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Telecommunication Equipment Production and Trade Figures For FY2015 (April – March) – Domestic production falls with slow economy and production shift abroad –

2016-06-29

The Communication and Information network Association of Japan (CIAJ) announces the telecommunication equipment and trade figures for FY2015 April through March) as follows.

In FY2015, the private sector held back on capital investments with lower consumer spending and business earnings and the added risk of slowing economies in China and emerging markets. Demand for telecom equipment droped as a result and the continuation of relocating manufacturing overseas led to a significant drop in the total domestic production of telecommunication equipment and the 11th consecutive negative growth. By equipment category, the switch to overseas production impacted terminal equipment, while shrinking domestic demand resulting from the tapering off of an earlier surge in demand for newtork equipment.

The total value of exports in FY2015 recorded the third consecutive year-over-year growth fueled by robust demand for mobile phone parts (mostly for smartphones). The total value of imports grew year-over-year for the sixth consecutive year, helped by mobile phones (steady single-digit growth from FY2014) and data communication equipment.

I. Domestic Production
(Based on Indices of Industrial Production compiled by the Ministry of Exonomics, Trade and Industry)

(1)FY2015 actual

The total value of production in FY2015 was 740.9 billion yen, or negative 18.9% growth over FY2014 recording the fourth consecutive year of two-digit decline. All equipment categories, with the exception of wireline parts and facsimiles recorded negative growth.

(2)Trend by categories

Actual figures by categories were as follows:

[1] Wireline terminal equipment 62.8 billion yen (-9.6% over FY2014).
Of which telephone sets was 3.5 billion yen (-9.0% over FY2014) and applied telephone equipment 57.5 billion yen (-10.0% over FY2014). Key telephones was 24.3 billion yen (-9.4% over FY2014), intercoms 33.1 billion yen (-10.4% over FY2014) and facsimiles 1.8 billion yen (2.5% over FY2014).

[2] Mobile terminal equipment 242.3 billion yen (-16.6% over FY2014).
Of which mobile phones was 187.1 billion yen (-1.8% over FY2014) and public-use PHS 2.7 billion yen (-57.7% over FY2014). The popularity of smartphones led to a 1.8% year-over-year increase in sales by major carriers to 46.1 million devices (*1). The shift to production overseas, had recorded between 27% to 38% year-over-year declines in domestic production from FY2012, but in FY2015, the total figure remained relatively steady with a 1.8% decline.
(*1): Based on figures announced by NTT Docomo, KDDI and Softbank in May, 2016: New subscribers + existing subscribers switching devices

[3] Wireline network equipment 177.8 billion yen (-26.2% over FY2014).
Of which switching systems was 49.1 billion yen (-39.6% over FY2014) and transmission equipment 127.8 billion yen (-19.4% over FY2014). Central office switching systems saw a large drop of 58.6% as public switched telephone networks (PSTN) migrated to IP networks. There was a significant decline in the transmission equipment category, with the tapering off of the demand for wireline mobile network base stations and the shift to overseas production led to the 22.1% decline in demand for digital transmission equipment.

[4] Wireless network equipment 194.9 billion yen (-17.9% over FY2014).
Of which fixed telecommunication devices was 58.0 billion yen (-23.6% over FY2014) and base station equipment was 161.3 billion yen (-15.2% over FY2014). Rapid implementation of LTE/4G mobile infrastructure fueled domestic production (+33.5%) and exports (+249.7%) in FY2014, but then tapered off in FY2015 to record the first negative figure for domestic production in five years.

[5] Network access equipment 36.1 billion yen (-28.4% over FY2014).
Like wireline network equipment, the wave of domestic demand has dwindled and domestic production recorded a large drop.

[6] Wireline parts 27.0 billion yen (+10.6% over FY2014).
Robust overseas production of smartphones and data transmission equipment combined with the scarce local availability abroad of wireline parts contributed to the 6th consecutive positive growth in domestic production.

(3)Forecast for Japanese economy and the industry in FY2016

Government policies are expected to show their impact and nudge the overall Japanese economy towards gradual recovery in FY2016. However, the slower growth among Chinese and emerging markets together with the stronger yen has made businesses wary of making capital investments. Combined with the current telecom market relying mainly on replacement demand, we foresee a continuing decline in demand for mobile terminals and network equipment. Looking forward, it will be vital for Japanese companies to enhance their global competitiveness to increase their share in markets overseas, where the demand is expected to grow.

II. Exports
(Based on Indices of Industrial Production compiled by the Ministry of Exonomics, Trade and Industry)

(1)FY2015 actual

The total figure for exports in FY2015 was 563.8 billion yen (+14.7% year-over-year growth), recording positive growth for the third consecutive year. Telephone sets and terminal equipment continued to record negative year-over-year growth, pulled down again following FY2014 by the drop in mobile phones. In network equipment, base stations plummeted by 50.3%, but data communications equipment recorded the third consecutive growth to nudge the entire category into positive growth. Parts continued to grow significantly, helped especially by demand from China.

(2)Trend by categories

Actual figures by category are as follows:

[1] Telephone sets and terminal equipment 5.4 billion yen (-19.8% over FY2014)
Of which, mobile phones was 2.4 billion yen (-33.0% over FY2014), facsimiles was 0.3 billion yen (-9.5% over FY2014), cordless handsets for landline phones was 0.3 billion yen (+26.2% over FY2014) and other was 2.4 billion yen (-6.7% over FY2014).

[2] Network equipment 181.5 billion yen (5.8% over FY2014)
Of which, base stations was 12.5 billion yen (-50.3% over FY2014), data communication equipment was 163.7 billion yen (+15.9% over FY2014) and other network equipment was 5.3 billion yen (+0.9% over FY2014).

[3] Parts (both wireline and wireless) 376.9 billion yen (20.3% over FY2014)

(3)Actual figures by region

By region, Asia was 423.3 billion yen (+22.7% over FY2014), of which China was 287.5 billion yen (+31.0% over FY2014). North America was 80.0 billion yen (+8.7% over FY2014), of which the U.S. accounted for 78.9 billion yen (+9.5% over FY2014). Europe was 39.2 billion yen (+9.6% over FY2014), of which the EU was 33.9 billion yen (+13.7% over FY2014). Exports to China accounted for 67.9% of exports to Asia, indicating the fourth consecutive expansion in the region. The export of parts to China was 265.6 billion yen, accounting for 92.4% of the total exports to China and 70.5% of all exports of parts.

(4)Comparison and breakdown by regions

First: Asia75.1%(+4.9% over FY2014)
Second: North America14.2%(-0.8% over FY2014)
Third: Europe6.9%(-0.4% over FY2014)
Other regions:3.8%(-3.7% over FY2014)

III. Imports
(Based on Indices of Industrial Production compiled by the Ministry of Exonomics, Trade and Industry)

(1)FY2015 actual

The total figure for exports in FY2015 was 2.725 trillion yen (+0.8% year-over-year growth), indicating slower growth from FY2014. In mobile phones, which makes up 64% of total imports, despite upgrade demand for handsets bought in FY2013, upgrade cycles are becoming longer and was only 2.3% year-over-year growth. The value of data communications equipment also recorded positive growth.

(2)Trend by categories

Actual figures by category are as follows:

[1] Telephone sets and terminal equipment 1.765 billion yen (+2.1% over FY2014)
Of which, mobile phones was 2.4 billion yen (-33.0% over FY2014), facsimiles was 0.3 billion yen (-9.5% over FY2014), cordless handsets for landline phones was 0.3 billion yen (+26.2% over FY2014) and other was 2.4 billion yen (-6.7% over FY2014).

[2] Network equipment 647.7 billion yen (0.1% over FY2014)
Of which, base stations was 14.9 billion yen (-77.7% over FY2014), data communication equipment was 608.9 billion yen (+9.6% over FY2014) and other network equipment was 23.9 billion yen (-3.6% over FY2014).

[3] Parts (both wireline and wireless) 312.8 billion yen (-4.4% over FY2014)

(3)Actual figures by region

By region, Asia was 2.559 trillion yen (+0.7% over FY2014), of which China was 2.225 trillion yen (+5.1% over FY2014). North America was 83.0 billion yen (+2.6% over FY2014), of which the U.S. accounted for 79.0 billion yen (+2.0% over FY2014). Europe was 38.7 billion yen (-7.0% over FY2014), of which the EU was 37.9 billion yen (-7.4% over FY2014).

(4)Comparison and breakdown by regions

First: Asia93.9%(-0.2% over FY2014)
Second: North America3.0%(0.0% over FY2014)
Third: Europe1.4%(-0.1% over FY2014)
Other regions:1.6%(+0.1% over FY2014)

IV. Trends in Orders Received and Shipped
(from CIAJ statistics)

CIAJ statistics for total orders received and shipped amounted to 2.498 trillion yen (-9.2% over FY2014). Applied telephone equipment, smartphones, PBXs, satellite communication equipment, and other network equipment recorded positive year-over-year growth, while facsimiles non-smartphone mobile terminal equipment, central office switching equipment, transmission equipment, terrestrial communication equipment, base station communication equipment and communication equipment parts recorded negative growth. The total value of domestic shipments totaled 1.620 trillion yen (-7.3% over FY2014) and exports was 430.2 billion yen (-15.7% over FY2014).

For details, contact

Market Research
CIAJ
tel: 81-3-5403-9356 fax: 81-3-5403-9360

For more general inquiries, contact

Corporate Communications
CIAJ
tel: 81-3-5403-9351 fax: 81-3-5403-9360