A week in tech, June 23 - 29

A round-up of all the latest tech news.

ò Sanyo and Nokia said they have dropped talks to work together on a mobile joint venture, just four months after they announced the plan. After negotiations, Nokia Corp. and Sanyo Electric Co. stated that they have decided it would be better to pursue other options, the companies said in a joint statement. Japanese electronics maker Sanyo Electric said it would invest more than $350 million in its solar cell business over five years, aiming to cash in on the growing demand for renewable energy. Sanyo, the world's fourth-largest maker of solar cells behind Sharp, Germany's Q-Cells and Kyocera, aim to more than triple sales from the business to Ñ180 billion ($1.6 billion) by the year to March 2011. Solar energy is one of the few promising units for Sanyo, which lost over Ñ350 billion ($3 billion) over the past two years as it was unable to keep up with rivals in the consumer electronics market and suffered from earthquake damage to a chip plant in 2004. Japan's third-largest consumer electronics maker said it would invest Ñ40 billion ($343.2 million) or more in its solar business by the financial year through March 2011, starting with an investment of Ñ10 billion ($85.8 million) in 2007-2008.

ò Softbank Corp. disclosed that new cell phones offered by the company's mobile arm would offer direct connections to the internet via a Yahoo portal site. The company said the move is based on their perception that users will not be happy with the small content of DoCoMo, I-more, or au Ezweb services coming from SoftbankÆs rival. For the company, mobile phones are no longer just for voice communication even as it revealed that the company would not yet expand to offer optical fiber services. Softbank said it is targeting to increase its sales of Vodafone's Japanese arm to about Ñ2.5 trillion ($21.4 billion) and raise its number of subscribers to about 26 million by the end of this fiscal year.

Media, Entertainment and Gaming
ò According to the countryÆs Ministry of Internal Affairs and Communications, the value of JapanÆs market for information and entertainment content, including newspapers, television programmes and video game software, exceeded Ñ11 trillion ($94.3 billion) in 2005 for the first time ever. The report ascribed the growth to a 28.6 percent rise in the market for online content, even though it only accounted for 6.2 percent of the overall content market. In particular, the online video game software market posted a 56.6 percent growth to Ñ91 billion ($781 million); with music software downloads, including those for mobile phones, also seeing a sharp rise of 21 percent to Ñ186.8 billion ($1.6 billion). The source said that the market for online content will continue to expand, with free Internet based content distribution services having grown rapidly since 2005. The report indicated that at the end of March the country housed 23.3 million broadband users, including 5.5 million fiber-to-the-home (FTTH) users, 14.5 million xDSL subscribers, 3.4 million cable modem customers and 16,000 fixed-wireless access (FWA) connections.

ò Game maker Konami Digital Entertainment, a top-tier mobile content provider, announced that the company has entered into a definitive agreement to acquire Blue Label Interactive (BLI). Konami and BLI together plan to enter additional mobile entertainment ventures beyond gaming. Blue Label Interactive is a mobile application developer specialising in the creation and deployment of mobile software for the entertainment industry. Konami Corporation is a leading developer, publisher and manufacturer of digital entertainment properties, specializing in the home video game market. Konami Corporation is a publicly traded company based in Tokyo, Japan with subsidiary offices, Konami Digital Entertainment, Inc. in the US and Konami Digital Entertainment GmbH, Germany, and Konami Digital Entertainment Limited in Hong Kong, China.

ò Matsushita Electric Industrial said it would launch its first digital SLR camera in Japan next month, a move that is expected to heighten the competition in the high-end segment of the camera market now dominated by Canon . Digital single lens reflex (SLR) cameras use interchangeable lenses and are generally more expensive and offer better performance than simple point-and-shoot compact models. Industry analysts say that electronic makers are keen to get into the SLR market because demand is growing rapidly and such cameras yield fatter profit margins than compact models, which are much easier to produce but whose prices are falling due to an influx of low-cost makers. Matsushita, the world's largest consumer electronics maker known for its Panasonic brand, said it would start selling its first digital SLR in Japan in July, after rival electronics maker Sony Corp. introduces its first SLR. Matsushita expects its digital SLR camera kit, which includes the body of the camera and a lens to sell for about Ñ250,000 ($2,000), roughly double the price of Sony's product.


ò Internet portals reported massive profits made through World Cup-related clip and banner ads. Daum Communications, Yahoo Korea, NHN and Naver reportedly earned a combined W10 billion ($10.4 million) in profits, at a minimum by selling ads just before the World Cup. Daum Communications said it has sold five ad packages û each worth W500 million ($522,000), and two related packages û each priced at W1.5 billion ($1.5 million). To go by this figure, Daum earned some W5.5 billion ($5.7 million) in total ad profits so far. The company has a licensing agreement with Infront Sports and Media AG, the official agency that relays World Cup events, and thus has a foothold into local online and mobile broadcast rights for all World Cup matches. Industry sources said Yahoo Korea also has earned several billion won in profits by selling ad packages priced between W50 million ($52,000) and W60 million ($62,000). Naver has only sold banner ads, allowing them to pop up on its World Cup-exclusive website.

+ VSST, a mobile solution company, said that the company co-signed with Sponge Entertainment an agreement to start the mobile image service of South Korean popular stars in China. Both companies plan to provide the real-time mobile service of the daily life of South Korean Singer Jang, Woo-huk popular in China using real-time mobile streaming solution of VSST to China. VSST, possessing the solutions of real-time mobile streaming and gateway technology related to ubiquitous sensor network plans to launch into the domestic and overseas mobile service market with 'VR-110A' solution that can send MPEG4 movie and JPEG images at the same time.

+ Industry observers say the intense competition for super slim mobile phones has rendered specifications of battery chargers used for mobile phones almost useless. Mobile phone manufacturers are now asking the government to change its policy, while the Telecommunications and Technology Association (TTA) is urging manufacturers to stop producing non-compliant products. Earlier, three wireless operators, SK Telecom, KTF and LG Telecom, and leading mobile phone companies like Samsung Electronics and LG Electronics agreed to standardise terminals of battery chargers for a 24-pin type in April 2002. With technologies and designs evolving fast, however, handsets adopting other than the standard 24-pin type have hit the market. A wide range of MP3 players, DMB handsets and digital cameras has also spurred noncompliance. TTA has been issuing certificates for chargers adopting 24-pin terminals as a part of standardization drive.

+ SK Telecom announced that it has a set up a strategic alliance with China Unicom, a move that industry observers say facilitates its entry into the Chinese market considered to be an excellent one in terms of quantity and quality. Under the deal, SK Telecom said it would buy convertible bonds worth about US$1 billion from China Unicom. SK Telecom said the move of the company was part of its plan to strengthen its competitive edge in the global marketplace. China Unicom said it would harness the deal to boost its 3G CDMA offerings. The Chinese company has some 34.2 million subscribers to its CDMA service compared to 99.7 million for GSM. The Korean company said it would add more investment in China if the Company gets a 3G-service license.

ò Soufun.com disclosed that it is targeting a possible overseas listing at yearend, a move that observers say is encouraged by the phenomenal growth of China's property markets. For the last 3 years, ChinaÆs biggest online property advertising company has seen its revenue rise twofold, and hitting about HK$20 million ($2.5 million) in 2005. SouFun's investors have included IDG and Goldman Sachs, with the latter having disposed its stake already. The newest outside investor is Dutch firm Classified Media which paid $22.5 million for a 15 percent stake in August of 2005 with an option to increase that share or go later into an outright acquisition of SouFun.

ò ChinaÆs search engine market posted combined revenues of Rmb303 million ($37.8 million) in the first quarter excluding channel revenue, according to Analysys International. The China-based internet research firm said that Baidu, the countryÆs biggest search engine, is leading with a market share of 43.9 percent, followed by Yahoo!China with 21.1 percent. Google is third with 13.2 percent. The report said that 91.4 percent of total search revenue came from search engine portals, with 8.5 percent from affiliate web sites.

ò Warner Music Group Corp. announced the signing of a deal with China Unicom Ltd. to sell music to wireless users in China. Observers say the agreement marks the first of its kind between a leading music company and a Chinese mobile operator. Industry players look to the deal as paving the way for the market to open up to the profitable distribution of music. The Chinese market has been facing the problem of piracy and the government regulations on government restrictions in ownership.

ò Huawei Technologies disclosed that it is looking to securing some $2 billion worth of contracts from potential customers in the Asia-Pacific region, which is a rise of more than 50 percent from the contracts it gained last year, in a bid to boost its expansion in the region. In 2005, the company posted total contract sales of $8.2 billion, with international sales contributing about 57 percent. In the Asia-Pacific region the company said it had already won network contracts in Thailand, Malaysia, Pakistan and Brunei, and 3G contracts in Brunei, Malaysia, Indonesia and New Zealand. Huawei said the next-generation networks for both fixed and wireless carriers will serve as the future growth drivers of its business.

ò The countryÆs Ministry of Information Industry announced that the number of cell phone users in China, the world's largest cell phone market, exceeded 420 million by the end of May. The report noted that the number of fixed-line phone users from Oct. 2003 has grown by an average of 3 million to 4 million per month. MII also reported a rapid growth in the use of text messages (SMS), with the volume of text messages sent during the 5-month period posting a 46.3 percent year-on-year increase to 167.9 billion in the first five months. The growth is reflected in the total income of postal telecommunications for the five months with its 11.4 percent year-on-year rise to Rmb287.8 billion ($36 billion).

Media, Entertainment and Gaming
ò Acorn International, operator of a home shopping TV network in China, is reportedly seeking to raise between $150 million and $200 million through a public offering on the NASDAQ. The pre-marketing for the IPO of the home shopping TV network operator is expected to begin next month. SAIF Partners, a venture capital firm, holds some $35 million investment in Acorn International, which is part of Japan-based Oaklawn Marketing. Morgan Stanley and Credit Suisse Group are the underwriters for the IPO.

ò With words of caution about higher manufacturing costs, high interest rates, and rising value of yuan, VTech Holdings, a firm that manufactures cordless telephones and toys, reported that its net profit more than doubled to hit a record $128.8 million in the year to March from $56.9 million the previous year. The company said its revenue posted a 17.8 percent growth to $1.2 billion from $1 billion, ascribing the growth to the strong sales of its educational products and goods. Vtech also explained the profit as the result of the company reversing a sharp decline in the profitability of its cordless telephone operations, which remains its biggest-selling products in the U.S, and the launching of a new toy. It sales of electronic learning devices went up by 60.7 percent to $451.7 million while its contract manufacturing revenues posted a 23.2 percent growth to $158.2 million. It registered, however, a 2.9 percent decline in its telecommunication products to $594.7 million as the company did away with unprofitable businesses and streamlined product lines. The company also revealed its plans to relocate and expand its manufacturing to its factory in Qingyuan, another city in Guangdong, which has lower costs.

ò Qiao Xing Universal Telephone Inc., a manufacturer of telecom terminals and equipment in China, posted a 42.4 percent increase in sales for its financial year ended Dec. 31, 2005 to $356.1 million, compared to $250.1 million the year before. The company ascribed the growth to the strong performance by its subsidiary CEC Telecom Co. Ltd. (CECT), a manufacturer of mobile handsets. The company said its net income for the company reached $30.8 million for the year, up from $2.8 million in 2004.

ò Advanced Optoelectronic Technology (AOT), a Taiwan-based LED packaging house announced that it has reached an agreement for licensing white-LED chip technology from Toyoda Gosei. The patent licensing agreement will enable AOT to expand operations overseas, according to the company. Under the agreement, AOT is allowed to manufacture white LEDs based on Intematix-patented technology. In 2005, AOT saw an on-year growth of 78.7 percent in shipments, with its operating profits narrowing by 50.6 percent. The company ascribed the decrease in operating income to falling prices especially in the blue LED segment in 2005. Sources indicated that more than 50 percent of AOT's total shipments currently go to its handset customers in South Korea, including Samsung Electronics and LG Electronics.

ò Industry sources said that three Taiwan-based solar cell makers, Gintech, SolarTech Energy and Neo Solar Power will soon have new solar cell capacity available capable of delivering a combined 120-megawatt peak (MWp) capacity this year. Gintech is starting production in June and July, later than the company's announced April timeframe, the sources said. The company currently has one production line, and another line will be added in November, to house an annual capacity of 60MWp. SolarTech began equipment installation during April and is currently moving ahead with test production. Sources noted that initially, annual capacity will be 30MWp. Powerchip Semiconductor Corporation (PSC) and Wafer Works have both invested in Neo Solar Power, which is in the process of setting up production facilities. Sources indicated that equipment installation should be completed during the period of August to October. Neo Solar Power is expected to reach an annual capacity of 30MWp this year.

ò Quanta Computer has recently snatched from its chief competitor, Compal Electronics, a Dell order for 1 million units of a 15.4-inch notebook model, as the US vendor continues shifting orders between suppliers in a price-slashing strategy. Quanta is expected to ship 10 million notebooks to Dell next year, retaking the crown from Compal as the US vendor's biggest notebook supplier. Quanta said it would ship a total of 8.8 million notebooks in the first half of 2006, up 25.7 percent from the same period of last year, while Compal will ship 5.5 million notebooks in the first half of this year, up 22.2 percent on-year.

ò Acer, the worldÆs fourth-largest branded personal computer vendor, announced its objective to go for a tripling of its sales in the mainland this year. The Taiwan based firm said it has set a target of more than 200 percent sales increase in value terms using its own retail network. Acer reported consolidated sales of NT$83 billion ($2.5 billion), a figure that includes the amount of NT$71.7 billion ($2.1 billion) coming from its IT product business in the first quarter to March. According to Gartner Dataquest, Acer went up from No. 7 to No. 4 in the Chinese notebook market in the same period. The company also saw its notebook computer shipments on the mainland register a 136 percent surge quarter on quarter and 208 percent year on year to hit almost 110,000 units, a figure that makes up about 8.8 percent of the market in China. The market has Lenovo Group leading by 29 percent, followed by Dell with 10 percent, and Hewlett-Packard with 9.5 percent. Acer explains the growth to its strategy of getting customers through its own network of retail outlets, an approach observers compare to DellÆs direct sales.

ò Taiwan Semiconductor Manufacturing Co released its forecast stating that the global integrated circuit (IC) industry will be able to sustain steady growth over the next 10 years. According to the TSMC spokesperson, the IC sector has come to an agreement that the industry will continue to post steady growth at about 8 percent, between 2005-2015. The report took note of how the global semiconductor industry went through a period that saw an average 21 percent growth in 1985-1995, followed by an adjustment period of about 5 percent in 1995-2005. The report also indicated that the semiconductor industry was riding on a rapidly growing consumer electronics business, featuring cheap and user-friendly mobile communications devices and the huge market in the developing world.

Hong Kong

ò PCCW Limited announced on June 19, 2006 that it had received a non-binding expression of interests from Macquarie Bank Limited and TPG Newbridge, both in relation to a possible acquisition of substantially all the telecommunications and media related assets of the Company. The Company would evaluate the merits of both possible acquisitions and believes it is in the best interests of the Company and its shareholders as a whole to continue discussions with the potential acquirers in relation to both possible acquisitions. The Company's financial advisor, Lehman Brothers Asia Limited, will be reviewing the merits of both proposals and advise the Company accordingly. In each case, the possible transaction which has been proposed is an acquisition of the Company's telecommunications and media assets, together with a transfer of the employees and staff of the businesses to be acquired, and would not involve the acquisition of shares in the Company.


ò Tech.Mahindra, one of India's top software exporters, announced its plans to set up its Asian regional headquarters in Singapore next month. The company said it is also investing $5 million over the next two years and quadrupling its staff from 70 to 300 by the end of 2007. Under this plan, Tech Mahindra said it is going to base its international gaming business in Singapore, where it will do activities related to the development of mobile and interactive content. The company said the move to select Singapore, as its regional hub, is part of an overall strategy to gain access to China, Hong Kong as well as Macau.

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