Japan News: Golden Week reprieve; earnings parade; gas recycling tech

May 5, 2009 – For several years Japanese chipmakers have virtually ignored the traditional Golden Week rest period; this year they’re welcoming it, according to headlines this week in Japan. Also: “weak demand” is the nom-du-jour; one firm’s journey from food packaging to solar PV; and new tech to recycle argon gas in semiconductor fabs.

Golden Week reprieve

Toshiba, Renesas, NEC, and Fujitsu are among chip industry firms who are embracing the Golden Week holidays this year, shutting down plants and suspending work in a big shift from recent years, notes the Nikkei daily.

Toshiba will keep open its site in Yokkaichi/Mie Prefecture, but only at 70% capacity (vs. 100% a year ago); the company also will idle production lines for a full week at its chip packaging unit. The company already had warned it would idle its 19,000+ employee workforce for about a week during the current quarter, spanning its four domestic factories, HQ, branches, and labs, with workers getting 80% pay during the time off.

Other facility suspensions among Japanese chipmakers:

  • Renesas, meanwhile, reportedly is freezing one of its plants in Gunma Prefecture for 14 days (no rest a year ago).
  • NEC’s manufacturing subsidiary in Otsu, Shiga Prefecture, has halted 200mm output for six days (no stoppage in 2008).
  • Fujitsu Microelectronics is idling 300mm output at a site in Mie Prefecture for five days, with an eight-day holiday for 150mm and 200mm sites in its Fukushima Prefecture facility.
  • Seiko Epson is idling LCD panel operations for 12 days.
  • Rohm is instituting a two-day shutdown at seven domestic plants.

    Bracing for ugly results

    “Weak demand” is the common theme among a quartet of Japanese chip industry firms putting the final touches on their quarterly results and fiscal-year projections, notes the Nikkei daily.

  • TEL expects to swing to a ¥65B (US $654.6M) loss for the year through March 2010, on -41% lower sales of ~¥300B ($3.02B). Orders for chips and LCD panels plunged -84% in the most recent quarter, and isn’t expected to turn around in the current fiscal year. TEL wants to cut another ¥20B ($201.4M) in fixed costs (after a ¥34B [$342.4M] trimming last year), which will include a 33% layoff and reductions in capital spending, outsourced work, and overtime pay, though the firm pledges to not cut full-time jobs. The paper says TEL won’t be able to bring its fixed costs down too much, though, with sales at just a third of their peak.
  • Renesas took a ¥202.8B ($2.04B) hit in its fiscal year (ended in March) on -26% lower sales (¥702.7B/$7.08B), and its first operating loss (¥95.7B/$963.7M) since it was spun out in 2003. Blame sluggish demand across the board: microcontrollers (for cell phones, electronic gadgets, and automotive apps), system chips, and other products.
  • Elpida anticipates a ¥180B ($1.83B) loss for its just-completed fiscal year, nearly sevenfold the loss it posted in FY07, on -19% lower sales of ¥330B ($3.32B). The numbers, following a ¥118.0B ($1.19B) loss reported for the April-December period, suggest Japan’s sole remaining DRAM maker was still hemorrhaging red ink during the Jan-Mar quarter, the paper notes.
  • Top wafer supplier Shin-Etsu Chemical’s FY08 net profit slipped -16% to ¥154.73B ($1.56B), on -13% lower sales of ¥1.201T ($12.09B). The company has issued no earnings outlook for the current fiscal year, citing poor visibility for all of its target industries, from electronics to automotive.

    Recycling Ar gas

    Sumitomo Seika Chemicals has devised new technology to recycle up to 70% of argon gas used to remove impurities from silicon for semiconductors and solar cells, reports the Nikkei daily.

    When sprayed, argon gas takes on additional substances such as carbon monoxide, hydrogen and nitrogen, which must be removed to recycle the Ar gas. The company’s process isn’t described, but the paper says it restores the Ar gas to 99.999% purity, roughly translating to 70% of gas used by silicon plants.

    Domestic demand for Ar gas rose about 3% in 2008 to 257M m2, the paper notes, but prices have jumped about 15% over the past three years, in part due to aging equipment from gas suppliers — a chord Sumitomo Seika hopes will resonate with cost-conscious silicon manufacturers. The firm targets annual sales of ¥1B (~$10M) by fiscal 2012 for its new recycling equipment.

    From food packaging to solar panels

    Many companies are looking to break into the solar area, widely seen as a high-growth area for industries such as semiconductors and electronics. One Japanese firm has arrived at the market from a different direction, notes the Nikkei Veritas.

    Solar cell maker NPC, which is on track for a fifth consecutive year of sales and profit growth (and is confident for a sixth), holds a commanding 40% share in its market for PV module equipment; its earnings briefing on April 7 was standing-room only, the paper reports. But its path to success wasn’t always clear. The firm started off in 1992 supplying vacuum packaging machines for foods and similar products. In 1994 it received simultaneous orders from two “electrical machinery” firms — which, curiously, had nothing to do with food or other familiar markets, and were mysterious about their plans. Soon, more orders from other similar firms arrived. “We were puzzled and began looking for answers,” company president Yoshiro Chikaki told the Veritas. Ultimately, “we found out that they were using the machines to make solar cells.”

    Intrigued, the company developed a vacuum laminator to attach a protective sheet to a solar cell. With the domestic market not big enough (still in the 1990s), the firm expanded to the US and Europe — and dealt direct with its own employees, not through a contractor. This enabled it to “obtain firsthand information,” Chikaki said. “Customers are happier when people who understand the technology come to them.”

    The firm now has around 300 employees (mostly in their 30s or younger), and has business with ~90% of global solar module makers; 80%-90% of its sales are outside Japan, with factories in more than 30 countries.

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