3. Electric Machine Sector

3. Electric Machine Sector
3.1

Consumer electric machines and appliances

3.1.1. Supply and demand trend(1) Outline

The production and shipment of consumer electric machines and appliances in 2006 decreased
as in the previous year affected mainly by the unsettled weather in summer. This downward
tendency was accelerated by increases in so-called “reimport” of mostly low value added,
small-sized products mainly from China. In Japan, while there is the trend of expansion in the
production and shipment of high value added products, the domestic production of other products,
which account for a greater part of domestic demand, is expected to fall off due to increase in“reimport.”
But growing demand for high value added products, such as washing and drying machines andcooking heaters, is expected to continue growing in the future. In addition, 2007 is the tenth year
after 1997 when the consumption tax was raised from 3% to 5% and when many households bought
consumer electric machines and appliances in a hurry before the tax increase; thus it is expected thatdemand would go up because these households would buy new ones to replace those bought a
decade before. Due to the expectation that a greater demand for these high value added products andreplacement demand would be combined to boost domestic demand substantially, it is anticipatedthat the production and shipment of consumer electric machines and appliances would expand in theyears ahead. Attention has been paid to the future activities of the consumer electric machineindustry that would be done by watching the direction of growth of the Japanese economy.
On the other hand, care should be taken of the future direction because it has often been pointed
out that the recent recovery phase of the Japanese economy is not so powerful that the consumer
cannot feel that the recovery is real. But it is supposed that the increasing trend of “reimport” would
continue in the future, there will be no big change in the structure where the manufacturer has tocontinue its domestic production activities by continuously inputting high value added products andnew products into the domestic market.
(2) Trend of production

The method of classifying consumer electric machines and appliances was greatly changed in
the recent several years and it is impossible to simply compare year-to-year figures. But the
production in 2006 was ¥1,357.8 billion, a slight growth over the previous year when the figure was¥1,310.5 billion. By product category, the production of washing and drying machines and cooking
heaters increased favorably as shown in Figure 3-1. By contrast, due to unsettled weather, the output
of refrigerator tended to decline and so did the production of other main products. And there is thepossibility that demand for newly built condominiums would stagnates as a result of the risingcondominium price caused by higher land prices, mainly in the center of Tokyo, and raises inhousing loan interest, and thus, it cannot be denied that new demand for cooking heaters would fall53

3. Electric Machine Sector

consequently. As in the case of the expectations for growing demand mentioned earlier, the future
situation should be watched carefully. The direction of increased production would be limited as in
the past to washing and drying machines, cooking heaters and other high value added products, andstep-up in production can not be expected for general and low-priced products due to an increasing
trend of “reimport.” Considering the direction of the growth of the Japanese economy and new
demand, much care should be required about expansion in the production of consumer electricmachines and appliances.
The price of crude oil has increased recently and thus electricity rates will be raised. With
growing public awareness of environmental problems, demand for “energy-saving household
electric appliances” will rise in the future. To increase the domestic production of consumer electricmachines and appliances, there will be the need for strategies of encouraging the consumer to buy
energy-saving electric appliances to replace old ones.

Fig. 3-1 Trend of domestic production of consumer electric machines and appliances
Product

2002
Quantity

2003

AmountQuantity

Electric stoves

8,220

292,550

Electric kotatsu

1,362 1,028,589

2004

Amount7,620

Quantity

2005

AmountQuantity

2006

AmountQuantity

Amount247,735

3,538

-

-

-

-

-

1,092 1,013,413

-

-

-

-

-

-

Electric blankets

3,447 1,536,982

3,231 1,415,901-

863,252---

Electric carpets

14,935-13,013

-

7,065

-

-

-

-

-

Microwave ovens

50,116-39,066-32,977-

26,936-

23,644-

Electric cooking stoves- 5,136,845- 4,307,767- 4,424,291- 4,354,601- 4,285,352

Electric rice cookers

59,766722,372

52,385546,00754,519-57,432-

59,167-

Toasters

2,149

-

1,194

-

-

-

-

-

-

-

-

850,393-465,231-285,855

-

-

-

-

4,375

-

2,034

-

1,329

-

-

-

-

-

Electric ovens
Eclectic hot plates
Coffee-makers- 4,309,642- 3,552,154- 3,155,076- 2,666,509- 1,872,655

Electric pots

23,690782,832

17,156

945,502

15,837

949,531

13,824

853,646

9,755

822,426

Dish washing and drying
machines

38,347-42,653-45,326-

38,844-

34,693-Dish drying machines
Electric refrigerators- 3,316,725- 2,858,983- 3,019,604- 2,821,077- 2,783,449

324,926-

280,743-

315,649

674,872

289,378

801,842

260,774

799,717-

81,910-70,90966,571

46,542

68,23839,30070,737

48,903Freezers

13,863-

13,163-12,803-

11,391-

15,074-

Electric fans

5,531

-

4,843

-

2,391

-

-

-

-

-

Cooking heaters

Others- 7,683,817- 6,875,433- 6,982,132- 7,377,453- 7,117,335

Ventilation fans

100,309

234,099

91,959235,955

100,626

247,667

119,021

246,422

118,127

243,283

Electric water heaters

37,510-43,861-

51,628-41,803

205,793

40,497

279,525-

290,130-

272,856-

272,956

25,212

267,799

31,788257,555

12,438-12,295-

12,691 1,147,058

12,214

954,844

12,178 1,057,088-

234,750-

192,068

16,67912,188

256,470

16,205Natural refrigerant heatpump-type water heater
Household electric well pumps
Air purifiers
Dehumidifiers

8,447 6,020,750

7,830 5,526,775

356,269

206,697

10,820 5,586,336

10,121 5,618,384

8,111 5,948,761

Electric washing machines

147,139-

135,415-

135,294-

136,304 1,601,518

145,856 1,498,232

Washing machines (fully
automatic, twin-tub)

-

-

-

-

-

-

46,943 1,020,122

45,447 1,059,862

Washing and drying machine- 3,272,609

89,361-

100,409

-

-

-

-

-

Fully automatic washingmachines

141,703251,793- 2,895,099
130,353

237,60254- 2,631,936
130,670

216,025

3. Electric Machine Sector

Product
Twin-tub washing machines

2002
Quantity
5,436

2003

AmountQuantity

185,827

5,062

2004

Amount182,993

2005
Quantity

2006

Quantity

AmountAmountQuantity

4,624

151,011---Amount----Washing dryers

7,530 1,688,739

7,125 1,612,245

6,213 1,672,017-

Electric irons

4,657 5,199,540

3,777 4,809,931

3,800 4,654,560- 4,182,938

Vacuum cleaners

70,446

66,39262,441

Mini-vacuums

3,104 2,180,361

1,191 2,412,149

Toilet seats with warm water

67,015-

72,144-74,656-

69,101-73,499-

Electric razors

32,777476,226

36,443422,067

33,960632,024

16,601

363,676

13,749304,533

Electric massage machines

44,919 1,411,187

44,102 1,541,967

49,173 1,392,806

48,986-39,782-

Hair dryers

4,894

122,184

4,651

103,345

3,985

104,510-

110,916-

92,837

Household garbage processors

4,578

19,122,70
3

3,890

22,673,05
4

3,427

22,787,93
7

3,472

-

3,144

-

131,333-

126,406-

79,161

-

-

-

-

-

Other consumer electricmachines and appliances

Note:

Source:600,530

269,884-- 2,612,570

60,096-- 2,404,242- 3,158,561
49,771-- 2,528,513

The system of the Dynamic Production Statistics combined electric kotatsu, electric blankets and toasters in “Other
consumer electric machines and appliances” in 2004, and combined fully automatic washing machines and twin-tub
washing machines in “Washing machine (fully automatic, twin-tub)” and abolished electric heaters, electric carpets,
electric hot plates, electric fans and washing and drying machines in 2005.
Based on the statistical database of the Japan Electric Machine Industry Association.

(3) Situation of shipment

Figure 3-2 shows the situation of shipment of consumer electric machines and appliances. The
shipment in 2006 stands at ¥1,433.1 billion, a slight increase over the previous year, showing acontinued upward trend. Although simple comparison is not possible because the system ofclassification was partly changed for these products, too, the trend of shipment was similar to that ofproduction: that is, an increase can be seen in the shipment of high value added products, such as
cooking heaters and washing and drying machines. The shipment of microwave ovens also grew inamount though it declines a little in quantity; it is thus considered that the shipment of high value
added products rose for this product, too. But as most products suffered a decrease both in thequantity and amount of shipment and the shipment of general products roughly leveled off thegrowth in cooking heaters and washing and drying machines is regarded as being a support for the
expansion as a whole. The domestic market of consumer electric machines and appliances has
already reached a maturity stage, and almost all of demand is considered to be replacement demand.
Thus, there will arise the need for activities for stimulating replacement demand, which may be
represented by the case of “energy-saving household electric appliances” as noted above. In addition,
it is necessary to closely observe how the products with “safety and security” functions, mainly
targeted at the elderly user, will contribute to shipment in the years ahead.

55

3. Electric Machine Sector

Fig. 3-2

Situation of domestic shipment of consumer electric machines andappliances (number of units, ¥ million)

Product

2002
Quantity

2003

AmountElectric stoves

1,679,078

Electric kotatsu

459,661

Quantity

2004

AmountQuantity

9,795 1,507,091

8,502 1,269,434

2,507

1,411

-

284,4292005

AmountQuantity

2006

AmountQuantity

Amount

6,706

-

-

-

-

-

-

-

-

-

Electric blankets

1,449,751

4,617 1,278,579

4,030

-

-

-

-

-

-

Electric carpets

2,099,038

20,184 1,693,197

15,449 1,081,500

8,913

-

-

-

-

Microwave ovens

3,563,287

67,760 3,524,091

62,924 3,478,751

61,770 3,683,229

70,185 3,644,569

74,485

Electric rice cookers

6,715,953

79,497 6,610,182

80,580 6,719,543

82,358 6,931,240

86,116 6,992,957

87,401

Toasters

3,011,441

8,183 2,630,419

6,737

-

-

-

-

-

-

Eclectic hot plates

1,456,496

8,640 1,499,721

8,719 1,443,668

8,102

-

-

-

-

Electric pots

5,237,894

28,064 5,112,371

25,422 5,088,807

24,633 4,978,875

24,230 4,722,175

23,81035,63343,73645,08540,313

861,437

35,577Dish washing and drying
machines
Electric refrigerators
Cooking heaters
Freezers

766,972
4,197,789

957,402322,953 4,119,358

982,418

312,879 4,380,991

921,349

336,725 4,389,162

333,109 4,360,060

327,683

-

-

-

-

655,61555,758745,172

64,727

817,906

72,829112,610

14,706

131,569

16,200164,374

17,430176,943

17,484179,091

18,849

5,976

-

-

-

-

Electric fans

2,080,783

8,229 1,852,169

7,305 1,671,585

Ventilation fans

7,821,748

107,953 7,398,607

105,185 8,029,057

119,111 8,291,015

135,669 8,106,971

133,989

Electric water heaters

234,073

36,879241,72945,096

248,778

52,612

241,447

42,713

241,847

42,321Natural refrigerant heatpump-type water heater

-

-

-

-

-

-

196,428

30,626

267,610

40,413287,905

12,676

282,582

12,648281,886

12,947278,132

12,748257,271

11,637---

29,772 1,824,296

27,236

11,164

361,507

Household electric well pumps
Air purifiers
Dehumidifiers

379,315

10,468

Electric washing machines

4,080,808

Washing machines (fully
automatic, twin-tub)

-

-

-

-

Washing and drying machine

-

-

-

-

Fully automatic washingmachinesTwin-tub washing machines

3,670,582

166,565 4,154,281

1,748,665

157,845 3,785,957

590,802

24,635 1,840,079

641,635

14,108190,149 4,488,454

192,213 4,590,398

205,509-- 3,384,322

92,077 3,330,816

87,439-- 1,104,132

100,136 1,259,582

118,070

170,686 4,427,979

162,835 4,087,458

13,351

601,023

13,642

182,754

-

-

-

-

410,226

8,720

368,324

7,851

340,521

7,395

-

-

-

-

Washing dryers

197,6838,252

189,700

7,700

149,414

6,171

-

-

-

-

Electric irons

2,556,872

9,794 2,657,478

8,943 2,593,857

8,700

-

-

-

-

Vacuum cleaners

5,701,650

88,501 5,677,131

90,581 5,988,328

93,229 6,072,344

94,062 5,992,551

93,871

Mini-vacuums

1,191,019

5,045 1,822,670

5,966

Toilet seats with warm water

2,482,811

105,139 2,464,822

84,456 2,639,743

Electric razors

8,644,528

36,697 8,814,918
46,980Electric massage machines
Hair dryers

8,599,273

Household garbage processors

Note:
Source:912,274
128,594--

78,533 2,617,387

78,139 2,841,989

81,73439,045 8,330,457

36,954 8,033,130

35,230 7,552,142

32,61045,841

904,116

50,839750,218

49,644

701,978

43,03325,933 8,796,497

24,496 9,076,641

24,699

-

-

-

-

5,125

3,368

3,335

112,659

3,617

92,622

3,114

872,099
88,652Same as that for Fig. 3-1.
Same as that for Fig. 3-1.

56-

98,593---

3. Electric Machine Sector

With the increasing tendency of “reimport” as noted, the overseas production of main products
is on a high level. The ratio of overseas production in 2006 was 71.3% for electric refrigerators andelectric washing machines, 56.9% for vacuum cleaners and as high as 92.8% for microwave ovens.
The domestic shipment of these products has almost leveled off, and their “reimport” is likely toincrease more and more. But as described above, as for the relations between the domestic shipment
and domestic production of microwave ovens, the domestic shipment has leveled off but the average
price has been in an upward trend. There has been the coexistence of two groups of products: theproducts, as electronic ovens, which are the high value added ones mostly produced in Japan, of
which average price often rises, i.e., the products whose users can be divided, and the products
almost all imported from abroad. This suggests that the “reimport” strategies are no simple ones.
For domestic shipment, there is also the need to pay attention to how South Korean and Chinese
products will come to stay in the Japanese market in the future. Lots of low-priced, mono-function
products made by overseas manufacturers can be seen in Japan. It will be necessary hereafter towatch to what level foreign-made products will spread in Japan, too. The domestic market of
consumer electric machines and appliances has matured, and the market has reached the stage ofprice competition due mainly to the positive activities of mass merchandisers of household electric
appliances for extending the market. Therefore, the trend of product differentiation is expected tocontinue growing.
(4) Situation of export and import

Increasing “reimport” has been discussed so far, and the situation of export and import ofconsumer electric machines and appliances backs up the increase. Figure 3-3 shows the export ofthese products. The export in 2006 amounted to ¥203.4 billion, a larger figure than ¥180.7 billion in2005. After hitting the bottom in 2002, the export had been on the increase except in 2005 when it
showed a slight fall and rose again in 2006. The export of finished products registered an increase of
123.4% over the previous year. By product category, the export of refrigerators (approx. ¥3.5 billion,
up 26%), freezers (approx. ¥3.7 billion, up 16%) and microwave ovens (approx. ¥2.7 billion, up15%) grew over the previous year. On the other hand, the export of parts was greater than that offinished products, which shows that parts accounted for a large portion of the export of consumer
electric machines and appliances in Japan. In other words, the traditional structure has not beenchanged in which overseas manufacturers procure parts from Japan, assembly the parts in theirplants abroad and export the finished products to Japan (and other countries).

57

3. Electric Machine Sector

Fig. 3-3

Trend of export of consumer electric machines and appliances(number of units, ¥ million)

Product

2002
Quantity

2003

AmountQuantity

2004

AmountQuantity

2005

AmountQuantity

2006

AmountQuantity

AmountElectric refrigerators, total

63,681

1,954

68,236

1,826

69,4402,103

71,6702826

103,163

3,548

Refrigerators/freezers

32,655

1,085

34,654955

26,189

1,124

23,7851319

42,958

1,190

Refrigerators (compression
type)30,368855

32,706869

42,843976

46,3521501

56,875

2,351

Refrigerators (absorption
type)

658

14

876

3

408

2

1,533

7

3,330

7

Other refrigerators

9,052

248

6,604

178

7,658

193

4,767

118

2,490

67

Electric freezers, total

6,887

2,351

7,128

2,261

7,965

2,479

8,978

3200

10,629

3,717

Horizontal freezers

1,475

428

1,578

442

1,649

418

1,698

551

2,330

730

Vertical freezers

5,412

1,923

5,550

1,819

6,316

2,061

7,280

2649

8,299

2,987
2,264

Refrigerator parts

-

1,532

-

1,183

-

1,372

-

1109

-

960

35

1,863

58

1,164

37,075

597

13

946

36

Electric washing machines, total

115,468

3,029

111,107

2,724

99,0592,593

106,4513357

102,041

2,691

Fully automatic washingmachines

70,2082,179

65,143

1,755

65,311

1,884

66,2852564

56,632

1,864

Other washing machines,
total

45,260850

45,964968

33,748709

40,166793

45,409828

Twin-tub washing machines

44,130846

45,860968

33,550707

38,261

754

45,240827

Other washing machines

1,130

3

104

1

198

2

1,905

39

169

1

-

152

-

2,409

-

4,284

-

3496

-

2,850

6,958

259

4,561

168

5,100

163

7,427

244

5,657

201

273,998

2,515

262,775

2,336

295,134

2,690

279,8552409

260,0232,260

Dish washing machines

Washing machine parts
Clothing driers
Vacuum cleaners (with anelectric motor; output, 1500W or
less)
Floor polishers

-

-

83

1

60

2

32

2

21

1

Fans, total

786,626

1,387

556,4221,044

565,974

1,070

387,940826

447,155954

Hoods for ventilation/circulation

13,850167

13,575122

16,848207

18,892271

21,984324-

24,549-29,770-37,885

-

42749

-

48,792

Parts for fans, etc.
Kitchen disposers
Juicer-mixers

2,324

31

33

3

7

3

73

6

12

4

337,845

1,854

324,9101,701

366,301

1,825

347,699

1788

385,987

2,055

250,453

1,678

252,3541706

318,4152,1512930 1,100,516

2,881

Other food mixers, grinders, etc.

177,280

1,329

242,258

1,597Electric razors, total

975,673

2,341

993,306

2,968 1,041,857

2,950 1,132,694

Battery razors

921,7942,214

939,385

2,895

970,605

2,810

-

-

-

Electric razors

53,879127

53,921

73

71,252

139

-

-

-

-

Electric hair clippers

790,7732,315

706,268

2,040

609,453

1,942

582,160

1704

635,380

1,912Electric hair removers-

23,687

60

722

11

231

0

4,301

13

34,161

104

Razor and hair remover parts

-

4,832

-

5,710

-

5,391

-

6016

-

6,122

Household electric applianceswith a motor

493,901

996

340,887924--

144,868

786

161,772

1,045

Appliances with a motor/battery

465,785

601

305,648474

131,002

198

-

-

-

-

Other electric appliances with a
motor

28,116396

35,239451

29,079

378

-

-

-

-

-

2,017

-

2,467

-

2,474

-

2002

-

1,558

Electric water heaters

27,909641

18,169461

17,295425

15,117298

21,522

504

Electric blankets

11,173

21

2,930

7

2,728

8

1,800

4

-

-

Electric heating appliances, etc.

61,793291

69,097442

133,8171,345

130,0281042

195,062

2,178

Heat storage radiators

16,046

19

6,705

9

2,874

3

260

4

4,186

65

Other electric heating
appliances, etc.

45,747273

62,392433

130,943

1,342

129,768

1038

190,876

2,113

Parts for other electric
appliances with a motor

Hair driers

229,290550

371,055834

242,461

540

228,464561

315,490

832

Other hairdressing appliances

79,531646

89,901

478

71,152352

83,942291

25,297

204

Hand driers

12,201

47

431

32

412

39

966

51

690

57

58

3. Electric Machine Sector

2002

Product

Quantity

2003

AmountQuantity

2004

AmountQuantity

2005

AmountQuantity

2006

AmountQuantity

AmountElectric irons

610,097151

719,900

1,587

811,470

1,644

807,5741702

831,439

1,899

Microwave ovens

56,562

1,893

45,4501,630

70,6692,329

70,8542392

72,9392,744

Coffee-/tea-makers

11,365216

14,688338

26,686619

17,004392

14,897299

Toasters

17,915

37

8,506

19

5,405

5

-

-

1,100

2

Electric rice cookers

455,551

3,630

319,905

2,510

354,098

2,671

377,6823007

379,936

3,329

Other ovens, cookers, etc.

51,678354

42,035346

25,755

203

29,940473

11,996

311

Other electrothermal appliances

521,361

2,396

412,747

2,062

536,087

2,208

441,3992065

846,7522,458Electrothermal resistive
elements-

16,018-17,655-20,890

-

19234

-

27,536

Parts for electrothermal
appliances

-

5,877

-

5,228

-

5,906

-

5732

-

5,686

Source:Same as that for Fig. 3-1.

Fig. 3-4

Trend of import of consumer electric machines and appliances (number ofunits, ¥ million)

Product

2002
Quantity

2003

AmountQuantity

2004

AmountQuantity

2005

AmountQuantity

2006

AmountQuantity

AmountElectric refrigerators, total

1,923,062

29,371

1,827,166

27,2692,007,878

31,3972,141,041

36,0582,135,305

42,157

Refrigerators/freezers

1,460,641

24,461

1,468,97823,426

1,581,492

27,134

1,705,834

31,383

1,707,629

37,358Refrigerators (compression
type)425,613

4,547

338,860

3,606

401,259

3,950

420,1124,400

414,173

4,497

Refrigerators (absorption
type)36,808363

19,328237

25,127314

15,095275

13,503302

Other refrigerators

267,961

1,226

235,018

1,088

103,401

819

124,406

1,213

130,606

1,089

Electric freezers, total

275,855

5,276

273,017

4,868

373,028

6,174

353,449

6,296

331,765

6,578

Horizontal freezers

90,176

1,578

74,411

1,383

123,206

2,202

99,4391,868

112,001

2,120

Vertical freezers (900L or
less)

-

-

-

-

-

-

-

-

219,764

4,458

Vertical freezers (400L or
less)

185,679

3,698

198,606

3,485

249,822

3,972

254,010

4,427

-

-

Dish washing machines

22,609947

109,128

2,919

155,040

3,663

128,545

3,508

83,9362,336Electric washing machines, total

1,506,752

18,775

1,922,974

25,2372,630,236

38,9083,071,522

48,856

3,134,450

53,648Fully automatic washingmachines

993,122

14,118

1,541,143

21,4592,339,810

36,1542,815,456

46,3572,906,627

51,321Other washing machines,
total

513,630

4,657

381,8313,779

290,426

2,754

256,066

2,499

227,823

2,327

Twin-tub washing machines

379,821

4,174

341,8223,626

259,667

2,607

237,826

2,431

209,132

2,276

Other washing machines

133,809483

40,009153

30,759147

18,24068

18,691

51

-

4,376

-

5,281

-

5,720

-

5,607

-

9,399

5,566

204

14,994295

11,067

201

7,709

155

3,249

160

6,580,082

16,117

7,190,930

19,1296,813,852

20,596

7,316,534

28,9107,813,391

35,795

Vacuum cleaners(battery-powered)

2,480,541

3,794

2,328,894

3,860

1,550,707

2,220

1,967,692

3,465

1,971,150

3,737

Vacuum cleaners (electric)

4,099,541

12,323

4,862,036

15,2685,263,145

18,376

5,348,842

25,4455,842,241

32,057

11,45748

25,80963

47,711

99

46,720106

44,437

77

Washing machine parts
Clothing driers
Vacuum cleaners (with anelectric motor; output, 1500W or
less)

Floor polishers
Fans, total

14,193,862

20,458 13,761,082

18,923 11,897,274

15,064 13,971,965

17,452 13,330,862

19,418Fans

9,237,553

15,5638,640,012

13,962

7,391,498

10,607

8,413,133

12,486

9,567,564

14,389

-

-

-

-

-

-

-

-

896,324

1,388

4,956,309

4,895

5,121,070

4,961

4,505,776

4,457

5,558,832

4,966

2,866,974

3,641

6,717

210

105,632896

136,224

1,533

139,5272,010

116,423

1,917

Parts for fans, etc.

-

2,811

-

3,439

-

4,571

-

5,933

-

6,844

Kitchen disposers

23,486320

32,382361

35,186386

27,789277

32,815365

Ventilating fans
Other fans
Hoods for ventilation/circulation

593. Electric Machine Sector

Product

2002
Quantity

2003

AmountQuantity

2004

AmountQuantity

2005

AmountQuantity

2006

AmountQuantity

AmountMixers, juicers, etc. for food

3,649,364

5,781

4,677,124

6,443

4,871,717

6,777

3,920,493

6,147

4,277,194

6,816Electric razors, total

8,272,630

16,4758,644,022

16,4798,311,270

13,0408,950,137

13,122

9,961,760

15,311

Battery razors

7,922,073

16,053

8,273,212

16,011

-

-

-

-

-

-

Electric razors

350,557

422

370,810

468

-

-

-

-

-

-

Electric hair clippers

665,686906

1,066,604

1,296

1,074,731

1,254

1,284,430

1,336

1,671,011

1,731Electric hair removers

99,498466

1,201,743

2,693

784,635

1,711

881,6191,700

716,020

1,921

-

4,610

-

5,025

-

5,265

-

4,365

-

4,478

Razor and hair remover parts
Other electric appliances with a
motor

22,315,369

Parts for electric appliances witha motor

20,594 24,237,832

20,267 13,508,407

17,639 11,897,504

18,076 15,206,723

27,079

-

4,318

-

4,454

-

6,776

-

8,013

-

8,512

Electric hot-water heaters753,281

2,057

1,101,421

2,858

1,352,442

4,420

1,491,987

4,160

1,479,021

3,265Electric blankets

729,872949

1,163,050

1,375

1,314,710

1,374

1,718,179

2,063

2,559,777

3,428

32,031 10,669,499

33,2587,489,181

23,6487,436,379

25,5099,281,512

34,606

4,540

248,707

3,819

192,881

3,368

276,110

4,702

427,2227,120

7,296,300

20,2807,160,269

20,807

8,854,290

27,487

13,180 14,948,473

15,252

Electric heating appliances, etc.

9,413,696

Heat storage radiators

433,244

Other electric heating
appliances, etc.

8,980,452

27,491 10,420,792

29,440Electrothermal hairdressing
appliances, total

12,063,731

12,943 12,058,061

12,473 12,560,022

8,247,351

8,865

8,194,507

8,074

7,817,177

7,240

7,876,747

7,451

7,771,250

8,207

Other hairdressing appliances 3,816,380

4,078

3,863,554

4,398

4,742,845

4,853

6,077,777

5,729

7,177,223

7,045

Hair driers

12,093 13,954,524

Hand driers

61,107

36

6,308

33

38,819186

48,425264

113,027396

Electric irons

2,548,675

4,049

2,495,377

3,625

3,009,152

4,187

3,506,116

4,684

2,964,848

4,087

Microwave ovens

1,713,622

11,2392,346,929

15,5362,606,131

18,631

3,388,159

26,0603,470,533

30,0781,160,857

6,275

1,174,668

5,229

1,178,207

5,813

976,134

4,151

963,610

4,283

Mono-function microwave
ovens
Other microwave ovens

552,765

4,964

1,172,261

10,3081,427,924

12,8192,412,025

21,9092,506,923

25,796

Coffee-/tea-makers

2,298,073

3,965

2,215,260

3,947

1,851,678

3,192

2,171,207

3,747

2,168,917

4,414

Toasters

4,313,976

5,021

4,212,310

4,555

4,089,985

4,547

4,047,861

4,813

4,132,045

5,400

Other ovens, cookers, etc.

2,830,635

7,885

3,803,862

9,225

3,820,058

8,579

4,339,069

10,151

4,098,652

11,868Other electrothermal appliances

-

-

-

-

-

-

-

-

-

-

Electric rice cookers

2,792,643

10,4852,914,054

9,824

2,847,190

9,037

3,049,878

9,567

2,831,444

9,404

Other electrothermal appliances

11,943 11,377,250

15,381 14,157,555

20,201

8,676,331

11,376

8,083,664

10,692

9,008,152

Electrothermal resistive
elements

-

8,495

-

9,789

-

10,996-

11,273-

13,122

Parts for electrothermal
appliances

-

8,247

-

9,025

-

10,380-12,428-15,912Air filters or air cleaners(excluding battery-powered
ones)

-

-

-

23,995 11,299,112

24,431

Source:- 17,563,151

18,226 11,538,518

Same as that for Fig. 3-1.

The import of consumer electric machines and appliances continued to show an upward trend.
The import in 2006 was ¥484.7 billion or an increase of about 20% over the previous year when the
figure stood at ¥406.7 billion. According to Figure 3-4 showing the situation of import by productcategory, the amount of import rose for many products. Specifically, the import of electric washingmachines, microwave ovens, and vacuum cleaners were ¥53.6 billion, ¥30.0 billion, and ¥35.8
billion, respectively. Taking washing machines as an example for the situation of “reimport”, thedomestic production of washing machines in 2006 was 145,846 units, of which the figure forwashing and drying machines was 100,409 units. As the production in 2005 was 89,361 units, theincrease in the domestic production in 2006 was mostly as a result of the increase in that of washing60

3. Electric Machine Sector

and drying machines. On the other hand, the import of electric washing machines in 2006 was
3,131,552 units, of which 2,906,627 units were fully automatic washing machines. In 2005, theimport of electric washing machines was 3,071,552 units, including 2,815,456 units of fully
automatic ones. From these figures, it can clearly be seen that the imports were mostly fully
automatic washing machines and that there has been the deepening of the division of supply sources
into two categories: the import of widely used products, such as fully automatic washing machines,
and the domestic production of high value added products, such as washing and drying machines.

3.1.2. Future trend
As discussed so far, demand for consumer electric machines and appliances is expected to growdue mainly to anticipated business recovery and possible replacement demand because ten years
passed after the raise in the consumption tax. But considering that the “reimport” trend is not likely
to change and that the domestic market has matured, the domestic production is not expected to
expand greatly. Thus it is considered that the trend of the production, shipment, etc. of consumer
electric machines and appliances will be similar to that in the past.
Meanwhile, the issue that has become more serious recently is that of product safety. Thereoccurred several cases where products sold a few decades ago caused problems and had to berecalled, such as the recall of FF-type heating machines by Matsushita Electric Industrial Co. andthat of fans by Sanyo Electric Co. These events have been reported by the mass media widely andhave become social problems. Many of these cases are concerned with products introduced two to
three decades ago and show that manufacturers have to bear corporate responsibility for a long time.
In general, manufacturers of machine products have established the system of securing repair parts
for ten years or so after the manufacture is ended. But the consumer increasingly tends to buy a new
product instead of repairing an old one in recent years, and it is hard to say that manufacturers haverecognized the problems as those mentioned above sufficiently. These events have made it necessary
to review the concept of product lifecycles and have revealed the need on the part of manufacturers
to build the system of product development and safety on the assumption that their products are used
for over 30 years. Moreover, manufacturers have not been able to examine all of the situations about
very old products. There is still the possibility that some defective products remain unrecalled, andthe costs for recall have probably added up. In the future, manufacturers will need to create somesystem for “traceability,” too, and should enhance their awareness of product development, safety,
maintenance, repair and other related problems. The costs associated with these activities will
increase more, and manufacturers are required to construct a system for these problems, including
corporate social responsibility (CSR), urgently. The recall problems also gave manufacturers theopportunity to basically reconsider their stance on product safety.

61

3. Electric Machine Sector

3.2

Consumer electronic machines and appliances (including cameras)

3.2.1. Supply and demand trend(1) Outline

The domestic production of consumer electronic appliances in 2006 increased because demandfor consumer electronic digital audio-visual (AV) appliances, mainly flat-screen TVs was went up
globally, though the price of these products dropped. For consumer electronic digital AV appliances,the production of such video appliances as liquid crystal (or liquid crystal display/LCD) TVs, plasma
TVs and digital cameras was high, while that of traditional audio apparatuses continued to be low.
The export declined mainly because the overseas production of audio apparatuses grew.
(2) Production (Fig. 3-6)

The domestic production of consumer electronic appliances in 2006 was ¥2,781.3 billion or an
increase of +8.7%, continuing to register a growth as in 2005. The factors behind this is the fact thatthe output of liquid crystal TVs (up +33.4% y/y), plasma TVs (up +11.5% y/y) and digital cameras(up +12.4% y/y) continued to increase, while that of digital versatile disc (DVD)-videos (up +7.3%y/y) turned into a positive growth. The primary cause of continued expansion in domestic productionis that global demand for digital AV appliances such as flat-screen TVs with a high value added anda relatively high ratio of domestic production continued a favorable growth.
Figure 3-5 shows the ratios of domestic and overseas production of main consumer electronic
appliances by Japanese manufacturers (estimates for 2006). Liquid crystal TVs, plasma TVs andother flat-screen TVs, DVD recorders with a hard disc drive (HDD) and other DVD recorders, carnavigation systems and digital cameras still had a high ratio of domestic production, though shifts tooverseas manufacture, mainly in China, increased. The domestic production of these products rises
not only by increasing domestic demand but also by growing demand abroad.

Fig. 3-5

Ratios of domestic and overseas production of consumer electronic
appliances by Japanese manufacturers (estimates for 2006)(1,000 units)
Total production by Japanese manufacturers(of which domestic
production)(of which overseas
production)
Ratio(of which production in China)
Ratio

Ratio

Color TVs

62,273

7,228

11.6%

55,045

88.4%

6,030

11.0%

Flat-screen TVs

23,500

7,228

30.8%

16,272

69.2%

3,365

20.7%

DVD recorders & players

40,620

1,250

3.1%

39,37096.9%

28,06071.3%

Car audio systems

52,240

3,620

6.9%

48,62093.1%

17,70036.4%

Car navigation systems

6,050

5,680

93.9%

370

6.1%

200

54.1%

Digital cameras

63,66031,19049.0%

32,47051.0%

22,32068.7%

Source:Prepared by the authors based on the Japan Electronics and Information Technology Industries Association (JEITA),“Situation of Global Production of Main Electronic Appliances, 2005-2007,” March 2007.

By product category, the production of liquid crystal TVs amounted to ¥733.5 billion, attaining62

3. Electric Machine Sector

a higher growth rate of +33.4% over the previous year than any other consumer electronic appliances.
The production of plasma TVs was ¥192.9 billion or a two-digit increase of +11.5% y/y, but this was
far lower growth rate as compared with that of liquid crystal TVs because of falling prices resulting
from competition with liquid crystal TVs. That of video cameras was ¥391.8 billion, suffering anegative growth of -10.8% y/y. DVD-videos turned into a positive growth of +7.3% y/y with ¥101.1
billion, mainly because the unit price went up by introducing models with a built-in HDD, those
supporting digital terrestrial broadcasting and other new products. Digital cameras also enjoyed apositive growth: its output was ¥731.0 billion, up +12.4% y/y. As Fig.3-5 shows, car navigation
systems are one of the products that are mainly made in Japan; the production of these systems was¥475.8 billion or a decline of -0.3% y/y, the first negative figure after 1996 when the statistics werestarted to be collected. On the other hand, in the area of audio apparatuses that were mostly madeoverseas, while car audio systems was ¥114.9 billion, a slight increase of +0.1% y/y, home audio
systems (¥7.2 billion, down -44.5% y/y) and portable audio systems (¥3.2 billion, down -80.6% y/y)suffered a lower production in Japan; the domestic production of these systems became very small
due to further increase in overseas production.

Fig. 3-6

Trend of production of consumer electronic machines and appliances (interms of value)(¥ million)
Growth rate,
2005-2006

Estimatefor 2007

Growth rate,
2006-2007

Production

2004

2005

Consumer electronic appliances

2,488,012

2,559,238

2,781,325

8.7%

2,843,690

554,239

-

-

-

-

-

-

173,103

192,961

11.5%

191,570-0.7%

373,769

549,670

733,508

33.4%

873,310

19.1%

-

-

-

-

-

-

DVD-videos

132,793

94,176

101,068

7.3%

85,610-15.3%

Video cameras (excluding those for broadcasting)413,529

439,064

391,774-10.8%

365,950-6.6%

Digital cameras (Note 5)

712,417650,386

730,98812.4%

693,960-5.1%-

TVs (Note 1)
Plasma TVs (Note 2)
Liquid crystal TVs (Note 3)
Other color TVs (Note 4)

2006

2.2%

Single-lens reflex cameras (changeable lenses)-

114,704

127,028

10.7%-

Compact-type digital cameras-

535,682

603,960

12.7%

-

-

Portable audio systems (Note 6)

43,385

16,4393,181-80.6%

1,690-46.9%

Home audio systems (Note 7)-

12,9127,161-44.5%

3,640-49.2%

Car audio systems (Note 8)

135,436

114,760

114,9110.1%

113,590-1.1%

Car navigation systems

415,633

477,514475,847-0.3%

499,540

5.0%

Hearing aids

15,887

15,936

14,823

-7.0%

-

-

Notes: 1. This category was subdivided in 2005 and after.
2. This category was separated from “Color receiving apparatuses (including PDP receiving apparatuses)” and statedindependently in 2005 and after.
3. This category was renamed in 2005 and after.
4. This category was established in 2005 by separating it from “Plasma TVs.”
5. The categories “Single-lens reflex cameras (changeable lenses)” and “Compact-type digital cameras” were newly
established in 2005 as the breakdowns of “Digital cameras.”
6. This category was renamed in 2005.
7. This category was newly established in 2005 by uniting “CD/MD systems with a radio,” “Stereo sets” and “Digital audio
disc players.”
8. This category was newly established in 2005 by uniting “Stereos” and “Digital audio disc players.”
Sources: Results in 2004-2006, the Research and Statistics Department, Industrial Policy Bureau, Ministry of Economy, Tradeand Industry, “Annual Report of Machinery Statistics;” estimates for 2007, the JEITA, “Outlook of Production of theElectronic Industries in 2007,” December 2006.

63

3. Electric Machine Sector

The estimated production of consumer electronic appliances in 2007 is ¥2,843.7 billion or an
increase of +2.2% over the previous year. Flat-screen TVs have come into wider use at the domestic
market and the new establishment and reinforcement of the production capacity of flat-screen TVs
have been announced in succession; thus the domestic production will continue growing. In addition,
the service area of digital terrestrial broadcasting has been extended, and analog broadcasting will be
discontinued in 2011, which will boost replacement demand for DVD recorders and otherapparatuses for digital broadcasting. This will also contribute to an increase in the domestic
production.
(3) Export and import (Figs. 3-7, 3-8)

The export of consumer electronic appliances in 2006 was ¥1,644.4 billion, which was anegative growth of -2.6% from the previous year. That of video appliances, which accounted forover 90% of the export of consumer electronic appliances, was ¥1,566.1 billion or a fall of -1.2% y/y.
The export of still video cameras (e.g., digital cameras), which amounted to about 80% of that ofvideo appliances, was ¥1,211.3 billion, showing a slight growth of +0.3% y/y. The reason that theexport, including that of liquid crystal TVs whose domestic production was high, decreased is thatshifts to overseas production were reinforced. The export of audio appliances was ¥78.4 billion or afall of -24.6% y/y, continuing to show a downward trend. Because audio appliances were almost all
made overseas, they made no contribution to export.
The import of consumer electronic appliances in 2006 stood at ¥701.0 billion, a decline of-10.3% from the previous year. Video appliances registered ¥396.1 billion or a fall of -14.3% y/y,while the figures for audio appliances were ¥304.9 billion, down -4.4% y/y. By region, because
production was shifted mainly to China and the Southeast Asia, the import from Asia accounted for
97% for video appliances and 88% for audio appliances.

643. Electric Machine Sector

Fig. 3-7

Trend of export of consumer electronic appliances (in terms of value)(¥ million)
Growth rate,
2005-2006

Export2004

2005

Consumer electronic appliances

1,787,720

1,688,637

1,644,422-2.6%

1,656,578

1,584,659

1,566,066-1.2%

172,190

149,095

126,777-15.0%

6,950

2,752

2,884

4.8%

165,240

146,343

123,893-15.3%

94,55862,77359,941-4.5%

41,10938,00638,0210.0%

30,656

27,73638,80139.9%

1,191,132

1,207,735

1,211,335

0.3%

168,042

137,320

129,214-5.9%

131,142

103,977

78,356-24.6%

14,73811,0197,292-33.8%

10,061

7,372

5,267

-28.6%

10,061

7,372

5,267

-28.6%

3,734

2,814

1,783

-36.6%

2,549

1,670

923

-44.8%

1,980

1,451

794

-45.2%

Stereo components

52,674

31,46524,018-23.7%

Other audio appliances

63,73061,49347,045-23.5%

General radios

2,129

1,665

2,223

33.5%

For automobile

42,61145,01535,435-21.3%Car stereos (with a radio)

29,89436,23926,402-27.1%

Car radios

10,606

5,776

6,544

13.3%

18,99014,8139,388-36.6%

182

177

201

13.2%

Video appliances
Color TV receiving apparatuses
Color TVs (including chassis and kits but excluding liquid crystal TVs, etc.)
Liquid crystal TVs, etc. (color)
Video recording and playback appliances
Video recording and playback appliances (VTRs)
VTRs with camera
Still video cameras/other video and digital cameras
Video projectors
Audio appliances
Tape recorders (including stereo sets)
Tape recorders with a radio (including stereo sets)
Sets
Other tape recorders (including headphone stereos, etc.)
Those with recording function
Cassette type

OthersHearing aids

Source:2006

Prepared by the authors based on the Ministry of Finance, “International Trade Statistics.”

Fig. 3-8

Trend of import of consumer electronic appliances (in terms of value)(¥ million)
Growth rate,
2005-2006

Import2004

2005

Consumer electronic appliances

676,736

781,157

700,992-10.3%

439,023

462,253

396,133-14.3%

116,302156,261

112,773-27.8%

116,191

156,195

112,754-27.8%

Liquid crystal TVs

069,36270,470

1.6%

Plasma TVs

0

2,158

1,918

-11.1%

Video appliances
TV receiving apparatuses
Color TVs

Video recording and playback appliances2006

142,087

157,884

128,886-18.4%

Video recording and playback appliances (VTRs)

15,825

8,426

4,155

-50.7%

Still video cameras/other video and digital cameras

170,716

135,785

136,814

0.8%

9,918

12,323

17,660

43.3%

Video projectors
Audio appliances

237,713

318,905

304,858-4.4%

Tape recorders

86,277103,305

81,431-21.2%

39,39862,59647,239-24.5%

46,87940,70934,192-16.0%

3,048

2,364

2,038

-13.8%
16.8%

Tape recorders with a radio (including headphone stereos, stereo sets, etc.)
Other tape recorders (including headphone stereos, etc.)
Those with recording function
Record decks

399

354

413

Other audio appliances

107,159

171,363

174,952

2.1%

General radios

6,350

10,1678,331-18.1%For automobile
Car stereos (with a radio)
Car radios
OthersHearing aids

Source:58,536

67,033

77,91616.2%

51,97558,36071,71022.9%-28.4%

6,561

8,673

6,206

42,273

94,16388,705

-5.8%

8,074

8,653

9,614

11.1%

Prepared by the authors based on the Ministry of Finance, “International Trade Statistics.”

65

3. Electric Machine Sector

3.2.2. Results of operations and the trend of the consumer electronic applianceindustry(1) Trend of management

Figure 3-13 shows the total amount of sales and operating profit (on a consolidated basis) bysegment or product category of the seven major manufacturers of consumer electronic appliances.
The sales of the digital AVC network segment of Matsushita Electric Industrial Co. in 2006
were ¥4,047.2 billion or an increase of +15% over the previous year. Of this segment, the video andaudio appliance section achieved a growth of +6% y/y due to increased sales of plasma TVs, digital
cameras and other digital AV products (Fig. 3-9). The company’s sales by product category in 2006
were ¥122.5 billion (down -26% y/y) for videos, ¥200.7 billion (up +55% y/y) for digital cameras,¥547.8 billion (up +30% y/y) for plasma TVs, ¥220.3 billion (up +25% y/y) for liquid crystal TVs
and ¥113.5 billion (up +4% y/y) for DVD recorders.

Fig. 3-9

Analysis of sales by product category of Matsushita Electric Industrial (2006vs. 2007)(¥ trillion)

OthersPCs,
Cellular etc.
Liquid Digital phones
crystal cameras
TVs
PlasmaTVs
CRT

Sales in realterms:¥9,490.0
billion (104%)

Foreignexchangeloss:-¥240.0
billion¥9,250.0
billionAudios¥9,108.2
billion

Performancein 2006

Source:+¥141.8 billion

Estimate for
2007

Matsushita Electric Industrial Co., April 27, 2007.

The electronics segment of Sony Corp. achieved sales of ¥6,050.5 billion or a growth of+16.9% over the previous year. By product category, liquid crystal TVs that sold well both in Japanand abroad, notebook computers that enjoyed good sales in foreign markets and digital cameras that
registered greater domestic and overseas sales served as a propelling force for the increased sales.
But the company’s sales of cathode-ray tube (CRT) TVs declined because consumer demand shiftedto flat-screen TVs.

66

3. Electric Machine Sector

Fig. 3-10

Sales and shipment by product category of Sony (on a consolidated basis;
10,000 units)
FY2006
FY2000FY2001

FY2002

FY2003

FY2004

FY2005January
2007

Year-end
performance

Estimatefor
FY2007

-

-

-

-

85

450

550

450

500

Video cameras

550

540

575

660

735

760

770

745

750

Digital cameras

260

340

560

1,000

1,400

1,350

1,700

1,700

2,000

DVD video players

700

Portable audios with built-in HDD andflash memory

400

500

700

850

930

800

770

790

DVD recorders

-

-

2

65

170

200

180

185

170

LCD TVs

-

-

-

43

100

280

600

630

1,000

Liquid crystal rear projection TVs
Cathode-ray tube TVs

-

-

-

25

65

105

110

110

70

1,130

1,000

1,000

940

950

680

470

470

280

PC “VAIO”

250

350

310

320

330

370

420

400

460

Overseas

110

180

180

210

230

270

310

310

-

Domestic

140

170

130

110

100

100

110

90

-

Source:Sony Corp., May 16, 2007.

The sales of the digital media and consumer appliance segment of Hitachi, Ltd. in 2006
increased by +15% over the previous year to ¥1,506.1 billion. The factor attributed to this is thegreater sales of plasma TVs and other flat-screen TVs, DVD cameras and high value added white
goods. The company’s shipment of flat-screen TVs was 770,000 units in 2006 and is estimated at 1.4
million units in 2007 for plasma TVs, and was 510,000 units in 2006 and is estimated at 800,000
units in 2007 for liquid crystal TVs. But the operating profit suffered a higher deficit of -¥58.4
billion from the previous year. The reason for this includes the effects of falling prices of flat-screenTVs, DVD recorders, etc.

Fig. 3-11

Hitachi’s sales goals of flat-screen TVs- Market share of the plasma TVs of the 50-inch V model or larger- Market share of all plasma TVs- Shipment of liquid crystal TVs in units- Shipment of plasma TVs in units
10,000 units

FY2006

Source:FY2007

FY2008Hitachi, Ltd., May 28, 2007.

67

FY20103. Electric Machine Sector

In the briefing session about “Management of Cooperative Value Creation and Profit” on May
28, 2007, Hitachi reported the progress of improvement in its flat-screen TV business. According to
the report, the company intends to stabilize revenue from its flat-screen TV segment by building up
an optimum mix of products and regions, laying emphasis on plasma TVs. More specifically, thecompany aims at securing a 20% share of the global plasma TV market by 2010, mainly through thecreation of a global operation system, where concentrated investment in large-screen products of
50-inch or larger models and the production base of panels will be located in Japan, whileassembling bases will be placed in five regions in the world (Fig. 3-11).
The AV/communications equipment segment of Sharp Corp. achieved a substantial growth insales thanks to the good condition of large-sized liquid crystal TVs: ¥1,381.1 billion or up +26.6%
over the previous year. The operating profit also increased by 24.1% year on year on year to ¥44.4
billion. In the liquid crystal TV business, the company plans to increase its sales from 6 million units
in 2006 (estimate) to 9 million units (3.2 million units in Japan; 5.8 million units overseas) in 2007.
Fig. 3-12 lists the actual and planned shipment of main digital camera manufacturers in Japanand abroad. This figure shows that all manufacturers plan a high production increase in anticipationof greater demand. In addition, Japanese manufacturers made an upward revision of their shipment
plan. For example, Canon Inc. increased its planned shipment from 24 million units to 25 million
units, and Sony, from 20 million units to 22 million units. Demand is expected to continue increasing
for some time because of new demand in the emerging market and replacement demand in thematured market. However, if competition among manufacturers is intensified and the price falls
continue long, gaps in earnings among them are highly likely to widen in the competition for greater
market shares.

Fig. 3-12

Actual and planned shipment of main digital camera manufacturers
in Japan and abroad(10,000 units)Year

Manufacturer

2004

2005

1,400

Sony Ericson

1,400

Sanyo

1,100

Olympus

890

(10)

840

(25)

960

(25)

1,180

(50)

Nikon

661

(105)

845

(134)

801

(209)

1,030

(260)

Panasonic Mobile

200

400

700

900

Fuji Film

610

620

660

800 or more

Casio

370

Pentax210

Note:
Source:

5,980

1,900

(190)

2007 (planned)

Canon

Total

(130)

2006

1,350
1,150

(250)

2,400

1,740

(40)

2,000 (unpublished)

1,000

460
(6.6)

2,110

1,300

600

280

(12)

6,477

300
7,898

(300)

750
(30)

300

(50)

9,361

Figures in parentheses are those for single-lens digital cameras included in those for the total digital cameras; figures
for Canon are on a calendar year basis.
“The Handotai Sangyo Shimbun (Semiconductor Industry Newspaper),” November 2, 2007.

68

3. Electric Machine Sector

Fig. 3-13

Consolidated settlement of accounts of seven consumer electronic
appliance manufacturers (actual and estimated figures)(as of the most recent announcement)(On a consolidated basis, ¥100 million; fractions less than ¥100 million rounded off)
Actual figures for 2004

Actual figures for 2005

OperatingprofitOperatingprofitSales
Matsushita Electric Industrial

Sales

Estimated figures for 2006
OperatingprofitSales

Note: Internal sales between segments are included.

AVC Networks

39,861

1,909

40,472

2,196

41,8002,500

Panasonic AVC Networks

15,181576

18,287909

19,400

1,160

Sony

Note: Internal sales between segments are included.

Electronics

51,76469

60,505

1,567

-

-

Videos: sales to outside customers

10,213-

11,431---

TVs: sales to outside customers

9,278

-

12,270

-

-

-

9,500

320

16,300-150

29,700350

Mitsubishi ElectricHousehold electric appliances
HitachiNote: Internal sales between segments are included.
8,964

149

9,219

366

Note: Internal sales between segments are included.

Digital media/consumer appliances
Toshiba

13,057-358

15,061-584

Note: Internal sales between segments are included.

Digital products
Sanyo ElectricConsumer segment

25,365

209

28,055158

Note: Internal sales between segments are included.
11,544-99

10,177

-17

-

-

8,945

106

7,635

22

-

-

542

-

558

-

585

-

TVs: sales by product category

1,102

-

1,050

-

954

-

Digital cameras: sales by product category

1,853

-

1,265

-

1,741

-

AV/information and communications equipment
Liquid crystal projectors: sales by product category

Sharp

Note: Internal sales between segments are included.

Electronics appliances

17,428623

20,675817

23,090895--

13,815444

16,100520

AV/communications equipment

Note:
Source:Sanyo Electric: internal sales excluded for the sales figures for liquid crystal projectors, TVs and digital cameras.
Prepared by the authors based on the quick report, etc. on the website of the manufacturers.

(2) Technological innovation and the business environmenta)Ranking of shares of the world and Japanese market by product category

Figure 3-14 is excerpts from the “Survey on the Market Shares of Main Products and Services”
for 2006 conducted by Nihon Keizai Shimbun, Inc.
In the ranking of shares of the world market, Sony (+2.9 points) won the first place in liquid
crystal TVs for the first time. Samsung Electronics (+4.7 points) enjoying increased sales in North
America and Europe ranked second. Sharp (-6.1 points) was at the top in 2005 and strengthened its
sales activities overseas, but the growth of the Sony-Samsung alliance, which founded a joint
venture for panels by their joint investment, surpassed. In plasma TVs, Matsushita Electric (+3.8
points) reinforced its dominant position. In DVD recording and playback machines, the share of
Matsushita (-5.7 points), the leader, was reduced as a result of the offensive of late comer
manufacturers. Toshiba Corp. (+3.1 points), which ranked fourth in 2005, rose to the second place.
Japanese manufacturers led in digital cameras: Canon won the first place and Sony took second. But
Samsung Techwin, a late comer, went on the offensive, intensifying competition for a greater shareamong manufacturers. Japanese manufacturers have overwhelming market shares in video cameras:69

3. Electric Machine Sector

Sony (+1.2 points) and other three Japanese companies took the first four places.
For the ranking of shares of the Japanese market, Sharp (-3.3 points) maintained its hold on firstplace with a far large share but its share was cut. The second-ranking Sony (+0.7 points) and thethird-ranking Matsushita Electric (+0.8 points) are working to undermine Sharp’s commanding lead.
In plasma TVs, Matsushita (+1.3 points) held an established position as the leader. The
second-ranking Hitachi (+3.6 points) increased its share, whereas the share of the third-ranking
Pioneer Electronics Corp. (-3.6 points) was reduced, overwhelmed by the sales blitz of competitors.
Competition for a greater market share was fierce in digital cameras, and the ranking of the
manufacturers was changed from that in 2005 except Canon (+1.5 points) that held the top position.

Fig. 3-14

Ranking of market shares by product category (2006)[Ranking of shares of the world market]
Video cameras

DVD recording/playback machines

Digital cameras(In terms of shipment volume)(In terms of shipment volume)(In terms of shipment volume)

Manufacturer

Share

Manufacturer

Share

Manufacturer

Share

1st

Sony

40.2 Matsushita

19.0 Canon

21.5

2nd

Victor of Japan

20.9 Toshiba

13.2 Sony

17.3

3rd

Matsushita

17.8 Sony12.0 Eastman Kodak

10.7

4th

Canon

13.1 Samsung Electronics

8.1 Olympus

9.3

5th

Samsung Electronics

6.0 Phillips

7.8 Samsung Techwin

8.6

PDP TVs

Liquid crystal TVs(In terms of shipment volume)(In terms of shipment volume)

Manufacturer

Share

Manufacturer

Share

1st

Matsushita

29.5 Sony

16.2

2nd

LG Electronics

15.8 Samsung Electronics

15.1

3rd

Samsung Electronics

14.1 Sharp

11.5

4th

Phillips

9.8 Phillips

10.8

5th

Hitachi

7.9 LG Electronics

6.8[Ranking of shares of the Japanese market]
Video cameras

DVD recording/playback machines

Digital cameras(In terms of shipment volume)(In terms of shipment volume)(In terms of shipment volume)

Manufacturer

Share

Manufacturer

Share

Manufacturer

Share

1st

Sony

31.8 Matsushita

28.0 Canon

21.8

2nd

Victor of Japan

21.3 Sharp

20.1 Matsushita

15.1

3rd

Matsushita

21.2 Sony18.0 Fiji Photo Film

14.8

4th

Canon

12.9 Toshiba

17.5 Casio Computer

13.7

5th

Hitachi11.2 Pioneer

8.0 Sony

13.6

Portable music players

PDP TVs

Liquid crystal TVs(In terms of shipment volume)(In terms of shipment volume)(In terms of shipment volume)

Manufacturer

Share

Manufacturer

Share

Manufacturer

Share

1st

Apple Japan49.4 Matsushita

66.5 Sharp

43.9

2nd

Sony

20.7 Hitachi

28.5 Sony

18.0

3rd

Matsushita

8.6 Pioneer

5.0 Matsushita

17.0

4th

Toshiba

8.5

5th

Victor of Japan

4.3

Source:Prepared by the authors based on “The Nihon Keizai Shimbun,” August 2, 2007.

70

3. Electric Machine Sectorb)

A Flat-screen TVs: Demand forecast from the consumer sideThis section discusses the demand forecast of flat-screen TVs, including liquid crystal TVs,
from the consumer side (especially the diffusion rate) using the data of the “Consumption Trend
Survey” conducted by the Cabinet Office. The survey published the diffusion rate (for generalhouseholds) obtained from the outcome of the survey in 2005. The data published by the Cabinet
Office on April 17, 2007 revealed the tendency of rapid diffusion of flat-screen TVs amonghouseholds. The diffusion rate of flat-screen TVs, such as liquid crystal TVs and plasma TVs, as ofMarch 2007 was 29.4%, an increase of 9.6 points over the figure as of March 2006, i.e., 19.8%. By
contrast, the ownership of CRT TVs declined by 3.3 points to 92.9% (Fig. 3-15). The figure forflat-screen TVs in March 2007 is on a similar level to that as of February 1970, five years after the
diffusion rate of color TVs was included in the statistics, which was 26.3%. The diffusion rate ofcolor TVs rapidly rose to the 90% mark in the subsequent five years (90.3% as of February 1975),
while the ownership of black-and-white TVs greatly fell to less than 50% (48.7% as of February1975). During the three years after color TV statistics started to be collected, the diffusion rate ofblack-and-white TVs increased, too. Therefore, it is considered that color TVs were in the new
demand period for the three years after their statistics were begun to be prepared. Then in the fourthyear, the diffusion rate of color TVs started to rise, whereas that of black-and-white TVs began todrop. This suggests that color TVs entered the period of switchover demand in the fourth year. Thisroughly agrees with E.M. Rogers’ “16% diffusion rate theory.”
Fig. 3-15

Change in TV diffusion rates

Change in TV diffusion rates among households
Period of time needed for the diffusion rate of color TVs exceeding 90% and reaching the 99% mark (9 years)
Period of time needed for the diffusion rate of black-and-white TVs falling and that of color TVs exceeding 90% (7years)
Black-and-white TVs
Color TVs
CRT TVs
Flat-screen TVs (e.g., LCD TVs and PDPs)(Diffusion rate (%))

100
90
80
70
60
50
Diffusion rate of flat-screen TVs: 29.4%(survey at the end of March 2007)

40
30
20
10
0
66
Source:

69

72

75

78

81

84

87

90

93

96

99

Prepared by the authors based on the Cabinet Office, “Consumption Trend Survey.”

71

'02

'05

(As of the end of March each year)3. Electric Machine Sector

Considering the situation of switchover from black-and-white TVs to color TVs in the past, it
can be supposed that the change from CRT TVs into flat-screen TVs entered the phase of“switchover demand” in the fourth year. The period of time needed for changeover fromblack-and-white TVs to color TVs was about seven years, and the change from CRT TVs intoflat-screen TVs will also have a replacement period of seven years or so because the broadcasting
system will be switched to digital terrestrial one soon. The domestic market for flat-screen TVs thus
far may be regarded as the one at the stage of new demand when a flat-screen TV was bought inaddition to the existing CRT TV in the general households. Then will come the stage of switchover
demand, or it may be said that we have already entered this phase. In view of the switchover fromblack-and-white TVs to color TVs, switchover demand for flat-screen TVs is expected to rapidly
grow for seven years until 2012 supposing 2005 to be the first year.
When the switchover demand from CRT TVs to flat-screen TVs takes a round, the“replacement demand” from a flat-screen TV to a new flat-screen TV will gradually begin to
increase. According to the “Survey on the Consumers’ Considerations and Years for Replacement of
New Digital Household Electric Appliances” by Nihon Keizai Shimbun, Inc., “Lower prices” wasthe point the respondents regarded as the most important when buying a flat-screen TV (mentionedby 56.0% of them), surpassing “High performance” and “Energy-saving economy” (Fig. 3-16).

Fig. 3-16

Product category

Years for replacement of digital household electric appliancesand main important considerations at the same time(Multiple answers allowed; %)Years for replacement(average years)

User
friendliness

Energy-saving
economyHighperformance

Lower prices

Good design

Flat-screen TVs

7.6

38.9

45.7

52.8

56.0

30.7

Video cameras

5.8

64.4

8.7

53.1

46.2

19.5

DVD recorders/players

5.2

58.8

12.9

50.6

43.5

12.1

Personal computers

4.6

52.6

18.9

59.5

47.6

18.4

Digital cameras

4.4

65.3

11.1

60.0

43.8

27.2

Portable music players

3.4

56.3

9.1

39.8

32.2

30.8

Cellular phones

2.7

67.9

10.1

32.5

42.5

39.7

Source:“The Nikkei Sangyo Shimbun,” September 7, 2007.

The most important factor mentioned by the respondents was “User friendliness” (67.9%) for
cellular phones and “High performance” (59.5%) for personal computers. The important reasons
after “Lower prices” for buying a new flat-screen TV to replace an old one were “High
performance” (52.8%) and “Energy-saving economy” (45.7%). The years for replacement were thelongest for flat-screen TVs (7.6 years on average) and the shortest for cellular phones (2.7 years),
and were 4.6 years for personal computers.
(3) Future prospects and problemsa)Prospects for world shipment of digital cameras

In January 2007, the Camera & Imaging Products Association (CIPA) announced the prospects

72

3. Electric Machine Sector

for world shipment of digital cameras (Fig.3-17).

Fig. 3-17

Prospects for world shipment of digital still cameras (DSCs)
2006

2007

2008

2009

(Actualshipment)(Estimatedshipment)(Actualshipment)(Estimatedshipment)

Total shipment
Year-on-year growth rate
Single-lens reflex cameras with changeable lenses
Year-on-year growth rate
Built-in lens cameras
Year-on-year growth rate
Domestic shipment
Single-lens reflex cameras with changeable lenses
Built-in lens cameras
Export78,981

84,87088,532

21.9%

7.5%

4.3%

90,705
2.5%

5,264

5,994

6,528

6,888

38.9%

13.9%

8.9%

5.5%

73,71778,87682,004

83,817

20.9%

7.0%

4.0%

2.2%

9,424

9,417

9,346

9,269

717

789

832

861

8,707

8,628

8,514

8,408
81,43669,55775,45379,186

Single-lens reflex cameras with changeable lenses

4,547

5,205

5,696

6,027

Built-in lens cameras

65,01070,24873,49075,409Source:Prepared by the authors based on the CIPA data published in January 2007.

According to the announcement, the total shipment of all types of digital cameras in 2006 wasabout 78.98 million units (+21.9% y/y) mainly because the function improvement and diversificationof built-in lens cameras and new models and lower prices of single-lens reflex cameras withchangeable lenses. In 2007, too, the shipment is expected to continue increasing, though the growthrate will decline, and will reach 84.87 million units (+7.5% y/y). The total shipment of digital
cameras in 2008 and 2009 is estimated at 88.53 million units (+4.3% y/y) and 90.71 million units(+2.5% y/y), respectively, on the assumption that growth will be steady in the regions other thanJapan, Europe and the U.S. By product category, it is forecast that as in 2007, single-lens reflex
cameras with changeable lenses will have a higher growth rate than built-in lens cameras.
b)

Estimated world demand for flat-screen TVs

In February 2007, the Japan Electronics and Information Technology Industries Association(JEITA) published the “Estimated World Demand for Main AV Products: Prospects Until 2011.”
This report forecast that global demand for flat-screen TVs, the total of liquid crystal TVs (10-inch
and larger) and plasma TVs, will exceed demand for CRT TVs and reach 104.0 million by 2009 andthen 128.94 million by 2011 (Fig. 3-18). The JEITA publishes its demand forecast every year, andjust as done in 2006, made a substantially higher estimate of demand for flat-screen TVs in 2007 ascompared with the estimate in the previous year. The growth rate of demand for liquid crystal TVs
was estimated at far higher levels: the estimated average compound annual growth rate (CAGR) in
the 2006-2012 period was +23.4%. As a result, it is forecast that demand for liquid crystal TVs will
exceed the 100 million-unit mark in 2012. PDP TVs have a high growth rate at present but tend to belosing out to the power of liquid crystal TVs. Already in 2006, the sales of large-screen liquid crystal
TVs on the 40-inch mark were equal to those of PDP TVs, and it has been pointed out that the gaps
between liquid crystal TVs and PDP TVs might widen further.

73

3. Electric Machine Sector

Fig. 3-18

Estimated world demand for flat-screen TVs(2006: estimated results; 2007-2011: forecasts; in terms of quantity)(10,000 units)
14,00012,000

Projection TVs
10,000PDP TVs
Liquid crystal TVs

8,000

CRT

6,000
4,000

7,045

10,617

3,711
876

0
2001

3.3

9,740

5,327

2,000

Source:

8,485

2002

2003

2004

1,966
2005

2006

2007

2008

2009

2010
2011
(Calendar year)

Prepared by the authors based on the data published in February 2007 by the JEITA.

Electronic devices

3.3.1. Supply and demand trend(1) Outline

The production of electronic devices in 2006 recorded a positive growth. Growing world
demand for digital products, including personal computers (PCs), cellular phone units, flat-screen
TVs and digital cameras, contributed to the growth in the domestic production of electronic devices.
(2) Orders received

According to the “WSTS Semiconductor Market Forecast Spring 2007” published on May 30,
2007 by the World Semiconductor Trade Statistics Inc. (WSTS), the world semiconductor market in2006 attained a growth of +8.9% over the previous year thanks to increasing demand forsemiconductors for PCs, cellular phone units, portable audio players, etc. Because the semiconductor
market is expected to continue growing in the future, mainly in the area of semiconductors for PCs,
cellular phone units and digital household electric appliances, it is predicted that the world
semiconductor market in 2007 will increase to $253.5 billion, a new historic high, though the growthrate will decline to +2.3% y/y. The market is expected to grow by +10.2% y/y in 2008 and by +5.2%
y/y in 2009.
By region, the WSTS forecast that the Asian and Pacific market will expand at a yearly rate of+8.2% in 2006 and after, a higher figure than the overall average (+5.8%). It estimated the annual
average growth rate of the Japanese market in the 2006-2009 period at +5.1% (Fig. 3-19).

74

3. Electric Machine Sector

Fig. 3-19 Forecast for the World Semiconductor Market and Regional Contribution(2002-2006: actual results; 2007-2009: forecasts)（2002 年～ 2006 年実績(Year-on-year（ 前 年ratio
比in伸%)
30び率％）

2007 年～ 2009 年予測）

U.S.

EuropeJapan

25

Asia andother regions

20
15

Forecasts

10
5
0
-5
-10
2002

Source:

2003

2004

2005

2006

2007

2008

2009
(Calendar year)

Prepared by the authors based on the WSTS, “WSTS Semiconductor Market Forecast Spring 2007.”The “Semiconductor International Capacity Statistics” compiled by 40 major semiconductor
manufacturers in the world show that the capacity utilization rate of semiconductor production
facilities in April to June 2007 (for all ICs) increased by 2.2 points as compared with in January to
March 2007 to 89.7%. The capacity utilization improved for two consecutive quarters, and this wasprobably due to the recovery in demand for semiconductors for digital household electric appliancesand PCs in the U.S. in the sales campaigns for the new semester and the year end (Fig. 3-20).

Fig. 3-20 Capacity utilization rate of semiconductor production facilities in the world(1,000 wafers/week)(Capacity utilization rate, %)Production capacity (left scale)
Number of wafers inputted (left scale)
Capacity utilization rate (right scale)

Note:
Source:All data are in terms of 8-inch wafers.
Prepared by the Nomura Research Institute of Financing and Economics based on the SICAS.

75

3. Electric Machine Sector(3) Production (Fig. 3-21)

The production of electronic devices in 2006 amounted to ¥7,017.6 billion or a positive growthof +8.7% over the previous year. By product category, the output of electron tubes, semiconductor
devices, integrated circuits (ICs), liquid crystal (LC) elements, and solar battery modules were¥391.9 billion (+28.9% y/y), ¥1,127.4 billion (+6.5% y/y), ¥3,632.4 billion (+10.6% y/y), ¥1,675.1
billion (+5.0% y/y), and 190.8 billion (-11.6% y/y), respectively. The main reason for the positive
growth except solar battery modules was the active demand for PCs, where a new operation system(OS) was introduced, cellular phone units, where performance was improved and new functions
were added, and digital AV appliances, such as flat-screen TVs and digital cameras.
For electron tubes, the production of cathode-ray tubes, including those for color TVs andelectronic computers, in 2006 suffered a decrease due to falling demand resulting in expansion in flat
panel displays for PDP TVs, liquid crystal TVs, etc. and increasing shift to overseas production. By
contrast, PDP modules enjoyed a substantial growth in production, being ¥326.1 billlion, an increase
rate of +42.0% over the previous year. The output of semiconductor devices was ¥1,127.4 billion, a
positive growth of +6.5% y/y. Until 2005, the production of silicon transistors had been on the
decline partly because of integration into ICs. But in 2006, the output of silicon transistors, 1W or
more, grew by +22.6% y/y, and the total production was ¥132.3 billion, turning to an increase of+12.5% y/y. The production of photoelectric transducers was ¥547.7 billion, a positive growth of+5.3%. The output of light emitting diodes, included in photoelectric transducers, achieved a
two-digit growth in terms of quantity because of good demand for those for cellular phone units, but
had a negative growth of -1.2% from the previous year in terms of value. Laser diodes suffered adecrease of -8.0% y/y in production mainly because demand for laser pickups fell as the DVD player
market had reached a limit and the output of CD players was cut and also because the price came
down. But the production of all types of photoelectric transducers registered a positive growth of+5.3% y/y backed up by demand for other types of photoelectric transducers and from industrial
applications.
The production of ICs was ¥3,632.4 billion, achieving a two-digit growth of +10.6% over theprevious year. Semiconductor ICs were favorable ¥339,2.5 billion and +11.4% y/y due to expanding
market for cellular phone units, PCs and digital AV appliances, which did well globally. Linear
circuits also enjoyed a growth of +3.9% y/y, supported by good demand for those for both consumer
and industrial applications. Microcomputers achieved a positive growth of +11.5% y/y because theirmarket was brisk not only in digital AV appliances and cellular phone units but also in theautomobile sector. Logic devices registered ¥1,234.4 billion or up +9.2% y/y mainly because
demand for large-scale integrations (LSIs) was on an upward trend as the functions and performanceof digital household electric appliances and other electronic machines were improved. Supported bybrisk demand, memories attained a substantial growth of +25.0% y/y in production, which amounted
to ¥661.0 billion. In particular, DRAMs (+61.6% y/y) and SRAMs (+29.2% y/y) recorded a marked
increase because PC manufacturers tried to take demand in advance with the introduction of a new
OS near at hand. Flash memories also had a substantial growth of +27.3% y/y, with a production of¥590.0 billion, thanks to growing demand from the cellular phone unit and PC sectors as well as76

3. Electric Machine Sector

from the digital camera sector. Although the price has been down, Charge Coupled Devices (CCDs),a type of MOS ICs, recorded ¥276.1 billion or an increase of +7.3% y/y, supported by expanding
market of cellular phone units with a camera and automotive sensors and growing demand from thedigital camera sector.
The production of LC elements in 2006 attained a positive growth both in terms of quantity andvalue because demand for small- and medium-sized LC devices was active throughout the year andalso because large-sized LC devices also had a steady demand. The domestic production amounted
to ¥1,675.1 billion or a growth of +5.0% over the previous year. By product category, the output ofactive large-type LC elements increased by +8.0% y/y to ¥639.6 billion due to continued increase indemand from the liquid crystal TVs sector and also due to the enlarging of these TVs. Active andmedium/small-type LC elements recorded ¥946.0 billion or a growth of +5.9% y/y because of solid
improvement in demand for digital cameras for export, cellular phone units, new game units, etc.
Passive-type LC elements suffered a negative growth of -17.9% y/y with a production of ¥92.2
billion because demand continued to decline as a result of intensified competition among thedomestic and foreign manufacturers of active medium/small-type LC elements, which led to anincrease in active-type main panels for cellular phone units, etc.
The domestic production of electronic devices in 2007 is estimated at ¥7,291.6 billion or an
increase of +3.9% over the previous year because the growth rate is expected to be positive thoughslow. Electron tubes will attain a substantial growth of ¥495.3 billion or an increase of +26.4% y/y
because then output of PDP modules is likely to continue rising (up +31.8% y/y). The higher
production of PDP modules is expected to lead to greater demand for plasma TVs with high-quality
pictures as a result of the enlarging of the screen, the full-scale high-definition digital broadcasting
all over the world and the diffusion of high-quality picture DVDs. Semiconductor devices will have
¥1,192.0 billion or an increase of +5.8% y/y; because demand for electronic appliances, such as PCs
and digital AV appliances is expected to grow, a positive growth is forecast for chip production. ICs
will register ¥3,858.2 billion or a growth of +6.2% y/y; semiconductor ICs being ¥3,608.6 billion, up+6.4% y/y. LC elements are expected to record ¥1,746.2 billion or an increase of +4.2% y/y; demand
for active large-type LC elements will continue to show an positive growth because demand will besteady mainly in the liquid crystal TVs sector and also because in the supply side, the construction of
new production lines for new-generation products is planned. Active medium/small-type LC
elements will also achieve a positive growth due to good demand from the cellular phone unit sector.

77

3. Electric Machine Sector

Fig. 3-21

Trend of production of electronic devices (in terms of value)(¥ million)

Production
Electron tubes, semiconductor devices and ICs
Electron tubes

Estimated
growth ratefor
2006/2007

Growth ratefor
2005/2006

Estimatefor 2007

7,017,555

8.7%

7,291,596

3.9%

391,87828.9%

495,256

26.4%

2004

2005

2006

6,818,703

6,458,399

327,368

304,031

PDP modules

215,239

229,582

326,05042.0%

429,892

31.8%

Semiconductor devices

1,072,516

1,059,100

1,127,415

6.5%

1,191,981

5.7%

Silicon diodes

62,83852,34654,222

3.6%

56,770

4.7%

Rectifying devices (100mA and up)

79,45877,637

83,362

7.4%

87,228

4.6%

Transistors

305,424

295,033

322,591

9.3%

342,122

6.1%

Photoelectric transducers

518,866

519,984

547,729

5.3%

583,144

6.5%

Other semiconductor devices

37,45743,61044,5972.3%

99,170122.4%

ICs

3,619,050

3,284,289

3,632,404

10.6%

3,858,196

6.2%

Semiconductor ICs

3,337,883

3,046,167

3,392,542

11.4%

3,608,602

6.4%

Linear circuits

476,264

422,085

438,3913.9%

441,284

0.7%Counter circuits

2,861,619

2,624,082

2,954,151

12.6%

3,167,318

7.2%

Bipolar-type

47,48035,41833,868-4.4%

32,609-3.7%

MOS-type

2,814,139

2,588,664

2,920,283

12.8%

3,134,709

7.3%

Microcomputers

679,917

638,410712,024

11.5%

740,565

4.0%

MPU

41,18455,33140,641-26.5%--

MCU

638,733

583,079

671,383

15.1%

-

-

Logic devices

1,225,989

1,130,167

1,234,438

9.2%

1,337,692

8.4%

Standard logic devices

125,924

113,741

127,576

12.2%

-

-

Semi-customized logic devices

397,159

402,583

483,178

20.0%

-

-

Display drivers

273,601

233,539

219,826

-5.9%

-

-

Memories

605,364

528,661

660,99425.0%

718,114

8.6%

DRAM

39,626

16,551

26,751

61.6%

-

-

SRAM

36,46323,38130,206

29.2%

-

-

Flash memories

487,100

463,475

589,953

27.3%

-

-

302,869

291,426

312,827

7.3%

338,3398.2%

282,166

256,575

276,106

7.6%

-

-

281,167

238,122

239,8620.7%

249,594

4.1%

1,799,769

1,595,254

1,675,062

5.0%

1,746,164

4.2%

1,640,500

1,482,950

1,582,875

6.7%

1,669,710

5.5%

Large type697,486

589,593

636,923

8.0%

-

-

Medium/small type943,014893,357

945,952

5.9%

-

-

159,269

112,304

92,187-17.9%

76,454-17.1%

LC modules

116,691

75,406

58,834-22.0%--

LC panels

42,57836,89833,353

-9.6%

-

-

-

215,725

190,796-11.6%--

Other MOS-type
CCD
Hybrid ICs
LC elements
Active-type

Passive-type

Solar battery modules

Sources: Results in 2004-2006: the Research and Statistics Department, Industrial Policy Bureau, Ministry of Economy, Tradeand Industry, “Annual Report of Machinery Statistics;” estimates for 2007, the JEITA, “Outlook of Production of theElectronic Industries in 2007,” December 2006.

78

3. Electric Machine Sector

Fig. 3-22

Trend of export of electronic devices (in terms of value)(¥ million)
Growth rate for2005/2006

Export

2004

2005

2006

Electronic devices

3,840,442

3,849,798

4,205,550

9.2%Electron tubes

81,41999,27057,307-42.3%

Cathode-ray tubes for TVs

30,336

5,099

3,763

-26.2%

Microwave tubes

4,202

5,805

5,050

-13.0%

Fluorescent character display tubes

11,227

12,257

17,962

46.6%

831,115850,246

968,351

13.9%

Diodes103,591

96,236108,658

12.9%

Transistors

199,530

199,430

229,596

15.1%

9,774

10,686

11,5678.2%

500,476529,294604,874

14.3%

2,927,909

2,900,283

3,179,892

9.6%

10,612

11,924

7,961-33.2%

Monolithic ICs

2,798,690

2,779,549

3,085,706

11.0%

Digital2,176,354

2,210,746

2,518,104

13.9%

2,051,357

2,104,621

2,366,127

12.4%

572,241

700,485

814,001

16.2%

1,479,116

1,404,136

1,552,126

10.5%

286,134

303,098

394,336

30.1%

DRAM

85,12085,318140,356

64.5%

SRAM

27,711

25,35529,09614.8%

ROM173,303

192,425

224,884

16.9%

Microcomputers

386,021333,238

365,745

9.8%

MPU

101,751

82,142

134,297

63.5%

MCU

-6.3%

Semiconductor devices

Thyristors, diac and triac
Photosensitive semiconductor devices
ICs
Smart cards (cards with built-in ICs)

MOS-type
Non-packaged
OthersMemory elements

274,517242,369

227,009

Bipolar-type

48,83238,80741,859

7.9%

Others (BICMOS)

76,16667,318110,118

63.6%

622,336

568,803567,602-0.2%

118,607108,810

86,225-20.8%

Other ICs
Hybrid ICs

Source:Prepared by the authors based on the Ministry of Finance, “International Trade Statistics.”(4) Export and import (Figs. 3-22, 3-23)

The export of electronic devices in 2006 was ¥4,205.6 billion, a substantial increase of +9.2%
over the previous year. By product category, the export of electron tubes amounted to ¥53.7 billion(-42.3% y/y), semiconductor devices, ¥968.4 billion (+13.9% y/y), and ICs, ¥3,179.9 billion (+9.6%y/y). The positive growth in the export of ICs was supported by the globally active sales of cellular
phone units, PCs and digital AV appliances and also by the solid growth in the automobile sector.
The main importers of ICs were Asian nations; the export to this region totaled to ¥2,729.6 billion,
accounting for 85.8% of all the export, of which the export to China amounted to ¥649.6 billion or
20.4% of all the IC export. These figures indicate that the shift of IC export to Asia where a large
quantity of ICs were consumed for the production of electronic appliances, especially to China,
continued. The IC import from Asia was ¥1,852.9 billion or about 70% of all the import. But theimport from China accounted for only 7.0%.
The import of electronic devices in 2006 was ¥2,721.0 billion or an increase of +20.0% over theprevious year. By product category, electron tubes had ¥13.8 billion (+0.3% y/y), semiconductor
devices, ¥256.0 billion (+16.3% y/y) and ICs, ¥2,451.2 billion (+20.5% y/y). The positive growth in79

3. Electric Machine Sector

the import of semiconductor devices was due to the “reimport” of those made by the overseas
subsidiaries of Japanese manufacturers and continued increase in the import of foreign
manufacturers’ products. As in the case of export, the import from Asia had the highest ratio: ¥203.6
billion or 79.5% of all the import.

Fig. 3-23

Trend of import of electronic devices (in terms of value)(¥ million)
Growth rate for2005/2006

Import

2004

2005

2006

Electronic devices

2,195,927

2,268,133

2,720,994

Electron tubes

15,226

13,716

13,763

0.3%

2,702

1,736

663

-61.8%
16.3%

Cathode-ray tubes for TVs
Semiconductor devices

20.0%

204,121220,211

256,027

Diodes34,64535,09936,275

3.4%

Transistors

44,86944,39959,383

33.7%

Thyristors, diac and triac
ICs
Smart cards (cards with built-in ICs)

3,860

3,808

4,026

5.7%

1,976,580

2,034,206

2,451,204

20.5%

26,715

8,813

10,48619.0%

Monolithic ICs

1,877,575

1,938,160

2,384,490

23.0%

Digital1,567,733

1,621,578

1,888,214

16.4%

1,487,237

1,500,549

1,799,734

19.9%

248,387

205,652

220,2377.1%

1,238,850

1,294,897

1,579,496

22.0%

MOS-type
Non-packaged
OthersMemory elements

468,287494,239568,638

15.1%

DRAM

251,907

256,028

403,934

57.8%

SRAM

19,802

15,67421,30035.9%

ROM196,578

222,537

143,404-35.6%

Microcomputers323,247

321,993375,932

16.8%

MPU

246,551

240,384

288,834

20.2%

MCU

58,94563,422

68,9588.7%

44,18629,39621,166-28.0%-26.5%

Bipolar-type
Others (BICMOS)
Other ICs
Hybrid ICs

Source:36,31091,63467,315309,842

316,582

496,276

56.8%

72,29087,23356,228-35.5%

Prepared by the authors based on the Ministry of Finance, “International Trade Statistics.”

3.3.2. Results of operation and the trend of the electronic device industry(1) Trend of management

Figure 3-27 shows the sales and operating profit by sector and product category (on aconsolidated basis) of 12 electronic device manufacturers.
The sales of the electron device segment of NEC Corp. in fiscal 2006 were ¥861.0 billion or an
increase of +5.5% over the previous year. The semiconductor segment (NEC Electronics Corp.)
recorded sales of ¥692.3 billion, up +7.2% y/y. The increased sales were due mainly to the greater
sales of electronic devices for game machines and general-purpose micro-controllers. The sales ofelectronic parts and others declined by -0.7% from the previous year to ¥168.7 billion because of
fallen sales of small-sized LC displays.

80

3. Electric Machine Sector

Fig. 3-24
Item
Strengthen productcompetitiveness bynarrowing down businessareas

Progress of NEC Electronics’ new management policy(published on February 22, 2007)
Main steps taken
Completed

Transfer in-house development resources equivalent to about
400 employees

About a half completed (the transfer of
all 400 employees to be completed by
the end of FY2007)

Cost reduction by redrawing Compose a detailed schedule for redrawing the production map
the production map
Prepare for getting customer approvals
Business organizations andsystems for reinforcing the
profitability management

Completed
StartedPrepare for securing related equipment

StartedRegard SoC/MCU/individual semiconductors as responsibility
centers and make them independent business units
reduce the number of divisions by 18 (59→41) and increase themobility and efficiency of human resources

Reorganization completed

Reduce fixed costs to return Cut the expenses for technology outsourcing
to a surplus by the year
Trim fixed production costs by, for example, controlling capitalending in March 2008
investment
Cut salaries and bonuses for employees

Note:
Source:State of progress

Cut technology outsourcing by an equivalent to about 600
employees

Completed (As noted above)
Planned to reduce capital investment
drawn up
In progress

The state of progress is as of May 14, 2007.
NEC, “Briefing Session on the Management Policy,” July 10, 2007.

After registering deficits in fiscal 2006, NEC Electronics, NEC’s semiconductor affiliate,published a new management policy entitled “Toward Revival of NEC Electronics” on February 22,
2007. The new policy aims at, among others, “Achieving surpluses in business by steadily carryingout the plan to cut fixed costs by ¥20.0 billion as compared with the previous year.” According to the
NEC’s briefing session on the management policy, the steps included in the new policy seem to havebeen taken more than had planned (Fig. 3-24).
The device solution segment of Fujitsu Ltd. recorded sales of ¥762.7 billion and an operating
profit of ¥19.0 billion in fiscal 2006, having increased earnings and lower profits. Although the toneof market rapidly worsened in the second half of fiscal 2006, mainly in the digital household electric
appliance sector, the higher earnings were driven due to, among others, the full-scale operation of
the first 300mm wafer factory at the Mie Plant. The profit decline was the result of increased
depreciation and construction costs of the Mie Plant, though the increased production capacity at theplant had the effect of increasing the earnings.
The electronic device segment of Toshiba Corp. had sales of ¥1,657.3 billion in fiscal 2006,
higher earnings than in the previous year, thanks to the good performance of memories, mainly
NAND flash memories in semiconductor business and also the growth in export in liquid crystal
displays. The electronic device segment suffered a lower operating profit of ¥119.7 billion, adecrease of ¥3.6 billion from the previous year, because the semiconductor business had difficulty
affected by the sharp reduction in the price of NAND flash memories, though the liquid crystal
business was in good form due to brisk sales of high value added products and all-out cost-saving
efforts. Toshiba is focusing its energies on NAND flash memories. In the world market, the company
ranks second with sales of $3.23 billion (share: 26.1%), far less than the leading Samsung
Electronics that had sales of $5.61 billion (45.4%) (results in 2006 reported by iSuppli Corp. of theU.S.). But while Samsung Electronics reduced its share by 8.0 percentage points, Toshiba’s share
increased by 4.0 points due to the effect of higher production by large-scale investment. In the81

3. Electric Machine Sector

briefing session on April 12, 2007, Toshiba published its management policies: (1) Reinforce theproduction capacity of NAND flash memories by the steady increase of the production capacity of
300mm wafers (Fig. 3-25); and (2) Strengthen the profitability of NAND flash memories by drastic
cost-saving steps (Fig. 3-26).

Fig. 3-25

Toshiba’s measures to reinforce NAND production capacity(In terms of 300mm wafers; average production of wafers per period)• 4th factory’s full production capacity:
1.4 times that of the 3rd factory• Production at the 5th factoryscheduled to be started

Former plan
New plan

Production at
the 4th factory
started• Full production capacity at
the 3rd factory: 150,000
wafers a month

1st half,
2nd half,
1st half,
2nd half,
FY’05
FY’05
FY’06
FY’06
Process
generation
Mass-production started in(300mmCR)
January 2007

Fig. 3-26

FY 2007

FY 2008

FY 2009

Toshiba’s drastic cost-saving steps* Accelerating miniaturization/commercialization before other manufacturers⇒⇒

70nm → 56nm → 4Xnm → 3Xnm
* 56nm: mass-production started in January 2007.
Move up the plan to start the production of 56nm (former plan: over 50% in the 3rd q., FY2007 → over 50% in the 2nd q.,
FY2007, over 85% in the 4th q., FY2007) and accelerate the time for starting 4Xnm production* Promote the development of super-multivalence technology⇒

Establish the 3bit/cell and 4bit/cell technology and create the market* Further improve the throughput of the 300mm clean room⇒

Source:

3rd factory: 150,000 wafers/month
4th factory: operation started in the 3rd q., FY2007; full capacity: 1.4 times the output of the 3rd factory
5th factory: decision made within FY2007, giving top priority to the maximization of the output of the 3rd and 4th factories

Toshiba Corp., “Briefing Session on the Management Policy,” April 12, 2007.

82

3. Electric Machine Sector

The liquid crystal segment of Sharp Corp. reinforced its production capacity of liquid crystal
panels as the Second Kameyama Plant, where the eighth-generation mother glass was adopted firstin the world, started operation and the second-term production line was introduced to that plant.
Liquid crystal panels for cellular phone units and other mobile appliances did well, too. Thanks tothese factors, the sales of the liquid crystal segment recorded a substantial increase of +21.6% y/y insales: ¥1,042.3 billion, attaining the ¥1 trillion mark. Sharp set its sales goal of its liquid crystal
segment for FY2007 at ¥1,200.0 billion or a growth of +17% over the previous year. The company
also reinforced the system for solar battery business; for example, it expanded the production
capacity of the Katsuragi Plant. The solar battery segment registered sales of ¥151.4 billion in
FY2006, and the company aims at realizing sales of ¥160.0 billion or up +5.7% y/y in FY2007.

83

3. Electric Machine Sector

Fig. 3-27 Consolidated settlement of accounts of 12 electronic device
manufacturers (actual and estimated figures) (as of the most recent announcement)(On a consolidated basis, ¥100 million; fractions less than ¥100 million rounded off)
Actual figures for 2004

Actual figures for 2005

OperatingprofitOperatingprofit

Sales

Sales

Estimated figures for 2006
OperatingprofitSales

NECElectron device segment
Semiconductors
Electronic parts, etc.

Note: Internal sales between segments are included.
8,159
-308
8,610
-230
6,460
6,923
1,699
1,687
-

8,700
-

30
-

Reference: NEC Electronics
Total
Semiconductor segment, total
Communications equipment
Computers and peripherals
Consumer electronic appliances
Automobile and industrial appliancesMulti-purpose/multi-use ICs
Discrete/optical/microwave

Note: Sales to outside customers (including NEC)
6,460
-357
6,923
-286
6,191
6,597
1,080
996
1,266
1,237
1,026
1,208
1,038
1,061
694
890
1,087
1,206
-

6,900
6,700
-

0
-

Fujitsu
Device solution
LSI

Note: Internal sales between segments are included.
7,075
295
7,627
190
4,601
4,735
-

8,200
5,300

-

ToshibaElectronic devices
Semiconductors
Discrete components
System LSIs
Memories
LC elements

Note: Internal sales between segments are included.
13,881
1,233
16,573
1,198
10,3701,340
12,981
1,283
2,217
2,608
4,585
5,460
3,568
4,913
2,997
40
3,091
65

17,50013,500
2,700
5,400
5,400
3,600

1,150
1,100
100

HitachiElectronic devices
Displays
Liquid crystal displays

Note: Internal sales between segments are included.
12,044204
12,875
458
1,916
-228
2,003
5
1,770
-

12,350
2,000
1,760

430
20
-

Mitsubishi ElectricElectronic devices

Note: Internal sales between segments are included.
1,704
135
1,859
121

1,900

100

Note 1: Internal sales between segments are included.
2: Figures for semiconductors stated on a production basis.
13,683811
13,777
999
13,900
4,382
4,750
4,875
373
5,087

1,050
391

Matsushita Electric Industrial
Devices
Semiconductors
Panasonic Electronic Devices
Sony
Semiconductors
LC elements

Note: Internal sales between segments are included.
4,900
7,800
1,300
1,400
-

8,400
1,300

-

Sanyo Electric
Component segment
Electronic devices
Batteries
Semiconductors * sales by product category
Solar batteries * sales by product category

Note: Internal sales between segments are included.
9,484
116
9,007
676
3,783
-286
3,397
183
4,192
358
4,144
413
1,936
1,813
476
612
-

1,834
624

-

Sharp
Electronic parts, etc.
LSIs
LC elements
Flash memories * sales by product category
CCDs/CMOS imagers * sales by product category
Solar batteries * sales by product category

Note: Internal sales between segments are included.
13,581
1,019
15,617
1,055
1,907
64
10,423
781
472
976
1,514
-

17,4802,000
12,000
390
1,100
1,600

1,025
30
785
-

Renesas Technology
Total sales

Note: Internal sales between segments are included.
9,526
-

-

-

-

-

Elpida Memory
Total sales
PCs
Premium DRAMs
Digital household electric appliances/mobile equipment

Servers

Source:

2,416
683
1,534
1,157
377

1
-

4,900
2,352
2,379
1,823
556

Prepared based on the quick report, etc. on the website of the manufacturers.

84

684
-

3. Electric Machine Sector(2) Technological innovation and the business environment

Figure 3-28 shows the ranking of the share of the world semiconductor market in 2006.

Fig. 3-28

Ranking of the share in the world semiconductor market in 2006
(final values)(US$ million, %)2006
Ranking

2005
Ranking

Results in
2006

1

1

Intel (U.S.)

31,542

12.1

-11.1

2

2

Samsung Electronics (South Korea)

19,842

7.6

12.0

3

3

Texas Instruments (U.S.)

12,600

4.8

17.3

4

4

Toshiba

10,141

3.9

11.7

5

5

ST Microelectronics (Italy, France)

9,854

3.8

11.0

6

7

Renesas Technology

7,900

3.0

-2.6

7

11

Hynix Semiconductor (South Korea)

7,865

3.0

41.5

8

15

Advanced Micro Devices (AMD, U.S.)

7,506

2.9

91.6

9

10

Freescale Semiconductor (U.S.)

5,988

2.3

7.0

10

9

NXP Semiconductors (Netherlands)

5,874

2.3

4.0

11

8

NEC Electronics

5,679

2.2

-0.5

12

-

Qimonda (Germany)

5,413

2.1

-

13

12

Micron Technology (U.S.)

5,210

2.0

9.1

14

6

Infineon Technologies (Germany)

5,119

2.0

-38.3

15

13

Sony

4,852

1.9

6.1

16

16

Qualcomm (U.S.)

4,529

1.7

31.0

17

14

Matsushita Electric

4,022

1.5

-2.6

18

20

Broadcom (U.S.)

3,668

1.4

37.3

19

24

Elpida Memory

3,527

1.4

98.6

20

17

Sharp

3,341

1.3

2.3

21

19

IBM Microelectronics (U.S.)

3,172

1.2

13.6

22

18

Rohm

2,882

1.1

-0.9

23

21

Analog Devices (U.S.)

2,603

1.0

7.2

24

23

Spansion (U.S.)

2,579

1.0

25.6

25

22

NVIDIA (U.S.)

2,574

1.0

24.4

Others81,912

31.5

7.3

260,194

100.0

9.3

Manufacturer

Total

Share

Growth rate

Note:
The total sum of the figures for the manufacturers does not agree with the figure in then total column.
Original data: iSuppli Corp., U.S., March 2007.
Source: “The Nikkei Market Access,” June 2007.

In March 2007, iSuppli Corp., a U.S. research firm, published the ranking of electronic device
manufacturers by sales (final values) in 2006. According to the report, the top five manufacturers
were the same as those listed in the ranking for 2005, but Renesas Technology moved up to the 6th
from the 7th in 2005, Hynix Semiconductor of South Korea, to the 7th from the 11th, and AMD of
the U.S., to the 8th from the 15th. Hynix Semiconductor achieved greater sales due to stabilized
DRAM prices and increased production of NAND flash memories. Intel of the U.S., the top
manufacturer, experienced a decrease in share by 2.9 points to 12.1% because of sluggish businessof CPUs and flash memories for PCs. As a result, the difference in share between Intel and Samsung
Electronics of South Korea dwindled to 4.5 points from 7.7 points in 2005. Of Japanesemanufacturers, Elpida Memory increased its sales by +98.6%, y/y, almost twice the level in 2005,
making its ranking higher. The factors behind this are probably increased production of DRAMs by85

3. Electric Machine Sector

positive investment and the stabilized DRAM prices in 2006.
(3) Future prospects and problems

Figure 3-29 shows the actual and estimated figures of capital investment of 12 major
semiconductor manufacturers based on the data of “The Handotai Sangyo Shimbun (Semiconductor
Industry Newspaper).” The total investment of the 12 manufacturers in 2006 was ¥1,184.5 billion or
an increase of +8.3% over the previous year. The planned investment for 2007 is ¥1,104.5 billion,
down 6.8% from 2005. Toshiba and Elpida Memory plan to input ¥331.0 billion and ¥210.0 billion
into NAND flash memories and DRAMs, respectively. But the planed investment of major foreign
manufacturers is about ¥630.0 billion for Intel, the industry leader, about ¥460.0 billion for Micron
Technology, about ¥700.0 billion for Samsung Electronics and about ¥570.0 billion for Hynix
Semiconductor. As compared with that of these overseas manufacturers, the size of investment ofJapanese counterparts is much smaller.

Fig. 3-29

Capital investment of 12 main semiconductor manufacturers(¥ 10 million)
Results in2005

ToshibaRenesas TechnologySonyY/y ratio (%)

Results in2006

Y/y ratio (%)

Plan for
FY2007

Y/y ratio (%)

2,890

42.3

3,550

22.8

3,310

-6.8

800

-11.1

800

0.0

700

-12.5

1,400

-6.7

1,500

7.1

1,300

-13.3

NEC Electronics

830

-49.1

1,059

27.6

700

-33.9

Elpida Memory

1,894

52.1

1,550

-18.2

2,100

35.5

Fujitsu

930

106.7

1,250

34.4

1,000

-20.0

Matsushita Electric

730

-9.9

691

-5.3

620

-10.3

Rohm

686

2.2

537

21.7

553

3.0

Sharp (only in LSIs)

131

-27.2

170

29.8

90

-47.1

Sanyo Semiconductor Manufacturing

73

-65.6

78

6.8

112

43.6

Nichia

288

-27.5

305

5.9

300

-1.6

Oki Electric Industry

177

-23.4

221

24.9

140

-36.7

Mitsubishi Electric

110

-3.5

134

21.8

120

-10.4

Total

10,9395.5

11,845

8.3

11,045-6.8

Note:
Source:

The figures for Nichia Corp. are those of the company’s total investment.
Prepared by the authors based on “The Handotai Sangyo Shimbun,” July 11, 2007.

86