Consumer Crunch Hits Japan, Sony and Toshiba Feel Pain

Following the collapse of the digital consumer market in the third quarter of 2008, Japanese chipmakers Toshiba, Sony and NEC have reported depressed results for Q4 and gloomy outlooks for 2009. By contrast, Nintendo is perky on the back of its blockbuster Wii.

The Japanese semiconductor market is expected to decline 15 percent this year after the digital consumer market fell off a cliff in Q308, according to Future Horizons. The same collapse happened elsewhere in the world but in Japan, heavily dependent on consumer electronics, it caused the most hurt.

Toshiba reported a loss of $1.76bn for Q408 and said it may make an operating loss of $3bn for the year to the end of March. As well as being hit by the collapsing digital consumer market, Toshiba was hit by the oversupply and price slump in NAND flash where it is the world No.2 after Samsung.

Sony reported a $200m loss for Q408 and said it would make a $2.9bn loss for the year.

NEC reported a loss of $177m for Q408 and said it is expecting to lose $723m for the full year.

The exception to the Japanese gloom is Nintendo which reported a Q408 profit of $2.8bn and forecast a full year profit to the end of March of $5.8bn.

“All the drivers for Japan’s domestic industry are in deep trouble,” said Malcolm Penn, CEO of Future Horizons, earlier this week, “two big users of semiconductors in Japan, the electric machinery sector and automotive, are depressed. And Japan is losing semiconductor market share in China.”

The Japanese semiconductor industry expects to lose a collective $5.5bn in the year to the end of March 2009.

The effect will be to force further restructuring on the Japanese semiconductor industry which, according to Penn, “Has never really restructured.”

Currently Rohm is getting together with Oki, and Matsushita with Sanyo. More such consolidation is expected this year.

Electronics Weekly, a sister publication of EM Asia