3. Electric Machine Sector

3. Electric Machine Sector
3.1. Electronic devices
3.1.1

Supply and demand trend(1) Outline

The production of electronic devices in 2009 suffered a large negative growth. Affected by the
global recession, demand for personal computers (PCs), cellular phone units, flat-screen televisions(TVs), digital cameras and other digital products declined all over the world, which contributed tothe decrease in the domestic production of electronic devices. But solar cells and solar cell modules
achieved a solitary good performance in the circumstance where the production of all the otherelectronic devices slowed down. Partly supported by the policy support of the government ofcountries, demand for photovoltaic generation systems went up and helped increase the output ofelectronic devices.
(2) Orders received

According to the “Forecast for the Spring Market in 2009” by the World Semiconductor Trade
Statistics (WSTS) (published on June 8, 2010), the growth rate of the world’s semiconductor market
in 2009 continued to be negative (as compared with the same month of the previous year) for about ayear due to the global financial crisis started in the fourth quarter (October to December) of 2008
and then turned into positive in October 2009, but was -9.0% ($226.3 billion) year on year for thewhole year of 2009. It is expected that in 2010, the growth rate will show a substantial recovery of
28.6% year on year and the market will enjoy a favorable growth. It is supposed that the factors
behind this are larger demand in newly industrializing markets, mainly China, in addition to areaction to the negative growth in 2009. Estimates say that the global market size in 2010 will reach$291.0 billion or an increase of $64.6 billion year on year, exceeding the largest ever market of$255.6 billion recorded in 2007. It is forecast that a gradual growth will continue in 2011 with a
5.6% rise and in 2012 with a 4.2% increase.

45

3. Electric Machine Sector

Fig. 3.1.1 Trend of the world semiconductor market by region(actual results for 2004-2009; estimate for 2010-2012)
America

EuropeJapan

Asia Pacific350,000
300,000[$ million]

250,000
200,000
150,000
100,000
50,0000
2004CY 2005CY 2006CY 2007CY 2008CY 2009CY 2010CY 2011CY 2012CY
FORECAST

2004CY 2005CY 2006CY 2007CY 2008CY 2009CY 2010CY 2011CY 2012CY
Worldwide (M$)
America

CAGR
09-12

213,027 227,484 247,716 255,645 248,603 226,313 290,951 307,388 320,161

12.3%

39,06540,73644,91242,33637,881

38,52048,12550,401

52,088

10.6%
11.9%

Europe39,424

39,27539,90440,972

38,24929,86538,183

40,10341,805

Japan

45,75744,082

46,41848,84548,49838,30044,75647,27749,187

8.7%

Asia Pacific

88,781 103,391 116,482 123,492 123,975 119,628 159,887 169,606 177,081

14.0%Europe (euro basis) millions of euro

31,70931,57531,771

29,92725,968

n/a

n/a

n/a

n/a

n/a

Japan (yen basis) ¥100 million

49,54948,53554,02457,49750,24235,78640,60842,89644,6287.6%

Growth Rate (%)

2004CY 2005CY 2006CY 2007CY 2008CY 2009CY 2010CY 2011CY 2012CY

Worldwide

28.0%

6.8%

8.9%

3.2%

-2.8%

-9.0%

28.6%

5.6%

4.2%

America

20.8%

4.3%

10.3%

-5.7%

-10.5%

1.7%

24.9%

4.7%

3.3%
4.2%

Europe

22.0%

-0.4%

1.6%

2.7%

-6.6%

-21.9%

27.9%

5.0%

Japan

17.5%

-3.7%

5.3%

5.2%

-0.7%

-21.0%

16.9%

5.6%

4.0%

Asia Pacific

41.3%

16.5%

12.7%

6.0%

0.4%

-3.5%

33.7%

6.1%

4.4%

Europe (euro basis)

11.1%

-0.4%

0.6%

-5.8%

-13.2%

n/a

n/a

n/a

n/a

Japan (yen basis)

10.0%

-2.0%

11.3%

6.4%

-12.6%-28.8%

13.5%

5.6%

4.0%

Source:Extracts from the WSTS, “Semiconductor Conference in the Spring of 2010” (June 2010).

46

3. Electric Machine Sector(3) Production

Fig. 3.1.2

Trend of the production of electronic devices (value base)
Unit: ¥ million

Production

2007

2008

2009

Electron tubes, semiconductor devices and integrated circuits
Electron tubes
Semiconductor devices
Transistors
Photoelectric transducers
Light-emitting diodes
Solar cells (Note 2)
Other photoelectric transducers (Note 3)
Integrated circuits
Semiconductor ICs
Linear circuits
Counting circuits
MOS type
Microcomputers
MPU
MCU
LogicsStandard logics
Semi-customized logics
Display drivers
Memories
DRAM
SRAM
Flash memories
Other MOS type
CCD
Liquid crystal elements
Active type
Passive type
Liquid crystal modules
Liquid crystal panels
Solar cell modules (Note 4)

7,136,487
376,859
1,124,980
331,029
539,496
154,491
168,41159,6353,767,614
3,516,587
445,579
3,071,008
3,053,377
706,006
25,777680,229
1,340,346
118,714564,616
208,888612,753
40,20430,894
518,887394,272
378,019
1,714,254
1,627,600
86,65458,92527,729152,780

6,780,411
356,936
1,116,522
317,315557,758
151,982
221,984
59,924
3,261,951
3,025,208
413,8542,611,354
2,597,744
618,814
16,515602,299
1,186,052
153,212501,289
170,750
438,307
35,57024,623355,721354,571
347,594
1,835,724
1,766,185
69,53943,11026,429209,278

4,967,140
299,058
852,580
201,846484,129
140,770
228,848
41,5222,350,899
2,188,566
273,519
1,915,047
1,904,704
424,172
14,164410,008
783,013120,010
310,879
104,764
459,272
23,783
11,231
409,012238,247
230,610
1,244,290
1,208,845
35,445
20,771
14,674
220,313Growth rate in 2008-2009-26.7%-16.2%-23.6%-36.4%-13.2%-7.4%
3.1%-30.7%-27.9%-27.7%-33.9%-26.7%-26.7%-31.5%-14.2%-31.9%-34.0%-21.7%-38.0%-38.6%
4.8%-33.1%-54.4%
15.0%-32.8%-33.7%-32.2%-31.6%-49.0%-51.8%-44.5%
5.3%

Notes: 1. Beginning in 2005, “Color televisions,” “For electronic computer-related devices” and “Cathode-ray tubes for otherpurposes” are included in this product category.
2. Beginning in 2007, this product category is separated from “Other photoelectric transducers” and is independently
shown.
3. Beginning in 2007, “Solar cells” are separated from this product category and are independently shown.
4. In 2005, this product category was newly established.
Source: Adapted by the authors based on the Research and Statistics Department, Industrial Policy Bureau, Ministry of
Economy, Trade and Industry, “Annual Report of Machinery Statistics.”

The production of electronic devices in 2009 was ¥4,967.1 billion or a great negative growth of-26.7% from the previous year. By the type of product, the output of electron tubes was ¥229.1
billion (down 16.2% year on year), that of semiconductor devices, ¥852.6 billion (down 23.6%), thatof integrated circuits, ¥2,350.9 billion (down 27.9%), that of liquid crystal elements, ¥1,244.3 billion(down 32.2%) and that of solar cell modules, ¥220.3 billion (up 5.3%). The reasons for this
discouraging performance include a reduced demand for electronic appliances for which electronic
devices are used, affected by the global-scale recession after the Lehman shock, and a smaller
demand for high value-added products due both to a poor demand in industrial countries and larger
demand in newly industrializing countries, which means that the price of electronic appliances went
down increasingly, cutting the amount of semiconductors mounted on these appliances.

47

3. Electric Machine Sector

One of the characteristics of the production of electronic devices in 2009 is that while almost allof product types suffered a negative growth of -20% to -40%, solar cell products continued to grow:the output of solar cells was ¥228.8 billion or an increase of 3.1% year on year, and solar cell
modules, ¥220.3 billion or a rise of 5.3%. The probable reasons for this are some policy supports,
including the restoration of the subsidies for the construction of photovoltaic generation systems, andthe demand stimulated by the announcement of the construction plans of mega-solar power plants insuccession. Another characteristic is that the production of memories, especially flash memories(¥409.0 billion or up 15.0% year on year), attained a two-digit growth. Behind this is a greater
demand caused by the increased use of flash memories for, for example, SSDs (solid state drives: thedrives using flash memories as storage media whose introduction is increasing as substitutes for harddisk drives (HDDs).
According to the “Outlooks for the World Production of the Electronics and Information
Technology Industries” published in December 2009 by the Japan Electronics and Information
Technology Industries Association (JEITA), the domestic production of electronic devices in 2010 isestimated at ¥3,429.8 billion for semiconductors (semiconductor devices and integrated circuits) andat ¥1,916.3 billion for display devices.
(4) Export and import

The export of electronic devices in 2009 was ¥2,963.6 billion, which was a considerable
decrease of 25.5% from the previous year. By the type of product, the export of electron tubes was¥22.5 billion (down 33.8% year on year), that of semiconductor devices, ¥671.7 billion (down
30.6%) and that of integrated circuits, ¥2,269.4 billion (down 23.7%). The export of integrated
circuits suffered a sharp fall in all the product types due to the influence of worldwide decline indemand for electronic equipment with electronic devices, such as cellular phone units, PCs anddigital audio-visual appliances.
The import of electronic devices in 2009 amounted to ¥1,698.4 billion or a sharp drop of 28.9%
year on year. By product category, the import of electron tubes was ¥11.3 billion (down 36.4%), thatof semiconductor devices, ¥177.3 billion (down 27.0%) and that of integrated circuits, ¥1,509.8
billion (down 29.1%). What characterizes the import of electronic devices in 2009 is the relatively
good performance of photo-electric cells (optoelectronic elements) (¥40.4 billion, down 0.5%). The
factor contributing to this is probably the fact that because the output of these products by Japanesemanufacturers was insufficient to meet the greater needs due to an expanded domestic market ofphotovoltaic generation, Japanese module producers covered the shortage by imported solar cells
from foreign suppliers, especially new manufacturers.

48

3. Electric Machine Sector

Fig. 3.1.3

Trend of the export of electronic devices (value base)
Unit: ¥ million

Electronic devices
Electron tubes
Cathode-ray tubes for TVs
TV camera tubes, image-converter tubes, etc.
Data graphic display tubes (for color TVs)
Microwave tubes
Magnetrons
Klystrons
Receiving tubes and amplifier tubes
Fluorescent display tubes
Semiconductor devices
DiodesTransistors
Less than 1W
1W or more
Thyristors, diacs and triacs
Photosensitive semiconductor devices
Unmounted ones
LEDs
Integrated circuits
Processors and controllers
Unmounted ones
OthersHybrid integrated circuits
OthersMPU
MCU
DSP
Memory elements
Unmounted ones
Others
RAM
DRAM
ROM
Flash memories
Amplifiers
Unmounted ones
OthersHybrid integrated circuits
OthersUnmounted ones
OthersHybrid integrated circuits

2007

2008

2009

4,582,786
37,124473
13,744
2,210
3,701
2,155
197
129
12,674
1,023,755
108,821
243,699
86,884
156,815
11,715642,625
70,357215,0883,521,908
38,015273,543764,472
80,718683,754
143,593
256,462
25,718872,390438,797433,593
166,034
142,842
155,367
130,245
126,571
32,207
94,36437,291
1,484,932
435,258
1,049,674
38,792

3,977,604
33,955478
13,410
3,182
3,286
1,828
310
46
10,262
968,085
90,144
208,884
74,024
134,861
11,359642,227
71,063200,982
2,975,563
831,780
223,619
608,160
116,778
491,383
56,710235,385
22,335755,749
416,221339,528
139,205
122,654
122,289
103,507
113,434
19,79593,63945,591
1,274,601
420,233
854,368
26,174

2,963,579
22,469211
10,574
2,327
2,607
1,190
236
38
4,632
671,716
64,076
144,344
49,172
95,1738,827
435,972
60,530156,518
2,269,395
566,248
154,947
411,30256,519354,782
53,895
149,72228,939699,579
408,747
290,832
122,471
106,766
128,233
116,397
80,43813,711
66,727
31,380923,130
342,228
580,90225,317Note:

Growth rate in 2008-2009-25.5%-33.8%-55.9%-21.2%-26.9%-20.7%-34.9%-23.8%-17.1%-54.9%-30.6%-28.9%-30.9%-33.6%-29.4%-22.3%-32.1%-14.8%-22.1%-23.7%-31.9%-30.7%-32.4%-51.6%-27.8%-5.0%-36.4%
29.6%
-7.4%
-1.8%
-14.3%-12.0%-13.0%
4.9%
12.5%-29.1%-30.7%-28.7%-31.2%-27.6%-18.6%-32.0%-3.3%

The figures are those obtained from the year-to-year total figures published by the JEITA, and no retroactive
adjustment is made on the figures.
Basic data: Ministry of Finance, “Trade Statistics of Japan.”
Source:Adapted by the authors based on the data available on the website of the JEITA.

49

3. Electric Machine Sector

Fig. 3.1.4

Trend of import of electronic devices (value base)
Unit: ¥ million

Electronic devices
Electron tubes
Semiconductor devices
DiodesTransistors
Photosensitive semiconductor devices
LEDs
Photo-electric cells
Integrated circuits
Processors and controllers
Unmounted ones
OthersHybrid integrated circuits
OthersMPU
MCU
DSP
Memory elements
Unmounted ones
DRAM
Others
RAM
DRAM
ROM
Flash memories
Amplifiers
Unmounted ones
OthersHybrid integrated circuits
OthersUnmounted ones
OthersHybrid integrated circuits

2007

2008

2009

2,750,208
14,645242,905
37,82957,099132,974
76,33533,201
2,492,659
636,31778,178558,139
15,094543,045
260,423
61,62732,070858,508
61,81838,015
796,690
450,637
416,457
279,756
181,00224,232
1,333
22,8996,199
973,602
176,095
797,508
30,8032,390,327
17,794
242,71137,571
44,717
146,238
84,27240,7062,129,822
522,167
38,640483,527
15,957
467,570
232,889
71,073
28,825717,51155,832
43,299661,679
355,460
336,047
228,803148,942
24,1081,146
22,962
4,980
866,036
170,399695,636
16,733

1,698,420
11,316
177,290
24,57430,244
113,083
63,90640,483
1,509,814
389,173
33,124
356,049
15,226
340,824
167,132
43,677
16,600524,675
70,55562,512454,119
270,029
254,148
153,805
96,70813,810647
13,163
2,636
582,156
86,512495,644
15,587Growth rate in 2008-2009-28.9%-36.4%-27.0%-34.6%-32.4%-22.7%-24.2%-0.5%-29.1%-25.5%-14.3%-26.4%-4.6%-27.1%-28.2%-38.5%-42.4%-26.9%
26.4%
44.4%-31.4%-24.0%-24.4%-32.8%-35.1%-42.7%-43.6%-42.7%-47.1%-32.8%-49.2%-28.7%
-6.8%

Note:

The figures are those obtained from the year-to-year total figures published by the JEITA, and no retroactive
adjustment is made on the figures.
Basic data: Ministry of Finance, “Trade Statistics of Japan.”
Source:Adapted by the authors based on the data available on the website of the JEITA.

3.1.2

Results of operations and the trend of the electronic device industry(1) Trend of management

Toshiba, the top manufacturer of electronic devices in Japan, experienced a substantial fall insales in 2009, registering ¥1,309.1 billion, while the company had an increase of operating profit of¥299.0 billion or a relatively small drop of ¥24.2 billion compared with the previous year. Toshibasucceeded in reducing its fixed costs by ¥173.0 billion in electronic device business by integrating
and reorganizing its domestic manufacturing bases for the front-end process and by promoting
overseas activities for its back-end process. The company aims at going into the black figures in2010 by attaining sales of ¥1,380.0 billion and an operating profit of ¥90.0 billion.
In April 2010, Renesas Electronics Corp. was newly founded as a result of the merger between
NEC Electronics Corp. and Renesas Technology Corp. Renesas Electronics plans to earn an
operating profit and carry out structural reforms in 2010, the initial year of the integration, and to
make a net profit in 2011. The company also aims at realizing a two-digit ratio of operating profit (tosales) on a medium-term basis. Renesas says that to attain these goals, it will follow the following50

3. Electric Machine Sector

strategies: (1) Increase business chances strengthen the product competitive power (for example,
purchase of the “wireless modem” business, core parts for communication, from Nokia Corp.); (2)Prepare for expansion in overseas business raise the ratio of semiconductor sales abroad to over 60%(for example, establishment of a division for opening up the Chinese market); (3) Introduce
immediately effective cost reduction steps reinforce cost competitiveness (for example, closure ofold manufacturing lines and impairment accounting of advanced manufacturing lines; subcontractingof manufacture to foundries; cutting of a little under 10% of employees for more proper staffing);and (4) Top-down structural reform activities (posting of ¥70.0 billion as an extraordinary loss). As aresult of the simple totaling of the figures of the former two companies, Renesas Electronics
recorded sales of 1,062.4 billion (down ¥153.8 billion) and an operating profit of ¥125.3 billion (up¥53.7 billion). The company expects to achieve sales of ¥1,170.0 billion and an operating profit in2010.

Fig. 3.1.5

Source:Shares and rankings of the semiconductor market in the world in 2009
(final figures; unit: millions of U.S. dollars)

Quoted from iSuppli Japan, news release on March 17, 2010.

Fig. 3.1.5 shows the shares and rankings of the semiconductor market in the world in 2009
(final figures) published by iSuppli, a U.S. research firm. Of the top ten, those having a higher
growth rate are two South Korean companies, second-ranking Samsung and seventh-ranking Hynix

51

3. Electric Machine Sector

Semiconductors, and 15th-ranking Elpida Memory. This shows that increases in the price of DRAMs as s
result of deficiency in DRAM supply favorably affected the performance of memory manufacturers.
Behind the good results of memory companies is an insufficient supply of DRAMs and
NAND-type flash memories. Demand for NAND-type flash memories in 2010 was supported
mainly by the brisk sales of and great memory use for Apple’s iPhone. The report of iSuppli saysthat according to their provisional forecast, NAND-type flash memories of 35.2G bits on an average
will be used for the iPhone introduced in 2010, that the shipment of iPhone in 2010 is estimated at
33 million units, an increase of 35.1% over 2009 when the shipment was 25.10 million units and that
iPhone is the largest application for NAND-type flash memories and a high growth in iPhone willcause a deficiency in the supply of NAND-type flash memories for a certain period of time. The
provisional forecast indicates that because an increase in the shipment of iPhone and competing
smartphones and a rapid growth in NAND-type flash memories, which are incorporated in cellular
phone units, are likely, the sales of NAND-type flash memories in the world in 2010 will rise to$18.1 billion, an increase of 34.1% over those in 2009 when the sales were 13.5 billion.
According to DRAMeXchange, another research firm, DRAMs will face a short supply in thesecond half of 2010 because of growing demand. The firm expects that the shipment of PCs in 2010
will increase by 13% year on year, with the shipment of notebook PCs of 160 million (up 22.5%)
and that of less expensive netbooks of 35 million (up 22%). It is expected that DRAM manufactures
will increase their capital investment by 80% over 2009 to $7.85 billion in 2010 and further to $10.0
billion to $12.0 billion by 2011 or 2012. According to iSuppli, general-purpose parts are liable to beaffected by changing supply-demand balances. The firm says that the shipment of DRAMs in termsof 1G bits in 2010 will rise to 15.9 billion, an increase of 48.6% over 2009 when the shipment was
10.7 billion.

Fig. 3.1.6

Forecast of the memory market

Forecast of the sales of NAND-type flash memories in the world (on a year basis) (figure at left)
Forecast of the shipment of DRAMs in the world (on a quarterly basis) (figure at right)

Source:Quoted from iSuppli Japan, news release on February 23 and August 13, 2010.

52

3. Electric Machine Sector

According to iSuppli, in 2009, the whole semiconductor industry was seriously affected by therecession but Asian semiconductor manufacturers succeeded in minimizing the impact of therecession. The semiconductor market in the world was $229.9 billion or a fall of 11.7% year on year,
but the sales of semiconductor companies having their head office in the Asia/Pacific region were
$44.5 billion, an increase of 2.3% over the previous year. For shipment by region, too, theAsia/Pacific region had a relatively small decline of 5.3% from 2009 as compared with 20.7% forJapan, 20.5% for Europe (including the Middle East and Africa) and 10.5% for the Americas. iSuppli
says that these suppliers were the leading ones of such products as NAND-type flash memories andLEDs, whose demand was large in 2009.
As already noted, Renesas Electronics was founded in April 2010 as a result of the merger
between NEC Electronics and Renesas Technology. The new company had a market share of 4.1%
in the first quarter of 2010. Because Renesas Technology had had the largest share in the MCU
market and NEC Electronics, the second largest one, the merged company became a supplier having
by far the largest share in the MCU market.
(2) Future prospects and problems

Gartner, Inc., a U.S. research firm, announced that the sales in the semiconductor market in theworld in 2009 were $228.4 billion or a drop of -10.5% from the previous year. This was the first time
when the semiconductor industry suffered poorer sales for the second consecutive year. But in thesecond half of 2009, the production of electronic devices recovered, and the decrease in sales was
not as sharp as had been expected. iSuppli, another U.S. research firm, says that the firm made its
sales forecast for 2010 more favorable considering an active demand for semiconductors. This firm
revised upward its forecast for sales growth on the semiconductor market in 2010 to a figure
equivalent to an all-time high. It predicts that semiconductor sales in 2010 will grow by 80.7 billion
over 2009, the largest growth rate in history. According to iSuppli, the semiconductor market in 2010
has expanded supported by an already large demand for consumer appliances. The firm also saysthat the factors contributing to bigger sales of semiconductors in 2010 include rising semiconductor
prices, inventory buildup and increases in the price of semiconductors mounted on smartphones, themajor products, and on the latest models of liquid crystal TVs.

Fig. 3.1.7

Source:Forecast of semiconductor sales in the world (on a quarterly basis)

Quoted from iSuppli Japan, news release on August 13, 2010.

53

3. Electric Machine Sector

3.2. Telecommunications equipment and wireless-applied appliances
3.2.1

Supply and demand trend(1) Outline

The production of wired and wireless communications equipment both suffered a large negative
growth in 2009. The export of mobile phones may increase if the strategies for overseas markets ofJapanese manufacturers of cellular phone units succeed. The import of mobile phones attained goodresults because the sales of iPhone3G of Apple in the U.S. were great in the Japanese market.
(2) Production

Fig. 3.2.1

Trend of production of telecommunications equipment andwireless-applied appliances (value base)
Unit: ¥ million

Production

Growth rate
in 2008-2009

2007

2008

2009

2,813,289

2,536,952

1,875,481

426,381473,753

389,347-17.8%

Telephones

14,20012,081

10,453-13.5%

Telephone-applied appliances

Telecommunications equipment and wireless-applied appliances
Wired communications equipment-26.1%

106,781

86,47170,000-19.0%

Button telephone sets

46,64436,34428,596-21.3%

Intercoms

53,135

44,13735,669-19.2%

23,894

21,71514,009-35.5%-40.7%

Telegraph/image appliances
Facsimiles

17,146

15,874

9,421

Switchboards

142,643

133,067

117,664-11.6%

122,881

114,140

100,928-11.6%For exchanges

81,43474,69870,245-6.0%

For PBXs

41,44739,44230,683-22.2%-19.4%

Electronic switchboards

Carrier devices

245,644306,890247,2212,241,898

1,937,472

1,391,188-28.2%

71,10071,91562,409-13.2%

Wireless communications appliances

1,931,716

1,589,900

1,067,093-32.9%

Fixed communications appliances

144,981

141,546

91,038-35.7%

Ground communications appliances

134,535

127,199

78,345-38.4%

Satellite communications appliances

10,446

14,347

12,693-11.5%

1,777,335

1,432,955

967,563-32.5%

Wireless communications equipment (including satellite communications units)
Broadcasting appliances

Mobile-station communications appliances
Mobile communications appliances
Ground mobile communications appliances
Cellular phones
Maritime/aircraft mobile communications appliances
Base-station communications appliances
Wireless-applied appliances
Radar appliances

1,695,552

1,348,050

912,775-32.3%

1,681,986

1,334,929

901,655-32.5%

1,587,678

1,240,390

841,695-32.1%

13,566

13,121

11,120-15.3%-35.5%

81,78384,90554,788239,082

275,657

261,686-5.1%

61,06986,901

68,568-21.1%

Wireless position finders

24,59833,634

22,848-32.1%

Network-connecting appliances

38,22939,25624,946-36.5%

33,56535,752

22,723-36.4%

Routers/hubs

Source:Adapted by the authors based on the Research and Statistics Department, Industrial Policy Bureau, Ministry of
Economy, Trade and Industry, “Annual Report of Machinery Statistics.”

54

3. Electric Machine Sector

The production of telecommunications equipment and wireless-applied appliances in 2009
suffered a negative growth, amounting to ¥1,875.5 billion, a decrease of 26.1% from the previous
year.
The output of wired communications equipment in 2009 was ¥389.3 billion or a negative
growth of -17.8% year on year. By the type of product, the production of telephones was ¥10.5
billion (down 13.5%), that of telephone-applied appliances, ¥70.0 billion (down 19.0%), that oftelegraph/image appliances, ¥14.0 billion (down 35.5%), that of electronic switchboards, ¥117.7
billion (down 11.6%) and that of digital transmission units, ¥247.2 billion (down 19.4%).
The amount of production of wireless communications equipment in 2009 was ¥1,391.2 billion,
suffering a year-on-year decrease of 28.2%. By the type of product, the output of broadcasting
equipment was ¥62.4 billion or down 13.2% year on year, that of wireless communications
appliances, ¥1,067.1 billion or down 32.9% and that of wireless-applied appliances, ¥261.7 billion or
down 5.1%. Of wireless communications appliances, the production of fixed communications
appliances amounted to ¥91.0 billion or a fall of 35.7% year on year and that of mobile
communications appliances, ¥967.6 billion or a 32.5% decline. It can be seen that the output ofcellular phones (¥841.7 billion; down 32.1%), which account for the greater part of that of mobile
communications appliances, was affected by the reduced demand due to recession because thecellular phones made at home by Japanese manufacturers are mostly for the Japanese market and are
high-priced and high-performance ones.
According to the “Outlooks for the World Production of the Electronics and Information
Technology Industries” published in December 2009 by the Japan Electronics and Information
Technology Industries Association (JEITA), the estimated output of telecommunications equipmentin 2010 is ¥2,020.9 billion, a similar level to that in 2009, while the estimated production of wired
telecommunications equipment and that of cellular phones, which are included in the group of
wireless telecommunications equipment, is a little below the level in 2009, ¥504.1 billion (down 2%)
and ¥914.4 billion (down 2%), respectively.
(3) Export and import

The export of telecommunications equipment in 2009 was ¥328.1 billion or a decrease of
23.2% from the previous year. That of wired communications equipment in 2009 amounted to ¥4.9
billion or down 55.6% year on year, which almost means a 50% decline. The export of wirelesscommunications equipment in 2009 greatly decreased, too, with ¥323.2 billion and a fall of 22.4%.
Considering that the export of base-station equipment suffered a steep drop of 43.3% amounting to¥36.7 billion, it is supposed that the export was seriously affected by a decrease in the capital
investment of telecommunications companies in the global economic crisis.

55

3. Electric Machine Sector

Fig. 3.2.2

Trend of export of telecommunications equipment andwireless-applied appliances (value base)
Unit: ¥ million
Growth rate
in 2008-2009

Export

2007

2008

2009

Telecommunications equipment
Wired communications equipment
Telephones
Wired telephones with cordless handset
Wireless communications equipment
Broadcasting appliances
Wireless communications appliances
Mobile phones
Base-station equipment
Transmission, receiving, conversing and reproduction appliances(including those for wired communications)
Wireless-applied appliances
RadarsDirection finders
Other wireless equipment for navigation
Wireless remote control appliances

446,876
13,01713,0152,520
433,859
17,082245,759
48,24979,969427,311
11,06011,0591,878
416,251
15,828
243,593
23,94464,614

328,117
4,913
4,913
1,513
323,203
8,992
198,116
17,91036,659-23.2%-55.6%-55.6%-19.4%-22.4%-43.2%-18.7%-25.2%-43.3%

106,588

148,471

138,525-6.7%

171,017
20,8381,191
134,895
14,092

156,830
23,626371
122,306
10,527116,096
17,629212
91,2457,010-26.0%-25.4%-42.7%-25.4%-33.4%Note:

The figures are those obtained from the year-to-year total figures published by the JEITA, and no retroactive
adjustment is made on the figures.
Basic data: Ministry of Finance, “Trade Statistics of Japan.”
Source:Adapted by the authors based on the data available on the website of the JEITA.

The import of telecommunications equipment in 2009 was ¥688.0 billion or a slight decrease of
2.8% from the previous year. That of wired communications equipment in 2009 was ¥12.3 billion ora significant decrease of 33.1% year on year. The import of wireless communications equipment
showed a small negative growth of 2.0% amounting to ¥675.8 billion. In particular, the import ofmobile phones, which accounted for about a half of the total import, was ¥281.4 billion or up 25.8%,
and mobile phone imports from Asia continued growing. It is supposed that this upward trend was
the result of the introduction of iPhone3G of Apple in the U.S. into the Japanese market. A newmodel of iPhone3G, “iPhone 4,” was on sale on June 24, 2010, and the import of mobile phones will
increase, too, in 2010.

56

3. Electric Machine Sector

Fig. 3.2.3

Trend of import of telecommunications equipment andwireless-applied appliances (value base)
Unit: ¥ million
Growth rate
in 2008-2009

Import

2007

2008

2009

Telecommunications equipment
Wired communications equipment
Telephones
Wireless communications equipment
Broadcasting appliances
Wireless communications appliances
Mobile phones
Base-station equipment
Transmission, receiving, conversing and reproduction appliances(including those for wired communications)
Wireless-applied appliances
RadarsFor vessels
For aircraft
Wireless appliances for aviation
For aircraft
Wireless remote control appliances

688,998
24,007
23,675664,991
9,235
625,545
192,329
56,421

707,969
18,344
18,344
689,624
5,990
639,726
223,630
40,776

688,044
12,274
12,273675,770
4,277
627,022
281,424
43,353-2.8%-33.1%-33.1%-2.0%-28.6%
-2.0%
25.8%
6.3%

338,710

349,596

286,055-18.2%

30,212
5,761
150
5,080
15,281
5,287
9,169

43,908
5,525
360
4,811
28,104
4,886
10,27944,471
5,821
830
3,766
29,816
4,282
8,834

1.3%
5.4%
130.7%-21.7%
6.1%-12.3%-14.1%Note:

The figures are those obtained from the year-to-year total figures published by the JEITA, and no retroactive
adjustment is made on the figures.
Basic data: Ministry of Finance, “Trade Statistics of Japan.”
Source:Adapted by the authors based on the data available on the website of the JEITA.

3.2.2

Results of operations and the trend of the telecommunications equipment andwireless-applied appliances industry(1) Trend of management

Sharp Corporation, the company having the largest market share in Japan, registered sales of¥1,332.9 billion, a 2.5% decrease year on year, but achieved an operating profit of ¥3.7 billion, an
increase of ¥61.5 billion as compared with the previous year’s level, thereby going into the black.
Sharp’s targets for 2010 are sales of ¥1,470.0 billion and an operating profit of ¥26.0 billion. The
company’s cellular phone business recorded sales of ¥454.4 billion and 10.54 million units in 2009and its plans for 2010 are a turnover of ¥505.0 billion and 13.70 million units.
The reorganization of cellular phone unit business was in progress. In June 2010, Casio Hitachi
Mobile Communications Co. and NEC’s cellular phone unit division integrated their business andthe newly founded NEC Casio Mobile Communications, Ltd. started its business. Fujitsu andToshiba also announced that they had agreed on the integration of their cellular phone business inJune 2010 and had signed a final agreement on the integration in July of the same year. The twocompanies will jointly found a new company, and Toshiba will transfer its cellular phone business tothe new company, while Fujitsu will acquire 80.1% of the new company’s shares from Toshiba, the
new company becoming Fujitsu’s subsidiary. This integration of Toshiba and Fujitsu will create a
new cellular phone manufacturer with a domestic market share of 18.7% in terms of the number ofunits shipped (on an annual basis), shipment of 6,440,000 units and the second place in Japan. The
new company aims at increasing its domestic market share to 25%, and Toshiba has already started
smartphone business for overseas carriers. Fujitsu also plans to begin the supply of smartphones tothe European and North American markets in the future.

57

3. Electric Machine Sector(2) Technological innovation and the environment of the telecommunications applianceindustry

According to the JEITA’s “Report of the Market Research on Mobile Phones” (March 2010),
the shipment of cellular phone units in Japan in 2009 suffered a great negative growth for two years
running, with 31.30 million units, falling below the 40 million-unit mark first in ten years. The
JEITA says that the downward trend will continue in 2010 and that while the shipment will go into
the black in 2011 but will not reach the 40 million level until 2015. Cellular phone units havestimulated demand by adding additional functions, such as camera, account settlement and “OneSeg” functions, but due to the maturing of the market and slower economic growth, it can no longer
be possible to expect any rapid expansion in the market.
The products on which hope is placed in the situation mentioned above are smartphones. In
2009, demand for cellular phones increased in overseas markets, mainly in China, India and other
newly industrializing countries but considerably fell in industrial nations; the production of cellular
phone units in the world in 2009 is expected to decline by about 10% year on year to 1,131.60
million. It is predicted that the output will turn into an upward trend in 2010 because demand inindustrial countries will be stabilized in addition to steady demand in newly industrializing nations.
In the future, the commercial service of the LTE (Long Term Evolution; new communication
standards for cellular phones, i.e., high-speed communication service following 3G (third-generation
mobile communications), also known as 3.9G; this service will be started in the world around 2010)
will be started but will not become any strong driving force in a short period of time.
The market of cellular phone units has increasingly been divided into two. In the market of
newly industrializing countries that is maturing, great hopes are pinned on smartphones and otherhigh-performance products and products with fashionable designs for replacement demand anddemand for the second unit. By contrast, in the emerging market that is expanding, there is active
demand for low-end products and popular models featuring reduced prices have been introduced
even for 3G cellular phone units. Thus, to secure a share in the market of newly industrializing
nations, it has become important to get hold of the market of low-end 3G cellular phone units.

58

3. Electric Machine Sector

Fig. 3.2.4

World market of cellular phones[Trends by region: scale of the cellular phone market by region]
Unit: 1,000 units
2006

2007

2008

2009 (estimate) 2010 (estimate) 2011 (estimate) 2012 (estimate)

Asia/Oceania

353,302395,060

431,145434,150

467,890517,680

Western Europe

190,679

207,965

219,612190,170204,000

212,100

218,810Central/Eastern Europe

85,18599,325

103,765

86,73091,67096,870101,380

North America

159,678

162,783

187,445

166,110

175,000

177,740

191,250

Central/South America

142,320

153,050

149,430

131,710140,540

149,200

155,750

Middle East

41,08848,09552,78549,02053,78057,45061,530543,250

Africa28,65533,99838,71036,35041,06045,96050,800Total

1,000,907

1,100,276

1,182,892

1,094,240

1,173,940

1,257,000

1,322,770[Trends by communication system: scale of the cellular phone market by communication system]
Unit: 1,000 units
2006

2007

2008

2009 (estimate) 2010 (estimate) 2011 (estimate) 2012 (estimate)GSM

702,632

653,368

560,353

387,720

361,190

316,185

3G (W-CDMA, HSPA)

111,662

246,851

397,090474,180

567,020

666,595

730,640

CDMA1X

175,898

194,435

223,203

228,520

231,600

236,200

227,200

LTE

0

0

0

120

960

8,650

33,650TD-SCDMA

0

0

294

3,250

12,72028,87052,24010,715

5,622

1,952

450

450

500

500

1,000,907

1,100,276

1,182,892

1,094,240

1,173,940

1,257,000

1,322,770

Others
Total

Source:278,540

Yano Research Institute, “Results of the Research on the Cellular Phone Markets in the World 2009” (July 2009).

Figure 3.2.5 shows the trend of the market share of cellular phone unit manufacturers in theworld. According to Gartner, the sales of cellular phones in the world in 2009 were about 1.2 billion
units and Nokia in Finland ranked top, followed by Samsung Electronics (South Korea) and LG
Electronics (South Korea). While Nokia suffered a sluggish rise in sales, Samsung and LG bothachieved a better performance than in 2008. Regrettably, no Japanese manufacturers were among the
top ten, but because they said that they would reinforce their activities on the smartphone market andthus their market share is expected to increase in the future.

Fig. 3.2.5

Trend of sales and market shares of cellular phone manufacturers
in the world (2009)

Manufacturer

2009 (number ofunits sold: units)2009 (market
share: %)Nokia Corp.
Samsung Electronics
LG Electronics
MotorolaSony Ericsson Mobile
Communications
Others
Total
Source:Gartner, February 2010.

59

2008 (number ofunits sold: units)

2008 (market
share: %)3. Electric Machine Sector

According to MM Research Institute, a Japanese research firm, the shipment of cellular phone
units in Japan in 2009 (April 2009 to March 2010) decreased by 4.0% from the previous year to34.44 million units, a fall for the second consecutive year. The firm says that behind the relatively
small drop in shipment in 2009 were both the negative factor (replacement cycle tending to become
longer due to rising shop prices resulting from reduced subsidies for stimulating purchases in theJapanese market where demand is mostly for replacement) and the positive factor (expansion in thesmartphone market more rapid than expected). In shipment by manufacturer in 2009, Sharp ranked
top for five years straight with a share of 26.2% (up 3.2 percentage points year on year; 9.03 million
units), achieving an increase both in market share and the number of units shipped. Panasonic
Mobile Communications took second place with 15.1% (down 2.7 percentage points; 5.20 million
units), followed by Fujitsu with 15.0% (up 2.2 percentage points; 5.18 million units), which went
upward from the fourth place in 2008. NEC was placed fourth with 10.5% (down 2.5 percentage
points), going downward from the third position in the year before. Kyocera ranked fifth with 6.1%
(up 0.7 percentage points), going upward from the seventh place in 2008.
MM Research Institute also reports that the smartphone market in Japan saw a rapid increase in
the shipment of smartphones, mainly iPhone 3GS of Apple in the U.S., totaling to 2.34 million units
or a 113% growth year on year. This means that smartphones accounted for 6.8% of the market ofcellular phone units in Japan (34.44 million units). The top company in the shipment of smartphones
shipped was Apple (72.2%), accompanied by HTC (11.1%), Toshiba (6.8%) and Research In
Motions and Sony Ericsson (both 4.3%). Apple, the supplier of units to Softbank Mobile, had by far
the largest share, but on October 28, 2010, NTT DoCoMo introduced Galaxy S, the smartphone of
Samsung Electronics, in an attempt to chase iPhone. It is expected that competition for a larger
market among manufacturers will be intensified in the Japanese smartphone market, involving
careers, in the years ahead. MM Research Institute predicts that the smartphone market in Japan willreach a 3-million unit level in 2010.
(3) Future prospects and problems

In June 2010, MM Research Institute published its forecast of demand for cellular phone units
and smartphones in Japan for the period up to 2015. According to the forecast, the sales of cellular
phone units in 2009 will be 35.82 million units or down 5.4% year on year and those in 2010 will
increase a little by 1.5% to 36.35 million units. The demand in the subsequent years is estimated at
36.36 million units in 2011, 37.45 million units in 2012, 37.30 million units in 2013, 37.12 million
units in 2014 and 37.19 million units in 2015. The number of smartphones sold in 2009 was 2.17
million units because of the good performance of iPhone, and that in 2010 is expected to grow by
77.9% year on year to 3.86 million units. The firm predicts that the use of smartphones will be
accelerated in the future because Japanese manufacturers will introduce them into the domestic
market. MM Research Institute estimates the smartphone market in 2011 and after at 6.60 million
units in 2011, 10.50 million units in 2012, 15.30 million units in 2013, 18.40 million units in 2014
and 20.30 million units in 2015. The firm says that by 2015, smartphones will account for 54.6% of
the total sales of cellular phone units sold.

60

3. Electric Machine Sector

In the market of cellular phone units, 3G units, which Japan was the first to introduce in 2001,
evolved in a unique way in Japan and so-called “Galapagos phenomenon” (the phenomenon ofJapanese standards becoming very different from the world standards just as the evolution in the
Galapagos Islands came to differ greatly from that in other parts of the world) has been pointed out.
Japanese manufacturers will soon be faced with the need to choose either of the two alternatives inthe smartphone market highly likely to expand in the coming years: to aim at overseas business andtry to compete with foreign manufacturers, or to make “Galapagos phenomenon” occur again. If they
are to win in the global market, it will be important for them to (1) secure customization ability inanticipation of localization and to (2) cooperate with overseas carriers. Japanese manufacturers havefocused on the development of high-performance units of Japanese specifications in cooperation
with carriers, but in the area of smartphones, are taking aim at overseas markets. In May 2010, Sharp
introduced “KIN” into the market in Europe and America but stopped to sell this product two months
after. The company will offer for sale two smartphone models in China in October 2010. The
company’s future activities should be watched carefully.

3.3. Medical equipment
3.3.1

Supply and demand trend(1) Outline

According to the Annual Report on Pharmaceutical Production Statistics 20081, the domestic
demand for medical appliances2 was ¥2,223.9 billion or an increase of 4.3% from the previous year
(Fig. 3.3.1). The world market totaled to about ¥25,000 billion, and Japan had a 10% share after the
EU and the U.S. As the aging rate in Japan reached 22.1% in 2008, people’s dependence on medical
service has been increasing. In addition, national medical care expenditure was as high as about¥34,000 billion, and this fact has exerted pressure on the government’s health care budgets and has
also affected demand for medical appliances.
(2) Production trend

In the production of medical appliances in 2008 (Fig. 3.3.2), diagnostic imaging systems
continued to take first place but clearly showed a declining trend with a drop of 6.8% year on year to¥368.7 billion. The production of household medical appliances greatly fell (-6.1%), too, while thatof other medical appliances kept a leveling-out tendency.
For the production of medical electronic appliances3 in 2009 (Fig. 3.3.3), that of medical X-ray

1

Because the Annual Report on Pharmaceutical Production Statistics 2009 was not published yet, the data of
the 2008 edition was used here.

2

Domestic demand = amount of import + amount of production - amount of export.

3

Medical electronics appliances mean the electronic application devices listed in the Ministry of Economy,
Trade and Industry, “Annual Report of Machinery Statistics” that are counted as those for medical
purposes.

61

3. Electric Machine Sector

devices declined by 14.5% year on year to ¥148.7 billion, that of ultrasonic application medical
appliances dwindled by 27.9% to ¥58.8 billion and that of other medical appliances dropped by 7.2%
to ¥81.4 billion. As a whole, the amount of output of these appliances suffered a considerable
decrease of 13.8% year on year.

Fig. 3.3.1

Trend of supply of and demand for medical appliances(amount of money)(¥ million)

2,500,000

2,000,000

1,500,000

1,000,000

500,000

01996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Domestic
Domestic demand
demandExport of export
AmountSource:Amountof production
Production
Import of import
AmountBased on the Health Policy Bureau, Ministry of Health, Labour and Welfare, ed., “Annual Report on Pharmaceutical
Production Statistics.” * Including medical materials.

62

3. Electric Machine Sector

Fig. 3.3.2

Trend of production of medical appliances(calendar years; ¥ million)

Diagnostic imaging
imaging systems
systems
Diagnostic
Artificial
Artificial internalinternal organ
organapparatuses
apparatusesandandassist
assistdevices
devices
Measuring
Measuringand
andmonitoring
monitoringsystems
systems forforbiophenomena
biophenomena
Medical
Medical laboratorylaboratorytesting
testing appliances
appliances
DentalDental appliances
appliances

Operatingequipment
equipmentand
andsupplies
supplies
OperatingHouseholdHouseholdmedical
medicalappliances
appliances
X-ray
instruments
diagnostic
imaging
X-raydevices
devicesand
andinstrumentsforfor
diagnostic
imaging
Appliances
Appliancesfor
fortreatments
treatmentsororoperations
operations
ClinicalClinicalequipment
equipmentand
andsupplies
supplies
395,813400,083

368,739

367,401
324,875
305,045
262,955
264,178

233,323

227,121235,724
182,572

177,569

153,752
147,976
118,700
92,564

Source:147,809
100,080

152,074
110,475

81,08989,067

34,66749,42233,94926,56929,234

2003

169,491

167,458

154,704

60,302

2002

189,979

40,33537,84328,736

2004

169,462
147,695
97,959199,892

178,281
137,710

109,937
109,136

100,281
42,18638,861

100,291
45,38744,30927,65633,80728,246

99,4602006

222,030
217,984

200,438

191,230

94,63739,34837,574

2005

274,278

262,407239,7442007

125,585
94,12882,70948,24644,31427,2652008

Based on the Health Policy Bureau, Ministry of Health, Labour and Welfare, ed., “Annual Report on Pharmaceutical
Production Statistics.”

Fig. 3.3.3

Trend of production of medical electronics appliances(calendar years)
Unit: ¥ million
2003

2004

2005

2006

2007

2008

2009

Growthrate (%)

Medical appliances, total

289,922290,140

367,618

379,122

386,447

339,648

288,864-15.0%

Medical X-ray devices, total

161,193

152,212

191,367

204,308

201,836

173,847

148,653-14.5%

Medical and dental X-ray devices

78,11375,07676,454

77,82678,22875,083

68,790-8.4%

CT devices

83,08077,136

114,913

126,482

123,608

98,764

79,863-19.1%

Ultrasonic application medical appliances

72,58775,846

94,79988,10594,356

81,621

58,820-27.9%

Other medical measuring instruments

56,14262,08281,45286,70990,25584,18081,391-3.3%

Source:Based on the Ministry of Economy, Trade and Industry, “Annual and Monthly Report of Machinery Statistics.”(3) Trend of export and import

The total amount of export of medical appliances in 2008 was ¥559.2 billion or a year-on-year
decrease of 2.8%, turning into a downward trend from the growth in the previous year. The importamounted to ¥1,090.8 billion or a fall of 6.7% year on year. The export of some types of medical
appliance products showed a considerable decline although the export amount was not very large:
the export of appliances for treatments or operations dropped by 43.0% year on year to ¥4.5 billion;
that of household medical appliances, by 23.7% to ¥6.9 billion; and that of measuring andmonitoring systems for biophenomena by 15.2% to ¥49.8 billion.

63

3. Electric Machine Sector

The import of medical laboratory testing appliances recorded a large increase of 39.6% year on
year although the amount was small. That of diagnostic imaging systems, that are large in terms ofmoney value, grew by 8.0% to ¥862.1 billion turning from the decline in 2007, indicating the factthat an unfavorable balance of trade continued even for these systems in which Japan is strong. In
2008, the export of medical appliances tended to fall and their import, to grow, suggesting thetendency of Japan’s dependence on imported products.

Fig. 3.3.4

Trend of export and import of medical appliances (calendar years)
Unit: ¥ million
ExportImportYear-on-year
ratio (%)

2008

Medical appliances, grand total

575,054559,160-2.8% 1,021,974 1,090,749

Medical appliances, total

560,310

544,986-2.7%

799,016862641

8.0%

Diagnostic imaging systems

219,535

199,785-9.0%

94,480

87447

-7.4%

Operating equipment and supplies

80,64890,036

11.6%

255,762267085

4.4%

Measuring and monitoring systems forbiophenomena

58,727

49,820-15.2%

42,631

40859

-4.2%

Artificial internal organ apparatuses and assist
devices

50,64451,733

2.2%

291,62333950016.4%

Medical laboratory testing appliances

72,38280,92811.8%

15,784

22041

39.6%

X-ray devices and instruments for diagnostic
imaging

38,98636,927

-5.3%

9,700

5498

-43.3%

Dental appliances

17,634

19,238

9.1%

10,2107515-26.4%

Household medical appliances

9,057

6,914

-23.7%

22,926

25371

10.7%

Appliances for treatments or operations

7,968

4,540

-43.0%

47,712

56105

17.6%

Clinical equipment and supplies
Other medical appliances
Source:

2007

2008

Year-on-year
ratio (%)

2007

6.7%

4,729

5,065

7.1%

8,188

11220

37.0%

14,744

14,174-3.9%

222,958

228,108

2.3%

Based on the Health Policy Bureau, Ministry of Health, Labour and Welfare, ed., “Annual Report on Pharmaceutical
Production Statistics.”(4) Future prospects

Major medical appliance businesses in Japan are promoting global-scale business activities not
only in the West but also in China, Russia and other newly industrializing countries. By these
activities, they will build up more global sales systems. But the recent trend of strong yen has raised
the exchange rate of the yen much more than they expected and may have adverse effects on theirbusiness results.

64

3. Electric Machine Sector

3.3.2

Situation of the medical appliance industry seen from electronic application
devices(1) Market trend

Fig. 3.3.5

Production of electronic application devices
Unit: ¥ million
2005

Electronic application devices

2006

2007

2009

Growth rate
in 2008-2009

945,273

681,913-27.86%

X-ray devices

204,782

217,102

216,383

189,405

166,598-12.04%

Medical191,367

204,308

201,836

173,847

148,653-14.49%

Medical and dental purposes

76,454

77,82678,22875,083

68,790-8.38%CT devices

114,913

126,482

123,608

98,764

79,863-19.14%

13,415

12,794

14,547

15,558

17,94515.34%

23,04021,715

16,614

19,62916,222-17.36%

Other X-ray devices
Radioactive substance application appliances
Radiation counters

1,002,250 1,052,909 1,072,622

2008

9,961

8,707

9,756

9,326

8,253

-11.51%

170,280

175,964

184,908

148,139

116,266-21.52%

Washers

18,78018,926

14,543

9,560

6,000

-37.24%

Medical appliances

94,79988,10594,356

81,621

58,820-27.94%

Welders

22,57933,07427,315

16,1158,103-49.72%Other ultrasonic application appliances

34,12235,85948,69440,843

43,343

6.12%

High-frequency power application equipment

5,655

5,411

5,277

4,502

3,011

-33.12%Ultrasonic application appliances

Other electronic application devices

170,280

175,964

184,908574,272

371,563-35.30%Electron microscopes

42,052

45,462

46,992

47,14135,217-25.29%Industrial TV sets

82,241

93,61090,24774,58250,191-32.70%

Medical measuring instruments

81,45286,70990,25584,18081,391-3.31%

Others382,787

398,229

412,190368,369

204,764-44.41%

Source:Based on the Ministry of Economy, Trade and Industry, “Annual Report of Machinery Statistics.”

The production of electronic application devices in 2009 (Fig. 3.3.5) was ¥681.91 billion or adecrease of 27.86% from the previous year. By the type of product, while the output of X-ray
devices and other ultrasonic application appliances grew, that of all the other product categories
suffered smaller production year on year. The declining rate of medical X-ray devices and medical
measuring instruments was relatively low as compared with that of all electronic application devices:
down 14.49% for medical X-ray devices, which have a close relation to medical and welfare
appliances; down 27.94% for ultrasonic application appliances; and down 3.31% for medical
measuring instruments.

3.3.3

Results of operations and the trend of the medical appliance industry(1) Results of operations

Toshiba Medical Systems Corp. experienced a difficult management environment due to thepostponement of delivery schedules and reluctance in buying in the medical appliance market
resulting from recession as well as lower selling prices. In January 2010, the company reformed its
management system by, among others, integrating the sales management and support divisions of the65

3. Electric Machine Sector

branches across the country into the head office and is strengthening its global development system,
including efforts to expand market in newly industrializing nations.
Hitachi Medical Corp. achieved greater sales because the sales of MR imaging devices in Japan
continued to be favorable as in 2008 but had slower sales in the West owing to business recession
and strong yen. The company’s sales of X-ray CT devices were on an equal level to the previous
year in Japan but were smaller in Europe affected by recession and yen appreciation, resulting in a
decline in the world as a whole. The sales of X-ray devices were better than in 2008 as domestic
sales were large and the higher earnings from services made good lower sales in the West. Those ofultrasonic diagnostic devices increased in Japan because new models were rated highly but fell in theWestern markets influenced by recession and strong yen.
Shimadzu Corp. enjoyed greater sales in Japan as demand for some products recovered as aresult of the revision of the medical fee schedule in 2008. But in the overseas market, the company
had a decrease in sales as a whole. The factors behind this situation are inactiveness in the U.S.
resulting from restrained buying due to recession and the reform of the medical insurance system
and greater sales in China and Central and South America because of steady demand.

Fig. 3.3.6

Results of operations of main medical appliance manufacturers
Toshiba
Medical1)
Systems

Hitachi2)
MedicalSettlement term

Shimadzu
3)
Corp.

Olympus4)
OpticalAloka Co.

5)

Year ended in March 2010

Unit

¥ million

Entire company’s sales

260,064

108,452

238,255

883,086

45,811Year-on-year ratio-10.5%-5.8%-12.7%-10.0%-6.5%

Operating profit

9,592

387

10,29460,1492,451

Year-on-year ratio-46.5%-89.7%-47.5%

73.9%-20.4%

Ratio of operating profit

3.7%

0.4%

4.3%

6.8%

5.4%

Sales of the medical appliance section-

97,59250,483

350,716

38,944

Sales ratio of the medical care section

-

90.0%

21.2%

39.7%

85.0%

Year-on-year ratio

-

-6.6%

-1.1%

-8.6%

-8.6%

Operating profit

-

-42

1,259

74,929-Year-on-year ratio--101.2%

7.1%

-0.2%

-

Ratio of operating profit

-

0.0%

2.5%

21.4%

-

Source:Notes:

Data of each company (on a consolidated basis)
The data for the medical appliance division is that for the company’s related business segment:
1) In October 2003, Toshiba Medical Systems Corp. integrated its medical system division into Toshiba Medical
Corp., which took charge of domestic sales and services. Toshiba Medical Corp. is engaged in the development,
manufacture, sale and service of medical devices and systems.
2) The entire company’s sales include those of medical information systems.
3) The figures for the medical appliance division are those for the company’s medical system field.
4) The figures for the medical appliance division are those for the company’s medical system company.
5) The figures for medical appliance division are those for the total sales of medical electronics and analyzing
devices except general-purpose analyzing devices.

In the field of medical endoscopes, Olympus Optical Co. registered larger sales in the Chinese66

3. Electric Machine Sector

market but suffered a fall in income due to stagnancy in hi-vision-compatible video scopes, thecompany’s flagship. In the area of surgical and endoscopy instruments, Olympus experienced a dropin revenue as a whole affected by unfavorable foreign exchange situations, although the sales ofsampling instruments and disposable guide wires were big.
For ultrasonic diagnostic devices, Aloka Co. publicized in Japan the usefulness of ultrasonicdiagnosis using contrast media for diagnosing cancer in the digestive system and for the early
diagnosis of arteriosclerosis, and these efforts were highly rated by a wide range of users. As a result,the company achieved a steady growth in the sales of not only the devices mentioned above but alsoof popular models. Overseas, foreign exchange fluctuations put pressure on the increase both in sales
and earnings, and Aloka suffered poorer sales than in the previous year. For specimen pretreatment
systems, the company experienced sluggish lease business and dull sales in Japan. Aloka’s overseas
sales of OEM analyzing devices remained steady.
(2) Future prospects and problems

In Japan, it is expected that population aging will expand further and demand for medical
appliances will become greater as a result. On the other hand, the financial situation of national
medical care expenditure has been tight, and it has been an urgent issue to prevent the expenditure
itself from becoming higher. In addition, while an increasing trend of import ended, global
competition will continue to intensify. The Japanese medical appliance industry is required to study aproper supply and demand balance in the circumstance of global competition where there is the needto control national medical care expenditure.
Moreover, medical appliance manufacturers in Japan have one problem: “device lag.” Device
lag means the time lag between the development of new medical devices and their introduction into
the Japanese market. The Japanese government began to review the examination and approvalsystem of these appliances in December 2008 and has since striven to eliminate the device lag. But a
drastic deregulation aiming at solving device lag will also invite foreign manufacturers’ entry into
the Japanese market. Therefore, Japanese manufacturers will need to take some steps to cope withexpected greater market competition at home.

3.3.4

Trend of the market of welfare equipment and the welfare equipment industry(1) Market trend

In the welfare equipment industry4, the market of welfare equipment in 2008 (Fig. 3.3.7) shrankas the upward trend until 2007 discontinued, totaling to ¥1,192.1 billion. This was largely affectedby the Lehman shock and the market is likely to turn to a rising tendency again considering themarket in Japan where population aging has been accelerated. By the type of product, while theproduction of communication equipment, such as hearing aids and eyeglasses, continued to lead that

4

The welfare equipment industry here means the “welfare instrument industry in the narrow sense” definedby the Japan Assistive Products Association.

67

3. Electric Machine Sectorof other product categories, the total output of welfare equipment declined by 5.3% year on year to¥346.2 billion. The production of personal care products, the second largest segment, includingincontinence diapers and bathing goods, roughly leveled out with a fall of 1.1% year on year. The
market of all the other product types got smaller.
(2) Trend and future problems of the welfare equipment industry

Prevention has been increasingly emphasized in the field of medical care in recent years, andthis concept began to be advocated in the welfare area, too. For example, the pie has been growing in
the market of wheelchairs excluding assistive models, such as self-propelled and electric wheelchairs,
sticks and walking frames, despite the shrinking whole market. The market of artificial limbs andprosthetics and wigs has been stable in the past 15 years regardless of economic situations because
these are essential goods for daily life. In the future, it should be noted that while there will be thoseareas where market expansion is expected from the viewpoint of preventive welfare, there will also
exist the fields whose market could shrink due to the appearance of new substitute products, such as
wheelchair lifting devices. Even so, high hopes have been laid on the welfare equipment industry as
a new manufacturing area because it is likely that the population of the elderly will continue toincrease even in the declining trend of population and thus the market will grow larger.

Fig. 3.3.7

Trend of the market of welfare equipment14000

福祉施設用機器システム
Equipment and systems for welfare facilities
社会参加支援機器等
Social participation supporting equipment, etc.

12000

その他
Others
10000

Long-term care-related products, such as
在宅等介護関連分野・その他
those for home care and others

コミュニケーション機器
Communication equipment

8000

家具・建物等
Furniture, buildings, etc.
6000

移動機器等
Traveling equipment
パーソナルケア関連
Personal care goods

4000

Artificial limbs and prosthetics (in the broad
義肢・装具（広義）
sense)

2000

家庭用治療器Household treatment appliances
福祉用具市場（狭義）Market of welfare tools (in the narrow sense)

0
2002
Source:

2003

2004

2005

2006

2007

2008

Based on the Japan Assistive Products Association, “Report of the Research on the Trend of the Market of the Welfare
Tool Industry,” 2010.

68