and contribution from overseas infrastructure infrastructure demand, heavy electric machinery production (excluding motors and to the for power generation) is forecast to be 2.9 trillion yen (up 1.7%) in FY2012. earthquake and reconstruction. 8 Mizuho Corporate Bank, Industry Research Division
  10. 10. FY2012 Japan Industry Outlook (Electronics) Figure 12-9: Summary of industrial electronics demand and supply (FY2010 actual/FY2011 estimate/FY2012 forecast)[Actual] Brief FY10 FY11 FY12 FY11/1H 11/2H FY12/1H 12/2H (Unit) (Actual) (Estimate) (Forecast) (Actual) (Estimate) (Forecast) (Forecast) Industrial Domestic electronics (JPY 7,144.0 7,428.3 8,040.0 3,443.3 3,985.0 3,930.0 4,110.0 demand Electronic devices (JPY billions) 4,284.8 3,762.6 3,930.0 1,762.6 2,000.0 1,880.0 2,050.0 Industrial electronics (JPY 3,944.4 3,823.0 3,940.0 1,923.0 1,900.0 1,940.0 2,000.0 Exports Electronic devices (JPY billions) 8,086.5 7,284.2 8,380.0 3,684.2 3,600.0 4,100.0 4,280.0 Industrial electronics (JPY 3,932.8 4,151.2 4,130.0 2,071.2 2,080.0 2,030.0 2,100.0 Imports Electronic devices (JPY billions) 4,038.0 3,490.2 3,750.0 1,690.2 1,800.0 1,850.0 1,900.0 Industrial electronics (JPY 7,155.6 6,795.1 7,400.0 3,295.1 3,500.0 3,410.0 3,990.0 Output Electronic devices (JPY billions) 8,333.3 7,556.6 8,790.0 3,756.6 3,800.0 4,300.0 4,490.0[Rate of Increase and Decrease] Brief FY10 FY11 FY12 FY11/1H 11/2H FY12/1H 12/2H (Unit) (Actual) (Estimate) (Forecast) (Actual) (Estimate) (Forecast) (Forecast) Industrial Domestic electronics (%) 12.6% 4.0% 8.2% 1.8% 5.9% 14.1% 3.1% demand Electronic devices (%) 15.7% - 12.2% 4.4% - 18.9% - 5.2% 6.7% 2.5% Industrial electronics (%) 6.2% - 3.1% 3.1% - 4.1% - 2.0% 0.9% 5.3% Exports Electronic devices (%) 5.0% - 9.9% 15.0% - 14.2% - 5.1% 11.3% 18.9% Industrial electronics (%) 21.6% 5.6% - 0.5% 9.1% 2.2% - 2.0% 1.0% Imports Electronic devices (%) 7.3% - 13.6% 7.4% - 21.0% - 5.2% 9.5% 5.6% Industrial electronics (%) 4.9% - 5.0% 8.9% - 5.6% - 4.5% 3.5% 14.0% Output Electronic devices (%) 9.0% - 9.3% 16.3% - 13.2% - 5.2% 14.5% 18.2%Source: Compiled by MHCB Industry Research Division based on materials published by the Ministry of Economy,Trade and Industry, as well as those by the Ministry of Finance. The figures given for FY2011 and FY2012 are basedon MHCB Industry Research Division forecasts.Note 1: Industrial electronics refer to computers, telecommunications equipment, heavy electrical machinery, andother electronic devices.Note 2: Electronic devices refer to general electronic components, semiconductors, liquid-crystal displays, and otherdevices.Note 3: Domestic demand equals output minus exports plus imports (apparent domestic demand inclusive ofinventory fluctuations).II. CORPORATE EARNINGS1. Household Appliance Manufacturers Flat-screen The combined sales of Japan’s three leading household appliance televisions manufacturers for FY2011 are expected to be 16.95 trillion yen (down 10.3% further struggled year-on-year), while the combined operating losses are expected to be 60 in FY2011. billion yen (falling into the red) (see Fig. 12-10). Due to the harsh competition environment surrounding flat-screen televisions and uncompleted restructuring involving device businesses, as well as the sluggishness of the digital camera 9 Mizuho Corporate Bank, Industry Research Division
  11. 11. FY2012 Japan Industry Outlook (Electronics) business affected by the Thailand floods and weak European economy, the three manufacturers expect significantly reduced sales and profits. Progress in the The combined sales for FY2012 are forecast to be 17.70 trillion yen (up 4.4% restructuring of year-on-year), while the combined operating profits are forecast to be 485 the flat-screen television and billion yen (going into the black) (see Fig. 12-10). Assuming the progress in the device businesses restructuring of the flat-screen television and device businesses, along with the is hoped for in reduced impact of the Thailand floods, increased profits on increased sales can FY2012. be expected. Figure 12-10: Cash flow trends for household appliance manufacturers [Actual] No. of companies FY10 FY11 FY12 (Unit) (Actual) (Estimate) (Forecast) 3 Sales (JPY billions) 18,895.9 16,950.0 17,700.0 3 Operating  profit (JPY billions) 584.0 -60.0 485.0 [Rate of Increase and Decrease] (YOY) Brief FY10 FY11 FY12 (Unit) (Actual) (Estimate) (Forecast) 3 Sales (%) - 0.5% - 10.3% 4.4% 3 Operating  profit (%) 90.1% (Into red) (Into black) Source: Compiled by MHCB Industry Research Division based on corporate financial statements. The figures given for FY2011 and 2012 are based on MHCB Industry Research Division forecasts. Note: The three leading manufacturers are Panasonic, Sony, and Sharp.2. Electronics ManufacturersSocial The combined sales of Japan’s five leading electronics manufacturers ininfrastructure FY2011 are expected to be 26.89 trillion yen (down 0.4% year-on-year), whileand the combined operating profits are expected to be 980 billion yen (down 11.6%communicationsinfrastructure year-on-year) (see Fig. 12-11). Although the weak economy in the Westbusinesses saw affected earnings, social infrastructure and communications infrastructuresteady growth in businesses seemed to see steady growth in responding to reconstruction demandFY2011. and the increase in communications traffic caused by the expanded use of smartphones, respectively.Environment- For FY2012, the combined sales are forecast to be 27.55 trillion yen (up 2.5%related year-on-year), while the operating profits are forecast to be 1.22 trillion yen (upbusinesses and 24.5% year-on-year) (see Fig. 12-11). Assuming social infrastructure andreconstructiondemand are also communications infrastructure businesses continue to grow steadily withexpected to lead environment-related businesses and reconstruction demand leading the market,the market in increased profits on increased sales can be expected also on an annual basis.FY2012. 10 Mizuho Corporate Bank, Industry Research Division
  12. 12. FY2012 Japan Industry Outlook (Electronics) Figure 12-11: Cash flow trends for electronics manufacturers [Actual] No. of companies FY10 FY11 FY12 (Unit) (Actual) (Estimate) (Forecast) 5 Sales (JPY billions) 27,003.4 26,890.0 27,550.0 5 Operating  profit  (JPY billions) 1,109.0 980.0 1,220.0 [Rate of Increase and Decrease] (YOY) Brief FY10 FY11 FY12 (Unit) (Actual) (Estimate) (Forecast) 5 Sales (%) 0.1% - 0.4% 2.5% 5 Operating  profit (%) 98.4% - 11.6% 24.5%Source: Compiled by MHCB Industry Research Division based on corporate financial statements. The figures givenfor FY2011 and FY2012 are based on MHCB Industry Research Division forecasts.Note: The five leading manufacturers are Hitachi, Toshiba, Mitsubishi Electric Corporation, NEC, and Fujitsu.III. TOPICS: Examining business fields holding promise in the medium-term – theelectronics industryEvery company In the electronics industry, every company has prepared a strategy to strengthenhas listed smart and expand smart grids as a new promising business field, with expectations forgrids as one of it soaring at home and abroad. On the other hand, based on its conept, the rangemost promising of the smart grid business has become so wide that no company can operate itbusiness fields,but challenges independently, with new domains and contacts increasing beyond the existingawait before business fields. Additionally, while the concept tends to go ahead of practice, itmaking it an seems that big challenges are to establish a specific scheme with which theactual business. operator can post sales & profits and fully launch a smart grid as an actual business.The business models Here, examining the business models for the smart grid industry, it is found thatfor the smart grid they break down into the following two major types (see Fig. 12-12). The firstindustry break down is the “large existing markets” type, where markets have been alreadyinto: 1) the “large estblished as individual industries. This refers to industries such as powerexisting markets”type, where market transmission and distribution, along with photovoltaic/wind power generation,foundations have which traditionally have market foundations as individual equipment and foralready been which future market growth is expected as existing industries. The industriesestablished, and 2) here will be required to mutually coordinate after introducing the smart gridthe “small existingmarkets” type, concept. In other words, as a business model, each company needs to developwhere much has to technologies that suit smart grids, reduce costs, and strengthen the coordinationbe developed before based on technological development for individual equipment.making smart gridsan actual business. The second is the “small existing markets” type. This refers to smart grid- related industries such as ICT, BEMS/HEMS (Building Energy Management System/Home Energy Management System), software/application, and DR (Demand Response), which are in the predawn stage of market launch and have yet to establish a scheme to post sales and profits as an actual business. However, these industries are essential for the first “large existing markets” 11 Mizuho Corporate Bank, Industry Research Division
  13. 13. FY2012 Japan Industry Outlook (Electronics) industries to coordinate in the smart grid. Having said that, these industries probably need to independently standardize interfaces in order to ultimately establish an industry foundation. Therefore, to realize a solid, actual business in the first place, sales and profits have to be posted during the course of covering smart grid-related business domains on existing equipment. To do so, relationships and coordination with individual equipment businesses must be reinforced. Figure 12-12: Examining business models for smart grids 1. “Large existing markets” 1. “Large existing markets” 2. “Small existing markets” 2. “Small existing markets” Mid-term market growth Photovoltai prospects as an existing Software T&D c/wind industry ICT application Still in the predawn stage power of industry and little sales Market as an existing posted so far industry Smart grid Smart grid BEMS DR HEMS Develop technologies, Trunk needed to make smart grids enhance cost a solid, actual business competitiveness, and establish coordination methods that suit smart Storage grids. Individual equipment: Existing industries Meter (T&D/meter/photovoltaic or wind battery power/storage/…)(Note) BEMS: Building Energy Management System HEMS: Home Energy Management System DR: Demand Response Source: Compiled by MHCB Industry Research Division Akio Mizutani akio.mizutani@mizuho-cb.co.jp Machinery and Equipment Team Industry Research Division Mizuho Corporate Bank, Ltd. 12 Mizuho Corporate Bank, Industry Research Division

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