Epson to Shut Down Japanese Semiconductor Plant
Matsushita Electric Aims to Boost Sales in China
Taiwan-Made Card Camera
NEC Mitsubishi Visual to Consolidate Non-Japanese Manufacturing to China
Sony’s Memory Stick Strategy
Fujitsu Makes PC Using Corn
Sony to Adopt Biodegradable Plastic in Walkman Casing
Sony Decides Not to Invest in FHP, Considers Investment NEC PDP Unit

Japan’s Seiko Epson announced on May 31, 2002 that the company would shut down its semiconductor manufacturing operations in Hatogaya, Saitama Prefecture, Japan in October 2002. The Epson Hatogaya plant has been producing LCD driver ICs for cellular phones, and the company plans to consolidate this driver IC production at its Fujimi Plant in Nagano Prefecture. Epson originally purchased the Hatogaya plant from Texas Instruments Japan and turned it into a LCD driver manufacturing facility in October 2000. Both the Hatogaya and Fujimi plants have been producing semiconductor components using processing rules a generation behind the state-of-the-art. With the global cellular phone market slump, factory run rates at both plants dipped significantly. Epson will transfer 170 employees from Hatogaya to the Fujimi Plant, as well as to a manufacturing facility in Sakata City, Yamagata Prefecture.

Epson’s flagship semiconductor operation, logic ICs for cellular phones, has been suffering badly since the fall of 2000. That the Hatogaya plant is being closed down after only two years of operation as an Epson subsidiary is symptomatic of the firm’s troubles. Epson is attempting to improve the profitability of its semiconductor business by reorganizing its operations and by reducing its development and manufacturing scale to more optimal levels. [M. Robertson, Portelligent]

Matsushita Electric Industrial Co., Ltd., internationally known for its Panasonic brand, plans to triple its sales and manufacturing in China to 1 trillion yen ($7.69 billion @ yen 130/$US1) in 2005, according to recent reports in the Nikkan Kogyo newspaper. Simultaneously, the company seeks to raise its total market share in China from the current 3 percent to 10 percent in 2005, with profit margins of 10 percent on sales. According to a director of Chinese and Northeast Asian Business Operations at Matushita, "Winning in the Chinese market is a necessary criteria in winning in the global market."

The company will accelerate its business strategy in China by consolidating its 41 business bases and by collaborating with leading Chinese firms such as TCL. Some Matsushita products sold in China, such as low-cost microwave ovens and DVD players, have been developed and manufactured in China, with components also procured within China. Matsushita plans to emulate this path to success with other product lines, such as rice cookers, washing machines, and home theater products. The firm plans to make its China subsidiary, Matsushita Electric China, more directly responsible for managing all of its Chinese operations in the future. [M. Robertson, Portelligent]

Mustek Systems of Taiwan has prototyped a business-card size digital still camera featuring a 1.3 million pixel CMOS sensor and showcased it at the Computex Taipei exhibition (held June 3-7, 2002, at the Taipei World Trade Center). The external dimensions of the Gsma@tmini2 are 69 mm x 47 mm x 11 mm. Image processing software allows the camera to output the equivalent of 2.1 million pixel images, according to company claims. In addition, the camera can capture a maximum 120-second long video at 640 x 480 resolution. The backside of the Gsma@tmini2 has a monochrome LCD, which allows the user to check camera conditions such as how many shots are left. The product weighs just 40 g. Still images and video are stored in 16 Mbytes of embedded memory. The camera employs a Li-polymer battery, which can be charged through a USB connection. According to Mustek, the firm can ramp up manufacturing at any time if they can find resellers. Release date and price have not been revealed. [M. Robertson, Portelligent]

A leading display monitor supplier, NEC Mitsubishi Visual Systems of Tokyo, has announced that it will reorganize its manufacturing operations. The firm – a joint venture between NEC and Mitsubishi Electric -- will shut down its two manufacturing facilities in Mexico and Malaysia by the end of September 2002 and consolidate its manufacturing operations at its plant in Dongguang, China. The company posted losses for the fiscal year ending March 2002 because of cooling demand for CRTs and a fall in LCD monitor prices. Although NEC Mitsubishi Visual expects to go back into the black for the current fiscal year, dramatic sales growth is unlikely. For this reason, the company seeks to reduce its manufacturing and distribution costs.

NEC Mitsubishi Visual’s Mexican plant has been producing CRT monitors for the North American market. However, since 2001, in part because of reduced prices, flat-panel LCD monitors have become increasingly popular and begun replacing CRT monitors. The Mexican factory has thus experienced low utilization rates, pushing NEC Mitsubishi Visual to concentrate its manufacturing operation in its Chinese plant, where cost competitiveness is high. Elimination of the two plants means that NEC Mitsubishi Visual will have only two manufacturing operations, one in Nagasaki Prefecture, Japan and the other in China. The Nagasaki plant produces high-end LCD monitors, while the Dongguang plant in China will concentrate on commodity monitors. The company will also increase its use of manufacturing contractors to over 40 percent of total volume.

NEC Mitsubishi Visual was formed in 2000 as a 50-50 joint venture between NEC and Mitsubishi Electric. Reportedly it does not currently have sufficient operating capital to function effectively, and plans to go public in the future to raise additional funding. [M. Robertson, Portelligent]

Sony has announced that in July 2002 it will commercialize a new memory card, the Memory Stick Duo, for application in cellular phones. A 16-Mbyte version of the card is going to be used to store image files in a new NTT DoCoMo handset that is designed to be used with i-shot — DoCoMo’s picture mail service. The Memory Stick Duo can operate in a conventional Memory Stick slot if a special adapter is used, and initially the Memory Stick Duo will be sold with the adapter. Sony plans to ship 16 million Memory Stick cards in fiscal 2002 (April 2002 to March 2003), with 1.9 million being the Memory Stick Duo variant. The Memory Stick Duo measures 20 mm x 31 mm x 1.6 mm.

Sony is also developing the Memory Stick-R, which, similar to CD-R, can only be written to once. In addition, Sony is preparing to mass produce an 8-Mbyte capacity Memory Stick-ROM. Both are targeted as content distribution media.

Sony Computer Entertainment will support the Memory Stick by using the memory card as a media to store downloaded games and music over the Internet on the PlayStation2. A Japanese PC supplier, Sotech, has announced plans to incorporate a Memory Stick slot in all the PCs it produces in the future. Korea’s Samsung Electronics Company and Japan’s Hitachi, Ltd. have also announced their support for the Memory Stick standard.

Sony projects that its cumulative shipments of Memory Sticks will reach 120 million units between the end of this year and March 2005. Other competing memory card standards include CompactFlash, Secure Digital Card, and Multi Media Card. [M. Robertson, Portelligent]

Fujitsu announced on June 5, 2002 that the company had successfully developed a notebook PC with a casing that uses a biodegradable plastic in which the primary ingredient is corn. . The new biodegradable plastic consists of poly-lactic acid, which is extracted from cornstarch, together with magnesium silicate, a significant constituent of earth, which improves robustness. If disposed, the plastic will decompose into water and CO2 and combine with earth. If incinerated, the material does not generate hazardous materials such as dioxins. Energy consumption in the manufacturing process is reported to be about half that required with conventional plastics.

Fujitsu has already adopted biodegradable plastics in a portion of its newest notebook models. After improving resistance to flame, Fujitsu plans to adopt biodegradable plastic for use in the entire casing of its notebook computers with PC notebook models starting from late 2004. The current price of its biodegradable plastic is 50 percent more than petroleum-based plastic. Fujitsu forecasts that the price of its biodegradable plastic will come down to levels equivalent to those of petroleum-based plastics within a few years. [M. Robertson, Portelligent]

On June 12, 2002, Sony Corporation also announced in Japan that it has developed technology to apply biodegradable plastic in the manufacture of electronic enclosures. Compared to petroleum-based plastics, the technology can reduce the use of petroleum resource by 60 to 70 percent. CO2 emissions will be reduced by about 20 percent. Sony will apply the new plastic in its Walkman series this fall. A new Walkman will employ the biodegradable plastic in over 90 percent of its total casing weight.

Sony’s new plastic employs poly-lactic acid as a base. Poly-lactic acid is made by fermenting corn starch and then chemically polymerizing the resulting substance. The conventional view of poly-lactic acid suggested that it would be difficult to apply in durable consumer goods such as electronics. Working with Mitsubishi Resin and Sanpo Chemical, Sony enhanced the properties of poly-lactic-based plastics in terms of durability and shock resistance, making it more practical for application in electronics. [M. Robertson, Portelligent]

Sony Corporation announced on June 6, 2002 that the firm has decided not to invest in Fujitsu Hitachi Plasma Display (FHP), a dominant PDP manufacturer. In April 2000, Sony announced that it had agreed to invest 5 billion yen ($38.46 million @ yen 130/$US 1) in FHP for a15-percent equity stake in the company. The Sony and FHP negotiations dragged on, however, and Sony eventually decided to abandon the Fujitsu Hitachi joint venture. Sony will continue to invest in the development of other flat panel technologies, one of which is OEL (organic electroluminescent) display.

Another source in Japan reported that Sony is considering investment in NEC’s Plasma display manufacturing unit, which NEC plans to spin out as a separate company in October 2002. According to Sony, Sony has entered discussions with NEC to establish a cooperative relationship and assure itself a stable supply of PDP panels. [M. Robertson, Portelligent]