Japanese suppliers weather electronics storm better than name brands
Although the company does not publicly name its clients, it was listed by Apple as one of its for 2013 and analysts say it supplied vital components for the recently released iPhone 5S and 5C, for which sales have outstripped analyst expectations. Another Japanese supplier, Nidec Corp, which makes motors for electronics and automotive parts, is projecting sales to increase 12.8 percent this year and operating profit to rise 325.5 percent to 70 billion yen. Taiyo Yuden Co Ltd which competes with Murata, is also forecasting a 14 percent increase in sales and 312.3 percent increase in profit. Domestic smartphone and electronics makers are not in such a comfortable position.Japan's household names like Sharp Corp, Panasonic Corp and Sony Corp, have suffered losses on their consumer electronics units in recent years, with many analysts blaming a lack of insight into what global consumers want. But companies like Murata have managed to avoid the same fate by selling directly to companies and making components that can be flexibly used in the finished product."Parts makers sell to businesses, so it's easier to see where the market is heading than with consumers, whose needs are more difficult to understand," Murata said. "Overseas sales are growing at lots of Japanese parts makers. Ninety percent of our sales are international and I think the industry average is about 60 percent," he added. Murata's mainstay products are ceramic capacitors, tiny parts that control the flow of electricity in electronic devices from game consoles to car engine controls. The majority are used in smartphones, which account for 40 percent of overall sales.Although Murata sees the growth of the smartphone market slowing to around 10 percent within two years from 30 percent currently, he says his company would be able to weather that shift without relying on its other divisions such as auto parts. "It's not just about the number of smartphones sold. If growth slows will innovation stop? The network technology or the architecture can change," Murata said, adding that a change such as an increase in LTE mobile bandwidth could provide a business opportunity. For now, the president is expecting orders to stay strong through Christmas after a leap at the beginning of September. The company is projecting operating profit to jump 70.5 percent to 100 billion yen this fiscal year, which ends March 2014.ReadMore:Android Games
Japan's flagship consumer technology brands have had a rough few years with their products overshadowed by Korean and U.S. rivals, but the Japanese parts makers who supply those rivals are doing a roaring trade.That is especially true for Murata Manufacturing Co Ltd, known as a supplier for Apple Inc's iPhone and Samsung's Galaxy series of smartphones, and which is projecting a 71 percent jump in operating profit this year. Orders between July to September were on a par with the previous quarter's record high of 190.5 billion yen, President Tsuneo Murata told Reuters on Tuesday in an interview at CEATEC, one of Japan's biggest electronics trade shows held near Tokyo.
Better than big brands?
Although the company does not publicly name its clients, it was listed by Apple as one of its for 2013 and analysts say it supplied vital components for the recently released iPhone 5S and 5C, for which sales have outstripped analyst expectations. Another Japanese supplier, Nidec Corp, which makes motors for electronics and automotive parts, is projecting sales to increase 12.8 percent this year and operating profit to rise 325.5 percent to 70 billion yen. Taiyo Yuden Co Ltd which competes with Murata, is also forecasting a 14 percent increase in sales and 312.3 percent increase in profit. Domestic smartphone and electronics makers are not in such a comfortable position.Japan's household names like Sharp Corp, Panasonic Corp and Sony Corp, have suffered losses on their consumer electronics units in recent years, with many analysts blaming a lack of insight into what global consumers want. But companies like Murata have managed to avoid the same fate by selling directly to companies and making components that can be flexibly used in the finished product."Parts makers sell to businesses, so it's easier to see where the market is heading than with consumers, whose needs are more difficult to understand," Murata said. "Overseas sales are growing at lots of Japanese parts makers. Ninety percent of our sales are international and I think the industry average is about 60 percent," he added. Murata's mainstay products are ceramic capacitors, tiny parts that control the flow of electricity in electronic devices from game consoles to car engine controls. The majority are used in smartphones, which account for 40 percent of overall sales.Although Murata sees the growth of the smartphone market slowing to around 10 percent within two years from 30 percent currently, he says his company would be able to weather that shift without relying on its other divisions such as auto parts. "It's not just about the number of smartphones sold. If growth slows will innovation stop? The network technology or the architecture can change," Murata said, adding that a change such as an increase in LTE mobile bandwidth could provide a business opportunity. For now, the president is expecting orders to stay strong through Christmas after a leap at the beginning of September. The company is projecting operating profit to jump 70.5 percent to 100 billion yen this fiscal year, which ends March 2014.ReadMore:Android Games
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