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Telecommunication Equipment Production and Trade Figures For Q1 (April – June) 2016 – Domestic production declines for 5th straight quarter and exports also shrink –

2016-09-14

The Communication and Information network Association of Japan (CIAJ) announces the telecommunication equipment and trade figures for April through June, 2016 as follows.

Japan’s GDP during April through June 2016 grew YoY at an annual rate of 0.2% according to the preliminary figures announced by the Cabinet Office. Housing and public sector investment remained healthy, but there was not enough momentum to keep consumer spending in positive numbers and private sector continued to hold back on capital investments with lower consumer spending.

Drop in domestic demand for telecom equipment, continuation of relocating manufacturing overseas and competition from overseas brands led to the 5th consecutive negative YoY growth in the quarter since 2015QI. Exports decreased for the second straight quarter with production of mobile phones waning in China, resulting in fewer exports of parts, but the big impact was from the value of the yen rising from 2015Q4 (10.9% increase this quarter over the previous year). Lower domestic demand led to negative growth for mobile phones and data transmission equipment among imports.

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

(1)FY2016 1st quarter actual

The total value of production was 118.1 billion yen, or negative 21.3% growth over the same quarter in FY2015. All equipment categories, with the exception of wireline parts and facsimiles recorded negative growth. Categories related to housing and office building facilities did well, while those related to capital investment by enterprises did not.

(2)Trend by categories

Actual figures by categories were as follows:

[1] Wireline terminal equipment
16.2 billion yen (+20.6% over the same quarter of the previous year). Of which telephone sets was 900 million yen (+7.1% over the same quarter of the previous year) and key telephones 7.4 billion yen (+39.5% over the same quarter of the previous year), intercoms 7.6 billion yen (+10.0% over the same quarter of the previous year) and facsimiles 300 million yen (-17.5% over the same quarter of the previous year). Key telephone figures bounced back and grew with larger capacity encouraging migration from PBXs as well as value added features, such as IP compatibility.

[2] Mobile terminal equipment
36.1 billion yen (-28.1% over the same quarter of the previous year). Of which mobile phones was 26.3 billion yen (-32.8% over the same quarter of the previous year) and public-use PHS 200 million yen (-75.1% over the same quarter of the previous year). The end to \0 (carrier subsidized) mobile phones and the resulting rise in the price tag led to a large drop in demand for devices.

[3] Wireline network equipment
32.7 billion yen (-24.4% over the same quarter of the previous year). Of which central office switching systems was 2.5 billion yen (-68.2% over the same quarter of the previous year), PBX was 4.2 billion yen (22.0% over the same quarter of the previous year) and digital transmission equipment was 11.0 billion yen (-4.0% over the same quarter of the previous year) and other transmission equipment was 13.8 billion yen (-27.7% over the same quarter of the previous year). Central office switching systems saw a large drop as public switched telephone networks (PSTN) continued to migrate to IP networks.

[4]Wireless network equipment
20.6 billion yen (-27.8% over the same quarter of the previous year). Of which fixed telecommunication devices was 7.3 billion yen (-38.2% over the same quarter of the previous year) and base station equipment was 13.2 billion yen (-20.3% over the same quarter of the previous year). Demand for base stations overall is increasing in order to accommodate rising 4G traffic, but the share of imports are gaining ground and domestic production shrank as a result.

[5]Network access equipment
5.9 billion yen (-26.5% over the same quarter of the previous year). Like wireline network equipment, the wave of domestic demand has dwindled and domestic production recorded a large drop.

[6]Wireline parts
6.6 billion yen (-1.3% over the same quarter of the previous year). In addition to the drop in domestic production of mobile phones, production abroad including China, has also decreased, resulting in fewer exports and the second consequtive quarterly decrease since the fourth quarter of FY2015.

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

(1)FY2016 1st quarter actual

The total figure for exports was 109.6 billion yen (-13.5% over the same quarter of the previous year), recording the second consecutive quarter of decrease. Telephone sets and terminal equipment continued to record negative year-over-year growth, in addition to the drop in mobile phones all leading to the total negative figure. In network equipment, base stations surged by 28.5%, but data communications equipment recorded negative growth to push the entire category into negative growth over the same quarter of the previous year. Parts also fell, with less production of mobile phones in China and elsewhere.

(2)Trend by categories

Actual figures by category are as follows:

[1] Telephone sets and terminal equipment 1.3 billion yen (-1.7% over the same quarter of the previous year)
Of which, mobile phones was 600 million yen (-25.3% over the same quarter of the previous year), facsimiles was 100 million yen (-17.1% over the same quarter of the previous year), cordless handsets for landline phones was 100 million yen (-14.9% over the same quarter of the previous year) and other was 600 million yen (+41.4% over the same quarter of the previous year).

[2] Network equipment 38.7 billion yen (-1.5% over the same quarter of the previous year)
Of which, base stations was 3.8 billion yen (+28.5% over the same quarter of the previous year), data communication equipment was 33.6 billion yen (-3.7% over the same quarter of the previous year) and other network equipment was 1.3 billion yen (-8.6% over the same quarter of the previous year).

[3] Parts (both wireline and wireless) 69.6 billion yen (-19.1% over the same quarter of the previous year)

(3)Actual figures by region

By region, Asia was 79.1 billion yen (-15.9% over the same quarter of the previous year), of which China was 48.6 billion yen (-27.6% over the same quarter of the previous year). North America was 16.0 billion yen (-4.8% over the same quarter of the previous year), of which the U.S. was 15.7 billion yen (-5.4% over the same quarter of the previous year). Europe was 10.1 billion yen (+5.2% over the same quarter of the previous year), of which the EU was 9.3 billion yen (+15.8% over the same quarter of the previous year). The export of parts to China was 43.9 billion yen, accounting for 90.3% of the 48.6 billion yen total exports to China and 63.1% of 69.6 billion yen total exports of parts – all indicating high dependency on exports of mobile phone parts to China.

(4)Comparison and breakdown by regions

First: Asia72.1%(-2.1% over the same quarter of the previous year)
Second: North America14.6%(+1.3% over the same quarter of the previous year)
Third: Europe9.2%(+1.6% over the same quarter of the previous year)
Other regions:4.1%(-0.8% over the same quarter of the previous year)

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

(1)FY2016 1st quarter actual

The total figure for exports in FY2015 was 516.4 billion yen (-14.9% over the same quarter of the previous year), recording the third consecutive negative quarterly growth from the third quarter of FY2015. The lower demand for mobile phones, which makes up 62% of total imports, was the biggest impact. The domestic demand for base stations recorded 11.7% positive growth despite the low unit price.

(2)Trend by categories

Actual figures by category are as follows:

[1] Telephone sets and terminal equipment 326.4 billion yen (-11.7% over the same quarter of the previous year)
Of which, mobile phones was 322.4 billion yen (-11.7% over the same quarter of the previous year), facsimiles was 1.1 billion yen (+22.7% over the same quarter of the previous year), cordless handsets for landline phones was 1.2 billion yen (-8.7% over the same quarter of the previous year) and other was 1.7 billion yen (-24.5% over the same quarter of the previous year).

[2] Network equipment 129.1 billion yen (-18.4% over the same quarter of the previous year)
Of which, base stations was 4.4 billion yen (+11.7% over the same quarter of the previous year), data communication equipment was 120.8 billion yen (-18.9% over the same quarter of the previous year) and other network equipment was 3.9 billion yen (-28.5% over the same quarter of the previous year).

[3] Parts (both wireline and wireless) 60.9 billion yen (-22.6% over the same quarter of the previous year)

(3)Actual figures by region

By region, Asia was 482.8 billion yen (-15.1% over the same quarter of the previous year), of which China was 402.3 billion yen (-8.8% over the same quarter of the previous year). North America was 17.2 billion yen (-13.8% over the same quarter of the previous year), of which the U.S. accounted for 16.6 billion yen (-12.9% over the same quarter of the previous year). Europe was 7.8 billion yen (-8.9% over the same quarter of the previous year), of which the EU was 7.6 billion yen (-8.6% over the same quarter of the previous year).

(4)Comparison and breakdown by regions

First: Asia93.5%(-0.3% over the same quarter of the previous year)
Second: North America3.3%(0.0% over the same quarter of the previous year)
Third: Europe1.5%(+0.1% over the same quarter of the previous year)
Other regions:1.7%(+0.2% over the same quarter of the previous year)

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

CIAJ statistics for total orders received and shipped amounted to 411.7 billion yen (-10.7% over the same quarter of the previous year) for the quarter. Key telephone equipment, office-use cordless phones, intercoms, other mobile terminal equipment, other switching equipment, media converters, terrestrial fixed communication equipment, base stations and other network equipment (routers, LAN switches) recoded positive growth over the same quarter of the previous year
The total value of domestic shipments totaled 313.5 billion yen (-13.3% over the same quarter of the previous year) and exports was 98.2 billion yen (-1.4% over the same quarter of the previous year).

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