Matsushita and Sony Focus on Electronic Parts

by News Editor
Published on Dec 23, 2003 12:00 AM



Matsushita Electric Industrial Co. and Sony Corp. are focusing attention on electronic parts production, which could determine the success of their advanced digital appliances. Matsushita Electric Industrial will turn its affiliate Matsushita Electric Works Ltd. into a consolidated subsidiary to enhance production of a wide variety of parts from semiconductor materials to glass substrates. Sony is also pursuing its proprietary technologies to form the core parts of its advanced products to provide a springboard for future growth.

Currently Matsushita Electric Industrial, Toshiba Corporation’s postage stamp-size, 2-gram metallic memory card is selling quickly. With a higher cost than its weight in gold, domestic shipments of the SD Memory Cards are projected at 18 million units in 2003, a surge of 190% from the year earlier. The memory card, released by Toshiba and U.S. computer maker SanDisk Corp. is priced at about 10,000 yen for a storage capacity of 256 megabytes and at nearly 30,000 yen for 512 megabytes. Both types of cards have been in short supply, prompting producers to boost output. ’’If consumers buy an SD card-compatible Panasonic product, they will consider using such a card for other products they buy,’’ said Shunzo Ushimaru, manager of Matsushita's Panasonic marketing division.

Sony's Memory Stick, a similar device to the SD card, is also selling briskly, with annual sales rising 90% to 16.5 million units.

The functionality of digital home appliances is reliant on key components. For example, Matsushita Electric Industrial has established the PEAKS technology for flat-panel, large-screen television sets, which processes all video signals in digital form to achieve optimal picture quality. The technology allowed the company to develop semiconductor, image-processing technology and flat screens simultaneously.

Kunio Nakamura, president of Matsushita Electric Industrial, decided to bolster its electronic parts division partly because of the high profitability of electronic parts makers based in the Kansai region. Both Rohm Company and Murata Manufacturing surpassed their fiscal first-half operations to earnings ratio. Rohm Co.'s operating profit to its sales on a consolidated basis stood at 27.8% and that of Murata Mfg. Co. at 13.1%, both far surpassing the 5% target set by Matsushita.

Sony is following a similar strategy, intensifying efforts in core parts in its advanced products division. In one example, its optical disk with a diameter of 6cm and half the size of a compact disk is capable of saving 1.8 gigabytes of data. It is a built-in memory device for its new PSP portable game machine, slated to be released late next year by Sony Computer Entertainment Inc. The palm-size game console, which Sony pitches as a ’Walkman of the 21st century,’ records and shows movies and music with comparable quality images and sound to those provided by DVD recorders.

Sony weaves its latest technologies like integrated circuit processing and image compression into the microchip of the PSP game unit.

Although Sony has suffered declining profitability at its electronics division, it enjoys exceptionally lucrative profit margins of over 10% on sales of digital cameras and camcorders, for which the company has become involved in the development of key elements like the charge-coupled device. Sony Vice President Ken Kutaragi said confidently, ’’Competitiveness lies in the performance of semiconductors in the days of digitalization,’’ referring not to commodity chips such as DRAMs but to system LSIs.