A week in tech - part 1

All the latest tech news from Japan, Korea and Taiwan.

Japan

Hardware

- Sanyo Electric plans to develop and market direct methanol fuel cells, which produce electricity when hydrogen extracted from the methanol reacts with oxygen in the air. The company has already set up a special development team at a facility in Gunma Prefecture. By using technology already being developed for household-use fuel cells, Sanyo Electric aims to expedite its development and commercialization of the small fuel cells for use in electronic devices. Sanyo Electric intends to keep the size and prices of these fuel cells about the same as existing lithium ion batteries.

Information Technology

- Quantum computing is one step closer to being realized as NTT Basic Research and the Japan Science and Technology Corp have developed a device that facilitates the storing and manipulating of qubits that can be integrated in groups of 1,000 or more-- the minimum level of integration for a practical quantum computing circuit. The new qubit element is made from three long electrodes and two short electrodes laid side by side alternately on the semiconductor surface. The semiconductor material is then processed with an electron beam in a special way that causes electrons to accumulate in the two regions where a short electrode is sandwiched between two long electrodes.

Mobile / Wireless

- Japan's June domestic shipments of mobile phones rose 19.6 per cent on the year to 4.7 million units, the Japan Electronics and Information Technology Industries Association (JEITA) announced. The number shipped is the highest since April 2001, when JEITA began releasing the data. JEITA believes that existing mobile phone users are replacing older phones with new models that include cameras with high pixel counts.

Software

- Toshiba IT-Solutions Corp. will begin a service for corporations and municipal governments that offers to convert their Unix software into versions that run with Linux. For its new Linux migration service, the company has tied up with the U.S. firm MigraTEC Inc. Toshiba IT-Solutions will evaluate whether programs and software that now run on Unix machines can run on Linux, and, if so, use MigraTEC's cross-platform conversion technology to automatically conduct the conversion process. With MigraTEC's technology, conversions that would take programmers at least six months to finish can be completed in just two to three months.

Telecommunications

- In a move that could trigger a wave of mergers and acquisitions, bankers arranging Japan's first big leveraged buyout are offering near-record fees to lure prospective lenders. Since early this year, Ripplewood Holdings LLC has been negotiating a ¥260 billion (US$2.2 billion) leveraged buyout of the fixed-line business of Japan Telecom Holdings Co., which is controlled by Vodafone Group PLC of the U.K. Ripplewood has been assembling a group of banks to finance 80% of the cost. Lenders being asked to join that group stand to earn a rich reward in the form of a fee paid to participants when they commit to join the deal. Those fees, which run as high as 2 per cent of the amount a bank is willing to lend, may be common in the U.S., but they are among the highest ever seen in Japan. The deal is the first big transaction in Japan to be done as a U.S.-style leveraged buyout and could lead to a sharp increase in Japanese mergers and acquisitions.

Korea

Internet

- The Ministry of Information and Communication said that it would implement a simpler Internet address system that utilizes telephone numbers in the first half of 2004. The project, known as eNUM (tElephone NUmber Mapping), would promote the development of core technologies as part of efforts to catch up with the global trend of telecommunication and Internet infrastructure convergence. The ministry originally planned to commercialize the technology early this year, but delayed the project due to a slew of technology issues that are yet to be resolved. The new telephone-number Internet address system is expected to have a great impact on the country's Internet market.

- The Korean government announced that it would introduce an electronic voting system for all political elections starting in 2005. The new voting system will be applied on a trial basis from next year when the government will allow local citizens to vote on its major policies. The plan is part of government efforts to put all state agencies online to create an "e-government," which would link people to government services and data via the Internet. To promote political participation, the government will set up an online information center by 2005 where people can get easy access to all public government information. It will also try to handle as much as 85 per cent of civil affairs administration online, up from the current 15 per cent.

Mobile / Wireless

- LG Electronics said that it has introduced two high-powered video handsets with maximum recording times of 60 minutes, due to their bigger memory capacities. The new videophones - the LG-SV130 and the LG-KV1300 - are armed with memory capacities of 96 megabytes each, while allowing users to download video and audio files over the cdma2000 1x EV-DO network. LG's videophones, which belong to the company's Cyon lineup, are equipped with 300,000-color digital video cameras, while fully supporting MMS, or multimedia messaging service.

- Korean exports of mobile handsets posted a record high for the year in July, bouncing back from the sluggish overseas sales in the past two quarters. The Ministry of Information and Communication said that the exports of mobile handsets in July jumped by 15.6 per cent to US$1.1 billion, marking a 53 per cent increase compared with the same period of last year. Samsung Electronics Co., the nation's largest handset maker, sold about 4 million units last month in overseas markets. It recorded sales of 3.8 million units in June, recovering from the past two quarters' falling sales

- Korea's mobile carriers are expected to slash the fees for the popular caller identification service as early as January 2004, pressured from civic groups and government officials. SK Telecom has considered cutting the rate it charges for caller ID service by as much as 50 per cent and would consult with telecommunications regulators to decide the detailed schedule and scope of the rate cut.

- Korea's mobile service operators are facing off ahead of the planned number portability system and in so doing making the wireless market-- which serves more than 33 million subscribers on the cdma2000 1x EV-DO network-- extremely competitive. A case in point is KTF's introduction of new low-priced subscription plans, a step that is aimed at targeting SK Telecom client base. Other newly introduced plans allow unlimited minutes amongst two phones on the same network. SK Telecom's network is partially protected from the number portability competition as its network is different from those of KTF and LG Telecom and subscribers would have to purchase new handsets when switching. In light of this fact, KTF may face a serious challenge from LG Telecom as they share the exact same CDMA network technology.

Telecommunications

- Dacom Corp. said it swung to a second-quarter net loss of 30.6 billion won (US$26 million) from a year-earlier profit of 5.6 billion won (US$4.8 million), due to higher competition, loan-loss provisions and higher interest payments for its purchase of a Powercomm stake. Dacom posted a 7% drop in revenue to 242.6 billion won (US$250.9 million) from 262.1 billion won (US$222.5 million). The company also swung to an operating loss of 6.5 billion won (US$5.5 million) from an operating profit of 25.3 billion won (US$21.5 million) in the previous year. Dacom said it incurred a one-time loss on bad debt of 20.3 billion won (US$17.2 million) in the quarter, which hurt the company's bottom line. Dacom said its second-quarter EBITDA, totaled 37.2 billion won (US$31.6 million), down from 67.2 billion won (US$57 million).

Taiwan

Hardware

- Hon Hai Precision Industry Co., Taiwan's largest electronics manufacturer, expects profit growth to ease by 7 per cent in the second quarter after sales expanded at their slowest pace in more than five years amid the SARS outbreak. Hon Hai, which makes PlayStation2 video-game consoles for Sony and personal computers for Hewlett-Packard Co., will report net income of NT$4.4 billion (US$128 million) from NT$4.1 billion (US$11.9 million) a year ago. Sales rose by a similar percentage to NT$61.3 billion (US$1.8 billion) from NT$57.5 billion (US$1.7 billion). Sales growth tumbled below 35 per cent for the first time since at least 1998 as Sony shipped fewer PlayStation2 consoles, while SARS may have affected computer and other orders. Hon Hai boosted annual sales more than 10-fold between 1997 and last year, benefiting from a trend of brand-name electronics companies contracting out their manufacturing.

A week in tech is brought to you by FinanceAsia, and IRG, Asia's boutique investment bank to the telecoms, media and tech sectors. More can be found at www.irg.biz

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