Japanese Companies Benefiting from Worldwide Mobile Market Growth

Osaka - Sunday, January 30, 2011




Nikkei, Japan’s leading newspaper specialized in business and economy reported today that worldwide demand increase of new mobile terminals such as smart phones is positively impacting revenue of Japanese companies. Toshiba’s consolidated operating profit for 2010 April – December is expected to be the greatest in history. Revenue of many other companies engaged in mobile terminal businesses (manufacturing, services) are expected to drastically increase from previous year. Worldwide smart phone sales is expected to overcome those of PC and the positive effects of mobile market growth on company financial performance is likely to further increase.



However, in the future, competition with global companies as well as among Japanese companies would become tough and it would be a challenge for Japanese companies to improve their competitive edge.



1. How is the recent worldwide trend of mobile terminal market?



It is clear that new mobile terminals including smart phones (e.g. iPhone, Android) and tablets (e.g. iPad) are driving BtoC IT market growth. This is starting to positively impact content industries as well.



According to IDC, a research company based in the U.S., number of smart phone shipped to worldwide market in 2010 reached approximately 298 million, an increase by over 70% from 2009. Number of PC shipped to worldwide market in 2010 reached 300 million, an increase by over 10% from 2009. In 2011 smart phone market is expected to further grow by around 40% and is high probable that more smart phones than PC will be shipped to worldwide market.



2. How is BtoC IT market growth positively impacting financial performance of Japanese IT companies?



Examples of Positive Effects on Japanese IT companies


(Source: Nikkei, translated and edited by the author)



Company Name / Operating Profit (billion yen) / Operating Profit (Increase vs 2009/Effect) / Area of High Performance

Toshiba / 140.0 / 10 folds / Semi conductors, small and mid-sized LCD panels

Fuji Film* / 12.2 / Back to black / Components for LCD panels

Lintec / 17.0 / Double / Equipment for semiconductor production

Taiyo Holdings / 5.0 / 40% / Ink to preserve IC

Anritsu* / 4.3 / 130% / Measuring equipments used in terminal production processes

Soft Bank / 470.0 / 30% / Increase in mobile phone subscriptions attributing to popularity of iPhone

NTT DoCoMo / 758.5 / 8% / Terminal sales growth with new product launches

* Financial announcement for 2010 complete.

GAAP is applied to Toshiba, Fuji Film and NTT DoCoMo.



Examples of Positive Effects on Some Non-Japanese Companies

(Source: Nikkei, translated and edited by the author)

Company Name / Operating Profit (billion yen) / Operating Increase vs. 2009 / Area of High Performance

Apple (U.S.) / 7.8 billion USD (2010 Oct-Dec) / 66% / Worldwide hit of iPhone 4

Samsung (Korea) / 17.3 trillion won (2010) / 58% / IC, mobile phone terminal



1) Electronics (Toshiba)



Flash memories of semiconductors and small and mid-sized LCD panels trade with companies such as Apple was very strong. Consolidated operating profit (GAAP) for April – Dec 2010 is assumed to reach 140 billion yen, which is a drastic increase from April – Dec 2009 which was 12.9 billion yen, and is the greatest since 2002 when they started quarterly financial announcements. With increase in demand, they decided to construct a new LCD component factory in Ishikawa prefecture.



2) Components, Equipments






(1) Fuji Film



Inventory adjustment of components such as polarizer preservation film has been a challenge with more than expected orders but managed it.



(2) Lintec



Consolidated operating profit for April – Dec 2010 marked the greatest in history with strong business in equipments that are used in semiconductor production.



3) Telecommunications (Soft Bank)



Consolidated operating profit for April – Dec 2010 reached 470 billion yen, increase by 30% from previous year and greatest ever, because of revenue increase in data communication.



4) Mobile Content (MTI)



Members paying fees to benefit from music distribution site for smart phones drastically increased. The top executive commented that it is now possible for their smart phone content business to generate revenue similarly to their current mobile content business.