It has become obvious that Japanese home electronics manufacturers, once champions in the industry, are now lagging far behind their foreign rivals, as Sharp Corp, Panasonic Corp and Sony Corp recorded huge after-tax losses in their half-year account settlements as of September 2012.
The three companies' after-tax losses totalled more than 1.1 trillion yen.
In all three companies, new presidents were appointed this fiscal year; in each case they implemented business reforms, mainly streamlining of TV production businesses, which had been the main cause of the losses.
But the companies have not found a profitable new business to replace TV production, and gaps with foreign rivals, which have gone on the offence by expanding their business scale, have continued to widen.
Panasonic President Kazuhiro Tsuga said Wednesday at a press conference for announcing the business results, "We'll shift the focus from sales scale to profitability and reconstruct our businesses."
He indicated an intention to discontinue past business strategies.
Under their respective new leaders, the three companies have made various structural reforms, yet still cannot be said to have cleared away the residue of their past failures.
Panasonic acquired Sanyo Electric Co.'s businesses, including production of solar power generation panels and lithium-ion batteries, for about 670 billion yen.
These businesses are unprofitable, and it cannot be denied that the delay in streamlining such loss-making projects has worsened Panasonic's performance.
In its consolidated account settlement as of March 2013, Panasonic forecasts it will incur more than 700 billion yen in after-tax losses, marking a second straight year of losses.
Panasonic plans to shift management resources to appliances for homemakers and environment-related products.
But Tsuga frankly admitted, "We don't have growth drivers that can replace the TV production business."
Sharp President Takashi Okuda said at a press conference Thursday in Tokyo: "Though we have made large-scale investment in liquid-crystal displays, business circumstances have changed. If our company had taken action earlier, the situation would have been different."
At the press conference, Okuda presented a forecast that Sharp will likely incur its largest ever after-tax loss as of March 2013.
In saying so, Okuda admitted concentrated investment in LCD TV production in the past was a failure.
Along with the deterioration of business performance, Sharp has withdrawn 61 billion yen from its deferred tax assets, which had been set aside on the presumption that the company would record profits.
Sharp aims to pour more energy into production of small and midsize LCD panels as a revenue pillar that can replace LCD TV production. The LCD panels are used in personal computers and mobile computing devices.
With its IGZO, a model of LCD panel that consumes much less electricity, as a main weapon, Sharp will try to rebuild its business.
Sharp aims to get contracts to provide large numbers of the panels for such products as Apple Inc's iPhone and ultra-thin PCs developed under the initiative of Intel Corp, a major semiconductor manufacturer of the United States.
However, as was seen with the long delay in the provision of products to Apple, the production technologies of the IGZO panels cannot be said to be stable.
Competition in the field with South Korean and Taiwan rivals is also fierce.
Okuda expressed his concerns, saying, "The biggest task is to raise operation rates of our Kameyama No. 2 plant [in Kameyama, Mie Prefecture]." The plant manufactures the IGZO panels.
Sony Corp.'s loss in TV production was smaller, but its audiovisual products department incurred 15.8 billion yen in operating loss.
Sony aims to rebuild its business, mainly with deals with corporate clients by, for example, strengthening its medical equipment businesses through equity and business partnership with Olympus Corp.
Among major electronics manufacturers, some companies quickly implemented structural reforms after recording huge losses.
For example, Toshiba Corp. and Hitachi Ltd. downsized their TV and mobile phone production businesses.
The companies recorded firm results in the latest period, in sharp contrast with the three companies currently in the red.
Both Panasonic and Sharp want to eliminate all negative factors after their recent losses.
However, an economic analyst said while the world economy is slowing down, "The companies may be forced to deal with losses again."
The companies have some way to go to reinvigorate their legacies.
Whole industry outstripped
Japanese electronics companies have fallen behind their US and South Korean rivals in the development of smartphones and cutting-edge displays.
While many domestic manufacturers have been hit by major setbacks recently, Apple Inc. of the United States and Samsung Electronics Co. of South Korea posted all-time sales records in the July-September quarter.
A tenaciously high yen hovering around 80 yen per dollar also contributed to the troubles of Japanese electronics makers.
Apple and Samsung currently hold about half of the still-growing global smartphone market, with both firms getting a boost recently from new releases of popular models--Apple with its iPhone 5 and Samsung rolling out the Galaxy S3.
Meanwhile, NEC Corp. and Fujitsu Corp are not keeping up in the race to develop products for the global market. Trouble in this area makes it difficult to regain footing, said an executive at a domestic manufacturer.
The large market shares held by Apple and other foreign electronics firms allow them to obtain high-tech parts at low prices, leaving Japanese manufacturers in the dust in terms of product attractiveness.
When the big US semiconductor manufacturer Qualcomm fell behind schedule in shipments this summer, it put Japanese firms on low priority, which delayed parts arrivals.
Japanese firms have continued to suffer in the flat-screen television business, with South Korean firms such as Samsung and LG Electronics Inc. dominating the market.
South Korean companies have also taken the lead in developing new products, such as organic electro-luminescence displays, which is seen as the next-generation technology for TV screens.
According to the Economy, Trade and Industry Ministry, annual electronics industry shipments amount to about 33.5 trillion yen, about 10 percent of all domestic manufacturing shipments, and the sector provides about 807,000 jobs.
Alongside the auto industry, electronics is seen as a key national industry, and its success or failure will likely have a big influence on the fate of the Japanese economy.
US$1 = 80 yen
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