Semiconductors
Fujitsu is to spin off its loss-making chip business as increasing competition is forcing the Japanese group to create a leaner organisation. Alongside NEC and Hitachi, which make a wide range of goods from chips to nuclear reactors, Fujitsu is finding it increasingly difficult to compete with nimbler rivals in other parts of Asia and the US. But rather than sell underperforming units to private equity groups or foreign rivals, Japanese companies have largely preferred to spin off the chip-making businesses into subsidiaries controlled by the parent company. Fujitsu said it needed to improve efficiency and reduce development times to compete with its rivals, including Toshiba and Infineon. The unit is expected either to break even or make a small profit this year, following a loss of about Ñ20 billion a year ago. For the year ending March 31, Fujitsu forecasts its chip business sales will rise by 12% from a year earlier to Ñ530 billion ($5 billion).
Toshiba is planning to give up on its HD DVD format for high-definition DVDs, conceding defeat to the competing Blu-ray technology backed by Sony. The move will likely put an end to a battle that has gone on for several years between consortiums led by Toshiba and Sony vying to set the standard for the next-generation DVD and compatible video equipment. Toshiba is expected to suffer losses running to tens of billions of yen (hundreds of millions of dollars) to scrap production of HD DVD players and recorders and to withdraw from the business.
Sharp and Kansai Electric Power are considering teaming up to build a solar power generation plant that could become one of Japan's biggest when completed on coastal land in Sakai, Osaka Prefecture. The plant is planned to be built on the site of an industrial waste disposal facility owned by the Osaka prefectural government. Once completed, its power output capacity could exceed that of SharpÆs 5,200KW solar power generation system in Mie Prefecture, currently the largest such plant in Japan.
Toyobo has come up with a way to fabricate films for printed wiring boards that are only 5 microns thick. At half the thickness of the company's existing products, the new films are the thinnest in the industry, beating out the 7.5-micron versions made by Ube Industries. Toyobo plans to market its new film to device makers starting in April 2009. The circuit board films are made from a solution of a polyimide resin that is spread out and dried, then rolled. The resin needs to be heated to more than 300 degrees Celsius to drive off the solvent, a process that causes the resin to expand, which can create uneven waviness in the film. Toyobo has reduced this thermal expansion by five-sixths by adding polybenzazole molecules to the resin, pushing its heat resistance above 500 degrees Celsius from the usual 350 degrees. The firm has also modified the rolling mechanism so the thinner film can be rolled without damage.
Hitachi and Matsushita Electric Industrial announced the conclusion of a formal contract related to a comprehensive liquid crystal display (LCD) panel business alliance. A basic agreement regarding this alliance was reached on December 25, 2007 by Hitachi, Matsushita and Canon. Under the terms of the agreement, Matsushita will acquire a 24.9% stake in Hitachi Displays, a wholly-owned Hitachi subsidiary that makes small and medium-sized LCD panels, from Hitachi by March 31, 2008, pending regulatory approval. Matsushita will then acquire large IPS LCD panel-related businesses, including the total issued shares of IPS Alpha Technology, for Ñ66 billion ($612 million) from Hitachi Displays once all conditions are met.
NEC Electronics will introduce an early retirement plan to reduce its local workforce by about 500 people, or 3%, by March 30 from the current 18,000, as part of a move to consolidate its manufacturing facilities in Japan. NEC Electronics currently has about 24,000 employees worldwide. The loss-making subsidiary of electronics giant NEC Corporation in November announced a plan to consolidate its six semiconductor-making units in Japan into three to accelerate its cost-cutting efforts and turn around its operations.
Internet
Rakuten has announced that its operating profit plunged 99.6% in 2007 from the previous year to Ñ118 million ($1.1 million), as it set aside hefty reserves to cover borrowers' claims for reimbursements of excessive interest charges at its financial unit. Rakuten's consolidated sales went up 5.2% to Ñ213.9 billion, helped by its healthy mainstay online shopping mall business and its solid online travel services and professional sports operations. Its group net profit swelled about 14 times to Ñ36.9 billion, due to a one-time gain stemming from the sales of part of its investment in Ctrip.com, a consolidator of hotel accommodations and airline tickets in China.
Korea
Telecommunications
SK Telecom has bought a Chinese Global Positioning System (GPS) service provider in order to tap the Chinese telematics market. SK Telecom said it bought a controlling 65.5% stake in Shenzhen E-eye High Tech for W13.9 billion ($14.7 million), putting it under its holding company in China, SK Telecom China Holding. Telematics refers to the integration of GPS technology with computers and mobile communications technology in automotive navigation systems. SK Telecom said China's telematics market has been growing at a fast pace due to China's policy to require government-owned and special vehicles to be equipped with a GPS device ahead of this year's Beijing Olympics. Shenzhen E-eye High Tech manufactures GPS terminals and provides software platforms for logistics. SK Telecom said it will seek to sell GPS platforms to large companies in China, set up a nationwide distribution network and provide GPS and traffic information services.
Korea's anti-trust regulator has given conditional approval to SK Telecom for its planned takeover of Hanarotelecom. Following the takeover, SK Telecom will have a 50% share of the domestic mobile phone market and a 26% share of the local high-speed Internet service market. The commission decided to recommend to the Ministry of Information and Communication to retrieve the 800 megahertz frequency bandwidth from SK Telecom for redistribution in 2011 when the carrier's exclusive right to use it ends. The panel also attached some conditions on the deal to discourage a monopoly in both the mobile and internet service markets. The deal is subject to final approval by the Ministry of Information and Communication next week.
Mobile/Wireless
Korean handset maker LG and Omnifone, the UK-based mobile music start-up, will attempt to upstage NokiaÆs flagship music strategy by unveiling a rival handset and music package. Customers who buy the LG handset will get free, unlimited access to a library of around 1.5 million songs for 12 to 18 months and be able to keep favourite tracks at the end of this time. Called MusicStation Max, the package will be on sale before June, several months ahead of a similar launch by Nokia. Omnifone has signed a deal with Universal Music Group to provide music for the programme, and hopes to sign other labels soon. Universal also has a deal with Nokia.
Femtocells, which enables coverage of a 3G network to be expanded and offers a fixed-mobile convergence service, will be introduced by Korean mobile carriers this year. It will help carriers to save money for network establishment and allow subscribers a better calling experience with various additional services. KTF said it is currently negotiating with KT to share the fixed network. It is also in discussions with femtocell makers like Samsung and Motorola with regard to equipment purchases.
Semiconductors
Samsung Electronics has begun mass production of 64GB solid state drives (SSDs) with its new SATA II interface, offering the highest performance rates in the industry for premium notebook PCs. Able to read data at 100 megabytes per second and write it at 80 megabytes per second, SamsungÆs SATA II SSD is up to 60% faster than SATA I drives and performs two to five times faster than conventional hard disk drives (HDDs). It also consumes nearly 75% less power than typical HDDs (1.45 watts compared to 2.1 watts) and at 73 grams, SSDs are much lighter than HDDs.
Samsung ElectronicsÆ LCD division has begun to establish a test line for AM OLED TV panels in order to begin mass production next year. The company is committed to catching up with Sony in the large-size panel market and the establishment of the test line is expected to make an impact in the industry.
Media, Entertainment and Gaming
Webzen recorded revenues of W6.9 billion ($7.3 million) in the fourth quarter, down 7.8% from the previous quarter. Even though total operating expenses decreased 4.7% to W10.6 billion due to the reduction of marketing costs, the operating loss increased 1.8% to W3.6 billion because of the revenue decrease. Ordinary profit increased 196.7% due to the partial disposal of GameOn shares and some tangible assets, and net income was W2.0 billion. The company announced that in 2008, three titles, including Huxley, will be commercialised and operational costs will come down due to the efficient management system and budget controls.
Information Technology
According to International Data Corporation, Accenture Korea is the top system integration firm in the world. In IDC's market share report on global and US system integration services, Accenture has shown dramatic growth in its information management service as well as in the solution business for SAP and Oracle products. Accenture Korea counted the strong relationship with its C-level executives as the key factor for the success.
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