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Sony, Toshiba to boost biz with increased IC spend

Posted: 07 Dec 2012 ?? ?Print Version ?Bookmark and Share

Keywords:Sony? Toshiba? IHS? Panasonic? Sharp?

Although Sony Corp. and Toshiba Corp. have posted poor financial performance, the consumer electronics original equipment manufacturers (OEMs) next year are forecast to increase semiconductor spending as they aim to revitalise their businesses. Sony is expected to purchase $8.4 billion worth of semiconductors, up nearly five per cent from $8 billion this year, predicted IHS. Company spending will rise slightly again the following year by 0.1 per cent.

Meanwhile, Toshiba's spending will increase two per cent to $6.1 billion in 2013, up from $6 billion in 2012. Toshiba's spending will surge by another 6.3 per cent in 2014, reaching $6.5 billion, the market research firm predicted.

In contrast, spending at the other major Japanese consumer electronics OEMs, Panasonic and Sharp, will decline in 2013 and 2014with Panasonic enjoying a minor rebound of 2.4 per cent in 2014.

"All the Japanese consumer electronics OEMs are struggling financiallyprompting them to take measures to cut costs in order to shore up their profits," said Myson Robles-Bruce, senior analyst for semiconductor spending and design activity at IHS. "But even in these grim circumstances, Sony and Toshiba remain optimistic about the future, and are taking steps to invest in innovative products. This will cause their spending on semiconductors to rise in the coming years."

The major Japanese consumer electronics manufacturers have been negatively impacted by a range of different factors this year, including economic slowdown in key markets of the world, lower demand plaguing certain product segments, and increasingly difficult competition from South Korean and Chinese rivals. According to the latest financial results, Panasonic, Sony, Toshiba and Sharp will all suffer losses this year.

As a group, the four companies will see their revenue decline by nearly seven per cent in 2012 compared to 2011.

Because of its financial difficulties, Sony has issued bonds twice this year, to raise funding. This effort comes even as the company has had its credit rating dropped to the lowest investment grade by Moody's. Sony is now in the process of eliminating 10,000 jobs by the end of its 2012 fiscal year, and it is also selling off assets such as manufacturing plants and shares in joint ventures. Sales estimates for its various products lines including televisions, cameras and gaming devices have been cut significantly for this year.

However, proof that the spirit of innovation is alive and well at Sony and Toshiba was in evidence at the October 2012 CEATEC, Japan's version of the Consumer Electronics Shows (CES).

IHS predicts Sony will bounce back with 3.7 per cent revenue growth in 2013. However, Toshiba will suffer another one per cent decline. Declines in 2013 revenue are expected at Panasonic and Sharp as well. The question remains whether the current downturn will be a long-term trend or if these companies eventually will recover and shine once more.

"The Japanese consumer electronics companies face a changed marketplace, due to the rising influence of Apple and other competitors that have redefined some of the product segments or else simply just taken away share in key areas," Robles-Bruce said. "Based upon the current financial evidence, it appears as though total revenue for Sony might be higher for next year, although estimates for Toshiba actually show a slight decline."





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