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 2008 suffered a 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 to thedecrease 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 government’s assistance, demand forphotovoltaic generation systems went up and helped increase the output of electronic devices tosome extent.
(2) Orders received

According to the “Forecast for the Fall Market in 2009” by the World Semiconductor Trade
Statistics (WSTS) (published on November 17, 2009), the estimated amount of semiconductor
shipment in 2009 was $220.1 billion or a decrease of 11.5% from the previous year, which wasrevised upward as compared with the Forecast for the Spring Market in 2009 (down 21.6%) (Fig.
3.1.1). The WSTS expects that in 2010, an upward trend will be resumed because of growing
demand for consumer products and the expectations that demand for PCs in businesses will berecovered as a result of the introduction of Windows7 and that this positive note will continue thereafter.

Fig. 3.1.1 Trend of the world semiconductor market by region(actual results for 2002-2008; estimate for 2009-2011)
America

EuropeJapan

Asia Pacific300,000[$ million]

250,000
200,000
150,000
100,000
50,0000
2003CY 2004CY 2005CY 2006CY 2007CY 2008CY 2009CY 2010CY 2011CY

FORECAST

41

3. Electric Machine Sector

2003CY 2004CY 2005CY 2006CY 2007CY 2008CY 2009CY 2010CY 2011CY
Worldwide (M$)
America

CAGR
08-11

166,426 213,027 227,484 247,716 255,645 248,603 220,123 246,924 269,811

2.8%

32,33139,06540,73644,91242,33637,88137,35341,85845,936

6.6%

Europe32,31039,424

39,27539,90440,971

38,24928,97632,15034,890

-3.0%

Japan

38,94245,75744,082

46,41848,84548,49838,231

41,99545,401-2.2%

Asia Pacific

62,84388,781 103,391 116,482 123,492 123,975 115,563 130,921 143,584

5.0%Europe (euro basis; millions of euro)

28,54631,70931,57531,771

29,92725,96820,94722,51024,428-2.0%

Japan (yen basis; ¥100 million)

45,03249,54948,53554,02457,49750,27736,16139,37742,571-5.4%

Source:Extracts from the WSTS, “Semiconductor Conference in the Fall of 2009” (November 2009).

(3) Production

Fig. 3.1.2

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

Production

2006

2007

2008

Electron tubes, semiconductor devices and integrated circuits
Electron tubes
Microwave tubes
PDP modules
Display tubes
X-ray tubes
Semiconductor devices
Silicon diodes
Rectifier cells (100mA or more)
Transistors
Silicon transistors
Photoelectric transducers
Light-emitting diodes
Laser diodes
Solar cells
Other semiconductor devices
Integrated circuits
Semiconductor ICs
Linear circuits
Standard linear circuits
Non-standard linear circuits
For industrial equipment
For consumer equipment
Counting circuits
Bipolar type
MOS type
Microcomputers
MPU
MCU
LogicsStandard logics
Semi-customized logics
Display drivers
Memories
DRAM
SRAM
Flash memories
Other MOS type
CCD
Hybrid integrated circuits
Liquid crystal elements
Active type
Passive type
Liquid crystal modules
Liquid crystal panels
Solar cell modules

6,995,057
391,878
9,397
326,050
10,926
14,945
1,127,415
54,222
83,362
322,591
132,347
547,729
145,131
100,42144,5973,609,906
3,370,044
438,391
87,975350,416
169,254
181,162
2,931,653
20,7962,910,857
702,598
40,544
662,054
1,234,438
127,576
483,178
219,826
660,994
26,75130,206589,953
312,827
276,106
239,862
1,675,062
1,582,875
92,187
58,83433,353
190,796

7,136,487
376,859
6,555
312,211
11,405
15,679
1,124,980
46,30890,123331,029
128,560
539,496
154,491
92,423
168,411
46,584
3,767,614
3,516,587
445,579
89,155356,424
163,274
193,150
3,071,008
17,631
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
251,027
1,714,254
1,627,600
86,65458,92527,729152,780

6,823,612
356,936
6,852
294,782
9,654
15,479
1,116,522
39,89686,272
317,315
118,519557,758
151,982
71,515
221,984
45,4433,305,152
3,068,409
413,854
79,833334,021
149,697
184,324
2,654,555
13,6102,640,945
623,479
16,515606,964
1,224,588
170,025
511,431
182,331438,307
35,57024,623355,721354,571
347,594
236,743
1,835,724
1,766,185
69,53943,11026,429209,278

Source:Growth rate in 2007-2008
-4.4%
-5.3%
4.5%
-5.6 %-15.4 %
-1.3 %-0.8 %-13.8 %
-4.3 %-4.1 %-7.8 %
3.4%-1.6%-22.6%
31.8%-2.4%-12.3%-12.7%-7.1%-10.5%
-6.3%
-8.3%
-4.6%
-13.6%-22.8%-13.5%-11.7%-35.9%-10.8%
-8.6%
43.2%
-9.4%
-12.7%-28.5%-11.5%-20.3%-31.4%-10.1%
-8.0%
-5.7%
7.1%
8.5%
-19.8%-26.8%-4.7%
37.0%

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.”42

3. Electric Machine Sector

The production of electronic devices in 2008 was ¥6,823.6 billion or a negative growth of-4.4% from the previous year. By the type of product, the output of electron tubes was ¥356.9 billion(down 5.3% year on year), that of semiconductor devices, ¥1,116.5 billion (down 0.8%), that ofintegrated circuits, ¥3,305.2 billion (down 12.3%), that of liquid crystal elements, ¥1,835.7 billion(up 7.1%) and that of solar cell modules, ¥209.3 billion (up 37.0%). Due to the worldwide recession
triggered by the Lehman shock, demand for electronic equipment using electronic devices dwindled,
and as a result the production of these devices had a negative growth.
One of the characteristics of electronic device production in 2008 was the fact that the output ofsolar cell-related products enjoyed a substantial increase: the performance of solar cells was ¥222.0
billion (up 31.8% year on year) and that of solar cell modules, ¥209.3 billion (up 37.0%). This canbe attributed to the policy supports, including the resumption of subsidies for those who haveinstalled a photovoltaic generation system, which stimulated demand for electronic devices. Anotherfeature was an increase in the production of active-type liquid crystal elements (¥1,766.2 billion; up8.5%). This can be the reflection of the favorable sales of liquid crystal TVs supported by the
introduction of the “eco-point” system, a demand generating policy.
According to the “Outlooks for the World Production of the Electronics and Information
Technology Industries” published in December 2008 by the Japan Electronics and Information
Technology Industries Association (JEITA), the domestic production of electronic devices in 2009 isestimated at ¥4,395.6 billion (down 3%) for semiconductors and at ¥2,479.8 billion (up 3%) for
display devices.
(4) Export and import

The export of electronic devices in 2008 was ¥3,976.7 billion, which was a considerable
decrease of 13.3% from the previous year. By the type of product, the export of electron tubes was¥34.0 billion (down 8.5% year on year), that of semiconductor devices, ¥967.3 billion (down 5.5%)
and that of integrated circuits, ¥2,975.5 billion (down 15.6%). The export of semiconductor devices
suffered a sharp fall in all the product types due to the influence of worldwide decline in demand forelectronic equipment with electronic devices, such as cellular phone units, PCs and digitalaudio-visual appliances.

43

3. Electric Machine Sector

Fig. 3.1.3

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

Export

2006

2007

2008

Electronic devices
Electron tubes
Cathode-ray tubes for TVs
Microwave tubes
Magnetrons
For microwave ovens
Receiving tubes and amplifier tubes
Fluorescent display tubes
Semiconductor devices
DiodesTransistors
Thyristors, diacs and triacs
Photosensitive semiconductor devices
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

1,025,658
57,307
3,763
5,050
3,486
2,053
321
17,962
968,351
108,658
229,596
11,567604,874
213,9624,584,909
37,124
473
3,701
2,155
531
129
12,674
1,023,721
108,459
243,690
11,707642,970
215,432
3,524,064
1,037,990
273,548
764,442
80,718683,725
144,196
255,841
25,718872,454438,793433,661
166,034
142,842
155,463130,245
126,579

3,976,736
33,955
478
3,286
1,828
227
46
10,262967,262
90,101
208,804
11,359641,772
200,527
2,975,519
831,780
223,619
608,160
116,778
491,383
56,710235,385
22,335755,751
416,221339,530
139,205
122,654
122,291
103,507
113,432

Source:Growth rate in 2007-2008-13.3%-8.5%
1.1%-11.2%-15.2%-57.2%-64.0%-19.0%-5.5%-16.9%-14.3%
-3.0%
-0.2%
-6.9%
-15.6%-19.9%-18.3%-20.4%
44.7%-28.1%-60.7%-8.0%-13.2%-13.4%-5.1%-21.7%-16.2%-14.1%-21.3%-20.5%-10.4%

Adapted by the authors based on the Ministry of Finance, “Trade Statistics of Japan.”

The import of electronic devices in 2008 amounted to ¥2,390.3 billion or a drop of 13.1% year
on year. By product category, the import of electron tubes was ¥17.8 billion (up 21.5%), that ofsemiconductor devices, ¥242.7 billion (down 0.1%) and that of integrated circuits, ¥2,129.8 billion(down 14.6%). Light-emitting diodes (LEDs) attracted much attention as low-carbon devices, andthe import of LEDs was ¥84.3 billion or an increase of 10.4%. If the use of LEDs is expanded tolighting purposes, import from China, etc. will rise.

44

3. Electric Machine Sector

Fig. 3.1.4

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

Import

2006

2007

2008

Electronic devices
Electron tubes
Pickup tubes for TVs
Image-converter tubes, etc.
Other cathode-ray tubes
Microwave tubes
Magnetrons
Receiving tubes and amplifier tubes
Semiconductor devices
DiodesTransistors
Thyristors, diacs and triacs
Photosensitive semiconductor devices
LEDs
Photo-electric cells
Integrated circuits
Processors and controllers
Unmounted ones
OthersHybrid integrated circuits
OthersMPU
MCU
DSP
Memory elements
Others
RAM
DRAM
ROM
Flash memories
Amplifiers
OthersUnmounted ones
OthersHybrid integrated circuits

269,790
13,763
251
2,582
1,103
3,499
1,070
576
256,027
36,27559,383
4,026
140,382
85,39736,8112,750,208
14,645
261
3,509
1,580
3,499
1,238
480
242,905
37,82957,0994,870
132,974
76,33533,201
2,492,659
636,31778,178558,139
15,094543,045
260,423
61,62732,070858,508
796,690
450,637
416,457
279,756
181,00224,232
973,602
176,095
797,508
30,8032,390,327
17,794
216
2,668
873
8,866
1,296
491
242,71137,571
44,717
4,887
146,238
84,27240,7062,129,822
522,167
38,640483,527
15,957
467,570
232,889
71,073
28,825717,511
661,679
355,460
336,047
228,803148,942
24,108866,036
170,399695,636
16,733

Source:Growth rate in 2007-2008-13.1%
21.5%-17.1%-24.0%-44.7%
153.4%
4.7%
2.1%
-0.1%
-0.7%
-21.7%
0.3%
10.0%
10.4%
22.6%
-14.6%-17.9%-50.6%-13.4%
5.7%-13.9%-10.6%
15.3%-10.1%-16.4%-16.9%-21.1%-19.3%-18.2%-17.7%-0.5%-11.0%-3.2%-12.8%-45.7%

Adapted by the authors based on the Ministry of Finance, “Trade Statistics of Japan.”

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

Fig. 3.1.5 shows the business results (sales and operating profits) in 2008 of 11 main
semiconductor manufacturers in Japan surveyed by a research firm. The figure indicates that all of
the companies suffered a considerable decrease both in earnings and profits. Toshiba, the top in sales,
experienced a substantial fall of 26.5% from the previous year with sales amounting to ¥1,023.2
billion, barely keeping the 10 billion-yen level. The company had a fall in profit of ¥368.9 billion
compared with the previous year as a result of an operating loss of ¥279.9 billion. The declining
prices of NAND-type flash memories, its main products, contributed to Toshiba’s smaller earnings
and profits. The sales of second-ranking Renesas Technology greatly dropped by 26.1% to ¥702.7
billion; behind this was a substantial fall of demand for MCUs, its flagship products. Sony and NEC
Electronics, which ranked third and fourth, both had a decrease in earnings with sales of ¥580.0
billion (down 31.8%) and ¥521.7 billion (down 20.1%), respectively.

45

3. Electric Machine Sector

Fig. 3.1.5

Sales and operating profit of 11 major semiconductor manufacturers
in Japan(actual results for 2003-2008; estimate for 2009)
Unit: ¥ million

Sales
Toshiba

2003(actual)
8,988

2004
(actual)
9,389

2005
(actual)2006(actual)10,3702007(actual)12,981

13,9192008(actual)Year-onyear ratio

2009(estimates)

Year-onyear ratio

10,232-26.5%

10,500

2.6%－

Renesas Technology

9,856

10,024

9,060

9,526

9,505

7,027

Not
-26.1%
published

Sony

4,000

4,550

4,900

7,800

8,500

5,800

-31.8%

4,900

NEC Electronics*2

6,716

6,798

6,191

6,597

6,533

5,217

-20.1%

4,600-11.8%

Fujitsu*3

4,039

4,682

4,601

4,735

5,088

3,903

-23.3%

2,900-25.7%

Panasonic*4

4,800

4,760

4,580

4,382

4,628

3,929

-15.1%

3,285-16.4%－-15.5%

Elpida Memory

1,004

2,070

2,416

4,900

4,055

3,310

Not
-18.4%
published

Rohm*5

2,945

3,008

3,207

3,300

3,184

2,742

-13.9%

3,072

12.0%

Sanyo Electric

2,626

2,168

1,936

1,813

1,591

1,171

-26.4%

1,050-10.3%Oki Electric Industry*6

1,322

1,507

1,507

1,455

1,382

541

-60.9%－－

Seiko Epson*7

1,463

1,394

1,026

911

797

666

-16.4%

550-17.4%

Operating profit
Toshiba

2003(actual)
1,184

2004
(actual)827

2005(actual)2006(actual)

1,340

2007
(actual)

1,283

890

2008
(actual)2009(estimates)-2,799-500

Renesas Technology

448

510

131

235

436

-957

Not
published

Sony

164

-99

-532

Not
publishedNot
publishedNot
publishedNot
published

NEC Electronics*2

546

332

-357

-286

51

-684

0

Fujitsu*3

275

325

295

190

182

-719

-150

Not
publishedNot
publishedNot
publishedNot
publishedNot
publishedNot
publishedNot
published

-264

151

684

-249

-1,474Not
published

Panasonic*4
Elpida Memory
Rohm*5

1

945

761

683

695

674

105

220

Not
publishedNot
publishedNot
publishedNot
publishedNot
publishedNot
publishedNot
published

Oki Electric Industry*6

23

120

30

7

38

-51

－

Seiko Epson*7

406

385

-97

-260

-171

-182

-130

Sanyo Electric*1. Figures are the sales and operating profit of each company’s semiconductor business. For the companies that did
semiconductor business only, the whole company’s sales and operating profit are shown.
*2. For NEC Electronics, the sales of the production of electronic parts by commissioning are excluded. The operating profit
figures are for the whole company.
*3. The operating profit figures for Fujitsu are for all of device solutions, including SAW filters, etc.
*4. The sales figures for Panasonic are the amounts of production for outside users.
*5. The operating profit figures for Rohm are for the whole company.
*6. In October 2008, Oki Electric Industry spun off its semiconductor division into a separate company and transferred 95% of
the separate company’s shares to Rohm at the same time.
*7. The operating profit figures for Seiko Epson are for the whole of its electronic device division, including quartz devices anddisplays.
Data:
Each company’s settlement of accounts published.
Source: Adapted by the authors based on the “Nikkei Market Access,” July 6, 2009.

46

3. Electric Machine Sector

Fig. 3.1.6

Sales rankings of semiconductor suppliers in the world in 2008
(final figures)
Unit: US$ million

Ranking in 2008

2007

2008
Share (%)

1stIntel, U.S.

33,99533,767

13.1

2ndSamsung Electronics, South Korea

19,691

16,902

6.5

3rdToshiba

12,186

11,081

4.3

4th

Texas Instruments, U.S.

12,275

11,068

4.3

5th

ST Microelectronics, Italy and France

10,000

10,325

4.0

6th

Renesas Technology

8,001

7,017

2.7

7th

Sony

8,055

6,950

2.7

8th

Qualcomm, U.S.

5,619

6,477

2.5

9th

Hynix Semiconductor, South Korea

9,047

6,023

2.3

10th

Infineon Technologies, Germany

6,201

5,954

2.3

11th

NEC Electronics

5,742

5,826

2.3

15th

Panasonic

3,880

4,473

1.7

18th

Sharp Corp.

3,401

3,682

1.4

19th

Elpida Memory

3,838

3,599

1.4

20th

Rohm

2,633

3,348

1.3

24th

Fujitsu Microelectronics

2,529

2,757

1.1

Total

272,577

258,304

100.0

Source:Adapted by the authors based on iSuppli Japan, news release on March 11, 2009.

Fig. 3.1.6 shows the shares and rankings of the semiconductor market in the world in 2008
(final figures) published by iSuppli Japan, a research firm. Of the top ten, those having a lower
growth rate than the average growth rate of the entire semiconductor market are second-ranking
Samsung,

third-ranking

Toshiba,fourth-ranking

TI,

sixth-ranking

RenesasTechnology,

seventh-ranking Sony and ninth-ranking Hynix Semiconductor. This suggests that the stagnant salesof memories greatly affected the performance of these companies.
(2) Future prospects and problems

In the unfavorable business environment and with the discouraging settlement of accounts
results described above, Japanese semiconductor manufacturers have begun to reorganize them byspinning off their divisions, merging and other methods in an effort to survive.
On April 27, 2009, Renesas Technology and NEC Electronics announced that they werestudying a plan to merge in April 2010. NEC Electronics belonging to the NEC group and Renesas
Technology, a subsidiary of Hitachi and Mitsubishi, are the semiconductor manufacturers thatcompete with each other mainly in the field of chipsets for cellular phone units. According to theannouncement, NEC Electronics is strong in consumer digital solutions, while Renesas is good atsolutions for cellular phones and automobiles. Thus, the two companies have different specialized
fields and by merging their business, intend to build a third-ranking company in the semiconductor
industry in the world and to focus on the development of globally competitive new products. The
conclusion of the merger contract was postponed once, but on September 16, 2009, they signed an
integrated basic agreement on merger. The two companies will merge on April 1, 2010 with NEC
Electronics as a merging company. While it is uncertain to what extent they can display the effects of47

3. Electric Machine Sector

merger as declared in their announced policies, the integration of NEC Electronics and Renesas
Technology, which have competed in the market, will create a new giant semiconductor
manufacturer.
On the other hand, Toshiba announced on January 29, 2009that it planned to spin off its system
LSI division as part of the structural reform plan of semiconductor business. But after Renesas
Technology and NEC Electronics published their intended merger, Toshiba put off the plan to spin
off its LSI division because it had considered a merger with NEC Electronics and seems to continue
the LSI business by itself.
Elpida Memory, a DRAM manufacturer, is studying the possibility to cooperate with a
Taiwanese manufacturer. The Taiwan government plans to found Taiwan Memory Company (TMC)
and assist DRAM manufacturers in Taiwan, and Elpida Memory is searching a way to join the
program. On April 1, 2009, TMC announced that it will appoint Elpida Memory as a technicalpartner, but the negotiations for the foundation of TMC appear to have stalled because DRAM
manufacturers in Taiwan are not very willing to take part in TMC. In such a situation, on November
11, 2009, Elpida Memory announced that it signed a memorandum on DRAM production bycontract with Winbond in Taiwan.

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 negative
growth in 2008. 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 is expected tocontinue expanding in the future mainly as a result of the introduction of iPhone3G to the Japanesemarket by Apple in the U.S.
(2) Production

The amount of production of telecommunications equipment and wireless-applied appliances in2008 was ¥2,537.0 billion, a negative growth of -9.8% from the previous year.

48

3. Electric Machine Sector

Fig. 3.2.1

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

Production

Growth rate
in 2007-2008

2006

2007

2008

3,014,157

2,813,289

2,536,952

606,311533,162

560,224

5.1%

Telephones

15,773

14,20012,081-14.9%

Telephone-applied appliances-19.0%

Telecommunications equipment and wireless-applied appliances
Wired communications equipment-9.8%

110,563

106,781

86,471

Button telephone sets

47,90546,64436,344-22.1%

Intercoms

54,94053,135

44,137-16.9%

Telegraph/image appliances

37,24723,894

21,715-9.1%

Facsimiles

30,141

17,146

15,874-7.4%

Switchboards

170,963

142,643

133,067-6.7%

148,987

122,881

114,140-7.1%

104,793

81,43474,698-8.3%

Electronic switchboards
For exchanges
For PBXs

44,194

41,44739,442-4.8%

Carrier devices

271,765

245,644306,890

24.9%

Digital transmission units
Wireless communications equipment (including satellite communications units)
Broadcasting appliances

169,518

158,933

195,07022.7%

2,365,100

2,241,898

1,937,472-13.6%

81,488

71,10071,915

1.1%

Wireless communications appliances

2,052,046

1,931,716

1,589,900-17.7%

Fixed communications appliances-2.4%

128,968

144,981

141,546

Ground communications appliances

109,686

134,535

127,199-5.5%

Satellite communications appliances

19,282

10,446

14,347

37.3%

Mobile-station communications appliances

1,908,402

1,777,335

1,432,955-19.4%

Mobile communications appliances

1,818,462

1,695,552

1,348,050-20.5%

1,805,339

1,681,986

1,334,929-20.6%

1,703,752

1,587,678

1,240,390-21.9%

40,203

44,69837,929-15.1%

89,94081,78384,905

3.8%

231,566

239,082

275,657

15.3%

42,74638,22939,256

2.7%

38,92033,56535,752

6.5%

Ground mobile communications appliances
Cellular phones
PHS units for public use
Base-station communications appliances
Wireless-applied appliances
Network-connecting appliances
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.”

The production of wired communications equipment in 2008 amounted to ¥560.2 billion, an
increase of 5.1% over the previous year. By the type of product, the production of telephones was¥12.1 billion (down 14.9%), that of telephone-applied appliances, ¥86.5 billion (down 19.0%), thatof telecommunications/image appliances, ¥21.7 billion (down 9.1%) and that of electronic
switchboards, ¥114.1 billion (down 7.1%). But partly because communications companies made apositive investment stimulated by expanding FTTH (fiber to the home: data communications service
for households using optical fibers), the output of digital transmission equipment increased by 22.7%
year on year to ¥195.1 billion.
The amount of production of wireless communications equipment in 2008 was ¥1,937.5 billion,
suffering a year-on-year decrease of 13.6% and falling below the 2,000-billion yen mark. By the typeof product, while the output of broadcasting equipment was firm with ¥71.9 billion or up 1.1%, that ofwireless communications appliances experienced a decline with ¥1,589.9 billion (down 17.7%). Of
wireless communications appliances, the production of fixed communications appliances was ¥141.5

49

3. Electric Machine Sectorbillion (down 2.4%) and that of mobile communications appliances, ¥1,433.0 billion (down 19.4%).
According to the “Outlooks for the World Production of the Electronics and Information
Technology Industries” published in December 2008 by the Japan Electronics and Information
Technology Industries Association (JEITA), the estimated output of telecommunications equipmentin 2009 is ¥2,584.7 billion or a decline of 1% from 2008.
(3) Export and import

The export of telecommunications equipment in 2008 was ¥426.9 billion or a decrease of 5.3%
from the previous year. That of wired communications equipment in 2008 amounted to ¥11.1 billion,
which was a fall of 15.0% year on year. The export of wireless communications equipment in 2008
decreased, too, with ¥415.8 billion and -5.0%. By the type of product, the export of mobile phones
was ¥23.9 billion and experienced a steep decline of 50.4%. This is probably the reflection ofshrinking cellular phone business overseas rather than the result of the transfer of production bases
to other countries by Japanese manufacturers. But changes in the stance of Japanese manufacturersof cellular phone units, who used to be oriented to the domestic market, have begun to be seen; forexample, Sharp plans to do business in China positively. If the overseas business of cellular phone
unit manufacturers succeeds in the future, the export is highly likely to head toward growth.

Fig. 3.2.2

Trend of export of telecommunications equipment andwireless-applied appliances (value base)
Unit: ¥ million
Growth rate in2007-2008

Export

2005

2006

2007

2008

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

110,696
2,219
2,219
2,219
108,478

129,049
2,332
2,332
2,332
126,716450,806
13,01713,0152,520
437,789
17,081
249,693
48,25480,365
110,121426,891
11,06011,0591,878
415,831
15,828243,173
23,94264,614148,053-5.3%-15.0%-15.0%-25.5%
-5.0%
-7.3%
-2.6%
-50.4%-19.6%
34.4%

108,478
17,102
5,988
71,04914,340126,716
17,413
12,37585,523
11,405

171,015
20,8381,191
134,895
14,090156,830
23,626371
122,306
10,527-8.3%
13.4%-68.9%-9.3%-25.3%

Source:Adapted by the authors based on the Ministry of Finance, “Trade Statistics of Japan.”

The import of telecommunications equipment in 2008 was ¥708.0 billion or an increase of
2.8% over the previous year. That of wired communications equipment in 2008 was ¥18.3 billion ora decrease of 23.6% year on year. The import of wireless communications equipment achieved agrowth of 3.7% amounting to ¥689.6 billion. In particular, the import of mobile phones, which
accounted for about a half of the total import, was ¥223.6 billion or up 16.3%, and mobile phone
imports from Asia continued growing. It is supposed that this upward trend was the result of the50

3. Electric Machine Sector

introduction of iPhone3G into the Japanese market by Apple in the U.S. (date of introduction: June
10, 2008), and if the sales of this product are good, the import of mobile phones will increase.

Fig. 3.2.3

Trend of import of telecommunications equipment andwireless-applied appliances (value base)
Unit: ¥ million
Growth rate in2007-2008

Import

2005

2006

2007

2008

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

21,264
11,834
11,8349,430

39,591
11,245
11,24528,346

688,998
24,007
23,675664,991
9,235
625,545
192,329
56,421
338,710

707,969
18,344
18,344
689,624
5,990
639,726
223,630
40,776
349,5962.8%-23.6%-22.5%
3.7%-35.1%
2.3%
16.3%-27.7%
3.2%

9,430
2,562
440
1,846
6,868
2,926
0

28,346
4,413
169
3,883
13,951
5,142
9,981

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

43,908
5,525
360
4,811
28,104
4,886
10,27945.3%-4.1%
140.0%
-5.3%
83.9%
-7.6%
12.1%

Source:Adapted by the authors based on the Ministry of Finance, “Trade Statistics of Japan.”

3.2.2

Results of operations and the trend of the machine tool industry(1) Trend of management

Figure 3.2.4 shows the sales, operating profit and number of units sold of cellular phones ofmajor telecommunications equipment manufacturers in Japan.
While the manufacturers of cellular phone units suffered a smaller number of units sold in 2008,
NEC increased its sales by 6.3% over the previous year. The company started to focus on domestic
sales in the first half of 2008 and launched out on the supply of cellular phone units for Softbank’s
mobile phones, thereby attaining the sale of 5.10 million units. But this figure was far below thetarget of 7 million units that NEC had set at the beginning of the year. Thus the company continued
its efforts to improve the income structure and announced that it would spin off its cellular phone
unit development division and merge the newly founded company with Casio Hitachi Mobile
Communications Co., a cellular phone unit developer founded by the joint investment of Hitachi and
Casio. NEC is expected to make over 50% investment in the new company. The aim is probably
reduction in the burden of development of units for the next-generation cellular phone
communications standard (Long Term Evolution (LTE), 3.9G) and reinforcement of the ability todevelop by joint development. Sharp gained the top position in Japan for four consecutive years but
experienced a marked decrease both in domestic shipment (8.30 million units, down 36%) and in
excport (1.60 million units, down 24%). In 2009, the company plans to sell 8.30 million units inJapan, an equal figure to 2008, and 4 million units overseas, more than twice the performance in2008. In June 2008, Sharp entered the Chinese market with “AQUOS Shouji (Portable)” (price:51

3. Electric Machine Sector

approx. 4,000 yuan), a high-grade cellular phone unit having the company’s brand for liquid crystal
TVs, and expanded the lineup by introducing six high-class to medium-class models. Sharp made it
clear that it would take a more positive attitude to overseas markets; in 2009, the company plans to
add popular units of 1,000 to 2,000 yuan, too, to its line of products and to sell about 2 million units,a half of its overseas sales, in China.

Fig. 3.2.4 Trend of sales, operating profit and number of units sold of the cellular
phone division of major Japanese telecommunications equipment manufacturers(actual results for 2007 and 2008; estimates for 2009)
Unit: ¥ million
Sales

2007 (actual results)

2008 (actual results)

NEC *1

3,403

3,481

2009 (estimates)

Panasonic *2

3,692

3,304

(For reference: Panasonic Mobile
Communications)

4,509

3,897

3,365

Sharp

6,513

4,373

4,900

2007 (actual results)

2008 (actual results)

2009 (estimates)

2,950
UnpublishedUnit: ¥ million
Operating profit (loss)
NEC *1

Approx. 110

Approx. 50

Approx. 130

Panasonic *2

UnpublishedUnpublishedUnpublished(Figures for reference: Panasonic Mobile
Communications)

138

Sharp

237

44

UnpublishedUnpublishedUnpublished2007 (actual results)

2008 (actual results)

2009 (estimates)(10,000 units)
No. of units sold
NEC
Sharp

Total
Japan
Overseas

Fujitsu(For reference: Sony Ericsson Mobile
Communications, U.K.)

480

510

500

1,510

992

1,230

1,300

830

830

210

160

400

590

460

460

10,3908,880

Unpublished*1. NEC published estimated figures only for the operating profit.
*2. The sales figures for Panasonic are shown in the upper column. The company did not publish any operating profit figure forits cellular phone business (classified as “mobile communications” in Panasonic), and thus the sales and operating profit ofPanasonic Mobile Communications, its subsidiary taking charge of cellular phone business, are shown in the lower column
for reference.
Data:
Data of the settlement of accounts published by each company, data published at news conferences, etc.
Source: Adapted by the authors based on the “Nikkei Market Access,” July 13, 2009.

(2) Technological innovation and the environment of the telecommunications applianceindustry

According to a private research firm, the production of cellular phone units in the world in 2009
will suffer a negative growth, as a result of the global-scale recession, for the first time in eight years,
from the performance in 2008 (approx. 1,219.00 million units) with 1,130.00 million or a fall of
7.3% year on year (Fig. 3.2.5). The research firm says that even if the market recovers in 2010 andafter, replacement demand will play a central role in all markets in the world because the market will
mature in industrial countries. The markets expected to create new demand in the future will be

52

3. Electric Machine Sector

found in non-urban parts of BRICs, such as the inland areas of China, and in emerging countries
other than BRICs.
A factor likely to affect the global market of cellular phone units in the future is “higher speed”
by new-generation products. As BRICs enter the age of spread of 3G, industrial countries will see transition
to the next-generation telecommunications standard (3.9G). The increase in telecommunications
speed will not only have impact on the market but also urge reorganization of the industry throughdevelopment activities by the manufacturers of cellular phone units.

Fig. 3.2.5 Trend of production of cellular phone units in the world(actual results for 1998 to 2008; estimates for 2009 to 2018)(100 million units)
For replacement purchase (on the left scale)
For new purchase (on the left scale)Year-on-year ratio (on the right scale)

Source:Adapted by the authors based on the “Nikkei Market Access,” September 30, 2009.

Figure 3.2.6 shows the trend of the market share of cellular phone unit manufacturers in theworld. Nokia in Finland ranked top in 2008, getting a good lead on its rivals. The company has awide product lineup ranging from smartphones and other high-priced, high-performance models to
inexpensive ones for emerging markets, and has gradually increased its share since 2005 supported
especially by its price competitiveness in low-priced units. Samsung Electronics and LG Electronics,
both South Korean manufacturers, continued to take second and third place, respectively, in 2008.
By laying stress on the manufacture of low-priced models for emerging countries, these companies
have increased their share. Noteworthy is the fact that Zhong Xing Telecommunications Equipment(ZTE) in China won fifth place, taking the place of Motorola. ZTE has achieved a rapid growth insales in Western Europe and North America. As described above, affected by the changing businessenvironment, that is, a declining demand in 2008 due to the global recession, medium-to-long termmarket maturing and a rapid expansion in emerging markets, the share of cellular phone unit
manufacturers have changed greatly. Some manufacturers have focused on inexpensive models for
emerging countries likely to attain a high growth, while others have aimed at raising unit prices withhigh value-added products; in other words, it can be said that cellular phone companies are dividing53

3. Electric Machine Sector

into two groups, one pursuing a larger market share (quantity) and the other, higher earnings(quality).
Cellular phone unit manufacturers in Japan have begun their efforts again to achieve goodresults in the world market with their original, high value-added products by making use of thetechnology they accumulated in the area of digital household electric appliances. It is probably no
exaggeration to call this an attempt to avoid 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) using the technicalability Japanese manufacturers are good at. In the briefing session of its cellular phone business heldin May 2009, Sharp announced that it would export 4 million units of its planned cellular phone
output of 12.30 million units. In April 2010, NEC Casio Mobile Communications will be founded by
the merger of the cellular phone division of NEC, Casio and Hitachi. This new company plans to dooverseas business positively. Its first shipment after the merger is estimated at 8.90 million units,
based on the results in 2008, and of these, 1 million to 1.5 million units will be exported. In 2012,
three years after the integration, the company plans to increase its total shipment to the 12 million
unit level and export 5 million units of these.

Fig. 3.2.6 Trend of market shares of cellular phone manufacturers(numbers of units produced) (actual results for 2001 to 2008; estimates for 2009)
Unit: %

Nokia Corp.

Finland2001(actualresults)

2002(actualresults)

2003(actualresults)

2004(actualresults)

2005(actualresults)

2006(actualresults)

2007(actualresults)

2008(actualresults)

2009(estimates)

37.1

36.1

32.7

30.6

33.0

35.9

39.4

40.3

39.8

Samsung Electronics South Korea

6.8

9.7

10.0

12.5

12.9

11.7

14.4

17.0

19.4

LG Electronics

1.6

3.0

3.8

6.3

6.9

6.4

7.3

8.7

10.4

7.2

5.0

4.6

6.0

6.2

7.6

9.2

8.3

6.1

South Korea

Sony Ericsson Mobile
U.K
Communications
ZTE

China

-

-

-

1.7

2.2

2.2

2.3

3.8

5.0

Motorola

U.S.

13.3

14.1

12.5

13.6

18.2

22.0

13.6

8.6

4.8

Research In Motion

Canada

-

-

-

-

-

-

1.0

2.0

3.1

Apple

U.S.

-

-

-

-

-

-

0.3

1.2

2.5

HTC

Taiwan

-

-

-

-

-

-

0.9

1.0

1.3

Sharp

Japan

0.9

1.4

1.4

1.5

1.4

1.4

1.4

0.9

1.0

33.2

30.7

34.9

27.8

19.2

13.0

10.1

8.2

6.7

Others

Source:Adapted by the authors based on the “Nikkei Market Access,” September 30, 2009.

(3) Future prospects and problems

Japanese cellular phone unit manufacturers are ready to resume active business in overseas
markets but their main battlefield is still the Japanese market. Here the situation of the domestic
market of cellular phone units is discussed referring to the estimates of a private research firm.
According to the research firm (MM Research Institute), the domestic shipment of cellular
phone units in 2008 decreased by 29.3% year on year to 35.89 million units, dropping below the 40

54

3. Electric Machine Sector

million level. This can be the result of a combination of a short-term factor and a medium-to-longterm one, that is, the impact of the worldwide recession on the domestic market (specificallyinventory cutback) and a longer replacement cycle of the consumer. The extension of thereplacement cycle may have resulted from the sales system of compulsory contract term for cellular
phone units started in 2007 (the contract term is mostly two years or more) and a shape rise in theprice of units due to the introduction of the new sales system, combined with poor demand caused by
the recession. Most cellular phone companies have lowered their estimated domestic demand in2009 to the 30 million range, which means a zero growth. An NEC officer is said to have expectedthat the domestic demand from 2009 to 2011 would not increase and remain at the 30 million unit
mark. MM Research Institute also forecasted a downward demand trend: 33.20 million units in 2009
and 32.60 million units in 2010. Cellular phone units continued to expand the demand mainly by the
progress of telecommunications technology and by the addition of new functions. However, it has
been considered almost unlikely that any increase in “special procurement demand” will be seen in
the cellular phone unit market as a result of the introduction of next-generation models. This isbecause it is supposed that at the initial stage of LTE introduction, manufacturers will offer dualband models compatible both with the existing telecommunications system and LTE and start withhigh-grade units rather than changing product generations immediately. But in the domestic market
where NTT and other telecommunications companies hold leadership in the sales of units,
manufacturers may adopt in 2010 a product strategy aiming at causing demand to be concentrated tosome extent in 2012 when the introduction of next-generation models will be made at full swing,taking advantage of the sales method based on the compulsory contract period. Yet it is unlikely thatthe extension of the replacement cycle will stop; rather, there is probably a high possibility that
anticipated demand for next-generation products will promote the elongation of the cycle. MM
Research Institute predicted that the replacement cycle would be extended from 2.2 years in 2007 to
3.1 years in 2008, 3.6 years in 2010 and 3.7 years in 2013.

3.3. Medical electronics
3.3.1

Supply and demand trend(1) Outline

According to the Annual Report on Pharmaceutical Production Statistics 20071, the domestic
demand for medical appliances2 was ¥2,131.3 billion or a decrease of 6.0% from the previous year
(Fig. 3.3.1). The world market totaled to about ¥20,000 billion, and the Japanese market ranked
second after the U.S.’s and was on a similar scale to Germany’s. As the aging rate in Japan reached22.1% in 2008, people’s dependence on medical service has become increasing. In addition, national
medical care expenditure was as high as about ¥33,000 billion, and this fact has affected demand for

1

Because the Annual Report on Pharmaceutical Production Statistics 2008 was not published yet, the 2007
edition was used here.

2

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

55

3. Electric Machine Sector

medical appliances directly and indirectly.
(2) Production trend

In the production of medical appliances in 2007 (Fig. 3.3.2), diagnostic imaging systems
continued to take first place but decreased by 1.1% year on year to ¥395.8 billion. The production ofhousehold medical appliances and clinical equipment and supplies dropped, while that of othermedical appliances tended to level off.
For medical electronic appliances 3 (Fig. 3.3.3), the production of medical X-ray devices
declined by 16.1% year on year to ¥173.8 billion, that of ultrasonic application medical appliances
dwindled by 15.6% to ¥81.6 billion and that of other medical appliances dropped by 7.2% to ¥84.1
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
Domestic
demandDomestic demand
AmountExport of export

Source:3

Amountof production
Production
Amount of import
ImportBased on the Health Policy Bureau, Ministry of Health, Labour and Welfare, ed., “Annual Report on Pharmaceutical
Production Statistics.” * Including medical materials.

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.

56

3. Electric Machine Sector

Fig. 3.3.2

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

Diagnostic imaging
imaging sysystems
Diagnostic
stems
Artificialorgan apparatuses
apparatuses andand assist
assist dev
devices
Artificial internal organ
ices
Measuringstems ffor
or biophenomena
biophenomena
Measuringand
andmonitoring
monitoringsy
systems
Medical
Medicallaboratorylaboratory testing
testing appliances
appliances
DentalDental appliances
appliances

Operatingequipment
equipmentand
andsupplies
supplies
OperatingHouseholdmedical
medicalappliances
appliancesHousehold
X-ray
ices andor diagnostic
imag
X-raydev
devicesandinstruments
instruments ffor
diagnostic imaging
Appliances
Appliancesf orfortreatments
treatments oror operations
operations
ClinicalClinicalequipment
equipmentand
andsupplies
supplies
395,813400,083
367,401

324,875
305,045
264,178
227,121235,724
182,572

177,569
154,704

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

147,809
100,080
81,08960,302
34,66749,42233,94926,56929,2342002

Source:2003

262,955

233,323

239,744

189,979

169,491

167,458

262,407

191,230
178,281
137,710

169,462

152,074
110,475
89,06740,33537,84328,736
2004

200,438
199,892

147,695
97,959100,281

109,937
109,136

94,63739,34837,574

99,46042,18638,861

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

2005

2006

2007

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
2005

2006

2007

2008

Growth rate
(%)

2003

2004

Medical appliances, total

289,922290,140

367,618

379,122

386,447

339,648-13.8%

Medical X-ray devices, total

161,193

152,212

191,367

204,308

201,836

173,847-16.1%

Medical and dental X-ray devices

78,11375,07676,454

77,82678,22875,083-4.2%

CT devices

83,08077,136

114,913

126,482

123,608

98,764-25.2%

Ultrasonic application medical appliances

72,58775,846

94,79988,10594,356

81,621-15.6%

Other medical measuring instruments

56,14262,08281,45286,70990,25584,180-7.2%

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 2007 was ¥575.0 billion or a year-on-yearincrease of 9.0%. This was a continued growth but the growth rate was a little lower than theprevious year. The import amounted to ¥1,021.9 billion or a fall of 6.9% year on year.
By the type of product, the export of measuring and monitoring systems for biophenomena
grew by 22.3% year on year to ¥58.7 billion, that of artificial internal organ apparatuses and assist
devices, by 22.2% to ¥50.6 billion and that of medical laboratory testing appliances, by 26.1% to57

3. Electric Machine Sector¥72.3 billion. While the export amount was not very large, the growth rate was high.
The import of artificial internal organ apparatuses and assist devices decreased by 6.2% year on
year but continued to rank first in amount. The growth rate was the highest but the amount was small
for the import of clinical equipment and supplies, with ¥8.1 billion or an increase of 8.7% year on
year. In the import of medical appliances, many types of product experienced a negative growth.

Fig. 3.3.4

Trend of export and import of medical appliances (calendar years)
Unit: ¥ million
ExportMedical appliances, grand total
Medical appliances, total

2006

2007

527,526

575,054

ImportYear-on-year
ratio (%)

2006

2007

9.0% 1,097,867 1,021,974

Year-on-year
ratio (%)
-6.9%

511,359

560,3109.6%

848,172

799,016-5.8%

Diagnostic imaging systems

208,229

219,535

5.4%

121,449

94,480-22.2%

Operating equipment and supplies

81,34580,648-0.9%

259,199

255,762-1.3%

Measuring and monitoring systems forbiophenomena

48,03558,72722.3%

41,983

42,631

1.5%

Artificial internal organ apparatuses andassist devices

41,44850,64422.2%

310,798

291,623-6.2%

Medical laboratory testing appliances

57,422

72,382

26.1%

14,703

15,784

7.4%

X-ray devices and instruments fordiagnostic imaging

36,27938,986

7.5%

9,337

9,700

3.9%

Dental appliances

16,207

17,6348.8%

10,354

10,210-1.4%

Household medical appliances

10,102

9,057-10.3%

21,87722,926

4.8%

Appliances for treatments or operations

7,729

7,968

3.1%

50,93947,712-6.3%

Clinical equipment and supplies
Other medical appliances
Source:

4,563

4,729

3.6%

7,533

8,188

8.7%

16,167

14,744-8.8%

249,695

222,958-10.7%

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 plan to reinforce their marketing system for China
and other Asian markets and for rapidly growing markets as Middle East and Russia. Some of them
have already entered these markets by establishing local subsidiaries and offices and will expand
their sales functions further in the future.

3.3.2

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

Toshiba Medical Systems Corp. enjoyed a relatively good demand at first but later had theconsumer’s holding down of buying and other problems as a result of the downturn in the economy.
As the CT diagnostic imaging device launched in 2007 was highly rated and won the Machine
Industry Good Design Award for 2009, the company established the research system for this product.

58

3. Electric Machine Sector

Hitachi Medical Corp. attained greater sales thanks to a good performance in MR imaging
devices. Its X-ray CT scanners had similar sales to the previous year in Japan but suffered a drop
overseas as a result of the suspension of production of some products. For X-ray devices, the sales of
new products were favorable at home but those of general-purpose X-ray devices, etc. were dull.
Ultrasonic diagnostic devices enjoyed bigger sales in China but had a poorer performance in Japanand Europe.
Shimadzu Corp. experienced lower sales because the market conditions for X-ray photography
devices, its main products, were dull due to the revision of the medical fee in April 2008 that gave
favorable treatment to digital storage of images. Overseas, demand for digital-compatible products
was steady and so the company’s sales increased mostly in China, Europe and Middle East.
Shimadzu also worked, as in the previous year, to increase the assortment of its clinical applications.
In the field of medical endoscopes, Olympus Optical Co. registered steady sales of
hi-vision-compatible video scopes both at home and abroad. But due to fluctuations of exchange
rates, the company had lower earnings for the whole area of medical endoscopes. In the field ofendoscopy instruments for surgery, the sales of Olympus in Japan grew led by the integrated
endoscopic video systems that would support surgical operations using an endoscope, and thecompany’s performance of guide wires and other pancreaticobiliary instruments and gastrostomy
catheters was better, too. Overseas, the company enjoyed good results in integrated endoscopic
operation systems and sampling-based instruments, such as biopsy forceps, mainly in North
America.
For ultrasonic diagnostic devices, its flagship, Aloka Co. worked at home on the developmentof new contrast media for diagnosing cancer in the digestive system and on the method of evaluating
blood vessel functions by new technology to detect metabolic syndromes, and these efforts werehighly rated by a wide range of users. In addition, Aloka’s new high-grade products with good
performances and new popular models both showed a steady growth. By contrast, the sales of its
medium-class products for the domestic market decreased due to intense price competition. The
sales went down abroad, too, affected by the recession and exchange rate fluctuations.

593. Electric Machine Sector

Fig. 3.3.5

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 2009

Unit

¥ million

Entire company’s sales

268,756

115,088272,833

980,903

48,986

-7.5%

4.3%

-5.9%

-13.1%-12.7%

Year-on-year ratio
Operating profit

10,6183,766

19,61334,587

3,078

Year-on-year ratio-40.8%

13.8%-28.9%-69.3%-39.3%

4.0%

3.3%

7.2%

3.5%

6.3%

Sales of the medical appliance section-

104,485

51,050383,828

42,625

Sales ratio of the medical care section

-

90.8%

18.7%

39.1%

87.0%

Year-on-year ratio

-

4.7%

-7.9%

8.7%

-14.0%

Operating profit

-

3,499

1,176

75,043-Year-on-year ratio

-

1.1%

-56.1%-23.8%-

Ratio of operating profit

-

3.3%

2.3%

19.6%

-

Ratio of operating profit

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.

(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.

60