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EPTE Newsletter from Japan: Yen Slides to Record Low

The Japanese yen slid to its lowest level in almost seven months compared to the U.S. dollar. The latest exchange rate is 104 yen for one U.S. dollar, a 5% depreciation from last month. Less than a year ago, the exchange rate was 80 yen for one U.S. dollar. Year-over-year, the value of the Japanese yen has declined more than 30%. 

 The Japanese stock market is soaring as a result of the yen tumbling in value. The Nikkei Stock Average closed at 15,870, a 52% increase year to date. Those who are fortunate enough to be invested in the Japanese stock market are enjoying some new-found wealth. 

Japanese-based companies with overseas business are also reaping the benefits of a weakening yen. Automobile manufacturers will post record profits for fiscal year 2013. They are spreading the wealth amongst their employees by paying out year-end bonuses. Many have communicated that this is a one-time bonus based on a profitable year and that salaries will not increase next year due to uncertainties in the market.

Unfortunately, there are some negative consequences of a weakening yen. The costs of imported materials has increased steadily throughout the year. The hardest hit were electric power companies that buy large amounts of oil and natural gas. Japan’s energy imports surged after the nuclear crisis in 2011 forced the shutdown of the country’s nuclear reactors. The declining value of the yen pushed up energy costs significantly in 2013. Japan recorded a minus record in trade for the year.

Japanese electronics companies are not reaping any benefits from a weakening yen. They have slowly outsourced most of their manufacturing needs to China and other Asian countries over the last two decades. It is extremely difficult to flip the switch and return manufacturing to Japan. Printed circuit manufacturers and part manufacturers are in the same boat and remain pessimistic with future market trends. Financial companies have a very optimistic forecast for the new year--I too will have a very optimistic forecast for 2014!

Dominique K. Numakura, dnumakura@dknresearch.com DKN Research, www.dknresearchllc.com

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Headlines of the Week

(Please contact haverhill@dknreseach.com for further information on the news.)1. Mitsubishi Material (Major material supplier in Japan) 12/5The supplier has developed a new DBA printed circuit board with thick copper conductors for next-generation power modules.2. Panasonic (Major electronics company in Japan) 12/6The company has developed new evaluation equipment for large-scale fuel cells used in automobiles.3. AIST (Independent R&D organization in Japan) 12/6The organization has developed a new flexible, dye-sensitized photovoltaic cell with an 8% conversion rate via a room temperature process available for RTR.4. Fujitsu Semiconductor (Device manufacturer in Japan) 12/10The manufacturer has developed new hybrid package technology for DDC technology and a flash memory cell for low-energy consumption devices.5. Solar Frontier (Photovoltaic cell supplier in Japan) 12/10The supplier has set a new record--a 12.6% conversion rate--with CZTS photovoltaic cell devices.6. AIST (Independent R&D organization in Japan) 12/12The organization has developed a new in-plant wiring process with carbon nanotubes for TSV of semiconductor chip providing a higher conductivity.7. Hirosaki University & Tohoku University (Japan) 12/13The university has co-developed a new magnetostrictive material for vibration power generators and wireless sensors.8. TSMC (Major semiconductor manufacturer in Taiwan) 12/16The manufacturer has increased its bumping process capacity to 150,000 300 mm wafers per month--a move that could be valuable for ASE waste water treatment.9. Foxconn (Major EMS manufacturer in Taiwan) 12/17The manufacturer plans volume production of middle- and small-size OLED in 2015 at an Innolux plant in Taiwan.

10. Toray Dow Corning (Major silicone resin supplier in Japan) 12/17The supplier has commercialized a new silicone rubber adhesive resin with high heat conductivity for automobile electronic devices.

11. JUKI (Equipment manufacturer in Japan) 12/19The manufacturer has unveiled a new optical inspection machine, “RV-1,” for component-mounted circuit boards. It viable with screen-printed solder paste.

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