A week in tech

All the latest tech news from around the region



- NEC Corp. and Mitsubishi Electric Corp. both posted weak net profits for the fiscal first quarter, but stronger operating profits suggest the two Japanese electronics companies might be getting back on their feet . NEC said its net profit plunged 90% to ¥700 million (US$5.8 million)for the quarter ended June 30, from ¥7.2 billion (US$60.3 billion) in the year-earlier period, when itincurred a huge extraordinary gain on securities sales. Mitsubishi Electric said net fell 23% to ¥658million (US$5.5 million) from year-earlier net of ¥857 million (US$7.1 million) amid losses on itsinvestment in Renesas Technology, a semiconductor joint venture in Japan it has with Hitachi. Theelectrical machinery maker's operating profit rose 16% to ¥9.0 billion (US$75 million) from ¥7.7 billion(US$64.4 million), and the company maintained its earnings forecast for the first half throughSeptember. The results suggest NEC and Mitsubishi Electric are growing stronger in the face of fierceglobal competition in the electronics industry, where rivals have been slashing prices.

- Fujitsu Ltd. and IBM Japan Ltd. have each succeeded in developing and finding customers for low-cost supercomputers. In both cases, the companies were able to develop the machines with highcomputational power and market them for about one-tenth the cost of standard supercomputers. Theyachieved this by using the free Linux operating system and stringing together multiple commodity-grademicroprocessors -- commonly used in personal computers -- to enable parallel processing. Traditionalsupercomputers use specialized operating systems and microprocessors.

- Key parts of digital cameras and personal computers with improved DVD functions are increasingly in short supply , forcing makers of the cameras and PCs, whose sales have been rapidlygrowing recently, to postpone the release of new models. Particularly in short supply among digitalcamera parts are charge-coupled devices (CCDs), which act as the eye in such cameras. As for PCs withimproved DVD functions, optical pickups -- devices used to store large amounts of DVD data -- arealso in short supply. Optical pickup makers have been hastily increasing production, but have beenunable to keep up with the surging demand.

- NEC Corp. said it will consolidate its eight research and development centers in Japan into five centers this fiscal year ending March 2004. NEC aims to strengthen its R&D activities by centralizingoperations in several important areas, including information technology, networks, semiconductors andnanotechnology, the Japanese electronics maker said. The move is also in line with NEC's strategy toposition its offices in the area around Tokyo Bay as its core technology center.

Information Technology

Nippon Telegraph and Telephone Corp., Hitachi Ltd., and Mitsubishi Electric Corp. have jointly developed next-generation digital signature technology that offers more enhanced securityfeatures than those currently available. They will employ the new technology in their smart cards andother products and aim to grab a big share in the digital signature market for electronic government.Electronic signatures are designed to help identify the senders of electronic documents and replacetraditional signatures and personal seals. Experts have pointed out that the encryption technology nowwidely used can easily be compromised. So NTT, Hitachi and Mitsubishi Electric have adopted a newtechnology called the elliptic curve cryptosystem, which is suited for equipment with lower processingcapacity and thus is more easily installed in mobile phones and smart cards, which are believed to beused most frequently in e-government and e-commerce.


- The number of subscribers to broadband Internet access services in Japan came to 10.9 million as of June 30, a rise of 451,000 over the preceding month, the government said. The number hadeclipsed the 10 million lines only on May 31, the Ministry of Public Management, Home Affairs, Postsand Telecommunications said. Most of the high-speed access contracts were for asymmetric digitalsubscriber line (ADSL) services, whose subscribers totaled 8.3 million, up 349,000 over the precedingmonth. They were followed by those who surf the Internet via cable television at 2.2 million, up 41,000over the preceding month.

Life Sciences

- Post Genome Institute Co. (PGI) aims to expand its line of protein synthesis kits to include more profitable custom orders. The bio-venture firm is also planning a private placement of newshares to procure funds for more equipment and technicians. PGI intends to release customized kitsbased on its Puresystem Classic line of kits that were introduced this spring. Following proteinspecifications provided by the customer, PGI will put together a customized kit that contains the DNA,amino acids and enzymes necessary to synthesize and purify the requested protein. The client will beable to synthesize the protein in around three hours. The firm plans an allotment of new shares aroundSeptember to boost its capital from the present ¥353 million (US$2.9 million) to as much as ¥500million (US$4.2 million).

Media, Entertainment and Gaming

- Japanese Internet portals and net service providers are turning their attention to movies as a new source of income. Firms are trying to lure customers at shopping sites into buying movie-relatedgoods by attracting them with free previews and a movie database. Excite Japan Co. is building adatabase containing information on 35,000 movies. The firm believes that the database will help todraw net users to its site, although the database itself will not generate profit. Yahoo! Japan Corp. is setto also create a database of 26,000 movies by the end of the year. The firm plans to make as many oldpreviews as possible available to customers. The Yahoo! database will also offer information on 8,000movie DVDs, with a view to boosting DVD sales through its shopping site and starting an online DVDrental service. Movie goods are becoming hot items on net shopping sites. The Biglobe earned about¥12 million (US$100,000) in combined sales of goods related to a Japanese movie called "Battle RoyaleII" in the past several weeks, doubling store sales.

Mobile / Wireless

- NTT DoCoMo Inc. and two other major cellular phone companies are set to expand their lineups of cell phones with a built-in charge-coupled device (CCD) camera featuring 1 million ormore pixels. Sharp Corp. is expected to supply them with cell phone digital cameras with 2 millionpixels, almost the same as the pixel count in low-end digital cameras. The improved image quality of cellphones has already started impacting shipments of conventional camera models. DoCoMo, J-Phone andau-brand cell phone firms started selling cell phones with cameras featuring 1 million pixels or more inMay. DoCoMo sold a total of 1.3 million units of such cell phones by the end of July. From October,DoCoMo will release cell phones with a camera featuring 1 million or more pixels -- made by NECCorp. and Panasonic Mobile Communications Co., which have never supplied such cameras toDoCoMo before. J-Phone and au-brand firms, both of which have so far had only a single cell phonemodel with a camera of 1 million or more pixels, will also expand their lineup of such cameras in themonths to come.


- Tokyo Electron Ltd. reported wider losses for the April-June quarter, as it continued to suffer from slumping sales of its mainline semiconductor-production equipment. Tokyo Electronposted a group net loss of ¥10.4 billion (US$86.3 million) in the three months ended June 30, comparedwith the ¥4.2 billion (US$34.7 million) loss in the year-earlier period. It had a group operating loss of¥8.3 billion (US$69.1 million), compared with a loss of ¥6.1 billion (US$51.2 million) in the prior year.Group revenue dropped 4.9% to ¥87.8 billion (US$731.5 million) from ¥92.3 billion (US$769.3million).


- Nippon Telegraph and Telephone Corp. believes that the obligation to make its fiber-optic networks available to other telecommunications service providers is unfair. Non-NTT carriersinsist that the obligation imposed by the government should remain intact, but NTT is dissatisfied withthe current situation in which investment burdens to install fiber-optic cable are concentrated solely onthe firm. Other carriers such as KDDI Corp. are planning to develop operations by leasing networksfrom NTT. NTT believes that fees that other service providers are charged for use of its networks areinsufficient. Some sources report that the fees account for about one-quarter of actual costs.

- Japan Telecom Holdings Co. will introduce a computer system to put records of its clients' transactions on a Web site by collecting all related documents in dedicated servers, company sourcessaid. The system, intended to help marketing efforts aimed at its corporate customers, will allow bothJapan Telecom's staff and customers to see on a Web site all contracts, e-mail and other documents thatboth sides have exchanged. It will facilitate the continuation of business even when the person incharge of such transactions at a corporate customer changes, the sources noted. The system will enableclients to send/receive estimates and application forms to/from Japan Telecom through the site. Theycan also see the degree of congestion in communications services as well as records of all the servicesthey have used.

- Nippon Telegraph and Telephone Corp. and 21 other telecommunications and electrical machinery firms are set to agree on a common standard for the transmission of high-quality images compatible with household televisions. In addition to NTT, Matsushita Electric IndustrialCo., Pioneer Corp. and Sharp Corp. will work on establishing the standard. And NEC Corp., CiscoSystems Inc. and Sumitomo Electric Industries Ltd., among others, will undertake telecommunicationsinfrastructure-related tasks. Using broadband technology, the firms will work on a common standardthat will allow for the transmission of text and images on TV screens that have inferior resolutioncompared with personal computers. The standard will also apply for such processes as accessing serversthat store information, telecommunications protocols, and operating procedures. The standard willenable TVs and telecom devices made by different firms to transmit high-definition images amonghouseholds and businesses. It is also expected to make large-screen TV phones possible.



- LG Corp. is negotiating with a consortium led by American International Group Inc. for an equity investment in Hanaro Telecom Inc., which would help shore up the financial position of thehigh-speed Internet access provider. The investment of 200 billion won to 300 billion won (US$169million to US$254 million) would be in addition to a 500 billion won (US$421.9 million) rights offeringLG Corp. already has proposed for Hanaro. Hanaro has struggled to maintain its foothold in anindustry in which intense competition has forced two Internet service providers -- Korea Thrunet Co.and Onse Telecom -- to file for court receivership. LG Corp., the holding company of South Korea'ssecond-largest conglomerate, LG Group, is the largest shareholder in Hanaro, with a combined 15.9%stake through its various affiliates.

- Samsung Electronics remained the world's second-largest supplier of liquid crystal display TVs in the first three months of the year but its market share was still less than half of the top-placed Sharp Electronics, according to the latest market survey. Display Search, a leading industry researchgroup, announced that production of LCD TVs in the first quarter grew 47 percent from the previousquarter and 223 percent year-on-year. The output totaled 734,000 units. In terms of market share, theKorean electronics maker ranked second with 20 percent. It trailed Sharp, which controlled 43 percent,down from 52 percent recorded in the previous quarter. Samsung and Sharp posted 57 percent and 22percent quarterly gains in sales volume, respectively, the survey showed. The research firm forecast thatLCD TV output in the second quarter would grow 224 percent in the year and 20 percent on thequarter.


- Microsoft Korea raised concerns by commencing the display of liquor advertisements on its MSN Messenger service. The software giant announced yesterday that it clinched its firstadvertisement contract with a foreign liquor firm and is ready to launch large-scale promotionalcampaigns for alcohol products in the next couple of months through its newly rolled-out MSNMessenger version 6. MSN Messenger is one of the most popular instant messaging services and itboasts about 6.5 million users in Korea. The company's move, however, prompted concerns fromobservers that it could expose the younger generation, which makes up a large part of the MSN service'suser base, to indiscriminate liquor advertisements.

Life Sciences

Korean scientists have developed a functional DNA chip containing information on 60,000 rice genes, which will enable prompt and massive gene comparison. The DNA chip, which is similar to acomputer chip but imbedded with DNA molecules instead of electronic circuitry, was designed to probea biological sample for genetic information that would indicate whether the sample has a geneticpredisposition for certain biological traits.


- SK Telecom Co. reported a 19% rise in second-quarter net profit from the year-earlier period, helped by an increase in subscribers and greater revenue from wireless Internet data services. SouthKorea's largest wireless operator posted a net profit of 548 billion won (US$463.7 million) for the threemonths ended June 30, up 19% from the 461 billion won (US$389.0 million) reported in the prior year.Revenue rose 13% on year to 2.4 trillion won (US$2 billion) from 2.1 trillion won (US$1.8 billion).

- KT Corp. has seen its profit fall 33 per cent to 325.5 billion won (US$275.6 million) in the secondquarter on slower growth in the company's high-speed Internet business. Net income dropped from arevised 488.5 billion won (US$412.2 million) in the year-earlier period. Sales rose 2.9 per cent to 3.0trillion won (US$2.5 billion) from a revised 2.9 trillion won (US$2.4 billion), the company said. KTCorp's drive to replace declining revenue in its traditional telephone business is being held back becausethe company and its competitors have installed high-speed Internet connections in two-thirds of Koreanhouseholds.



- Nokia Corp. said it has signed a deal to supply four of China Telecom Corp. Ltd.'s subsidiaries with DSL equipment. The delivery and implementation of equipment has already started, Nokia said.The agreements call for the supply of more than 100,000 DSL lines to China Telecom subsidiaries inFujian, Guangdong, Hunan and Jiangsu provinces. Nokia will also be providing implementation andproject management service, as well as care service to maintain the network.

- Netease.com Inc., which last year was the first of China's three U.S.-listed Internet companies to have positive annual net income, announced that its second-quarter profit surged as sales more than tripled. Net income in the three months ended June 30 surged to US$9.2 million, whilesales for the period climbed to US$15.6 million from US$4.4 million. Netease, the best-performingstock on the NASDAQ last year, has seen its share price more than tripled this year as it reportedgreater profits each quarter. In addition, Netease announced the additional sale of US$25 million ofzero coupon convertible subordinated notes as the initial purchaser exercised its option.

Mobile / Wireless

- Output by Chinese makers of mobile phones surged in the first half, threatening to add to a oversupply that is thinning profit margins in the world's largest handset market. The Ministry ofInformation Industry said output of GSM-standard phones was up 50% from a year earlier to 71.8million units during the first half, of which 31.6 million were exported. Production of CDMA-standardphones more than quadruped to 10.4 million, of which 5.3 million were exported. A total of 43.2million mobile phones in both major standards was sold domestically during the first half, said theministry's report. Domestic companies, which have been expanding aggressively to gain market share,accounted for 55% of those sales, a gain of 16 percentage points from last year.

Singapore / Malaysia / Philippines / Indonesia

Mobile / Wireless

- Singapore Telecommunications (SingTel) has introduced two new mobile-telephone plans that offer free incoming calls, matching rival StarHub. SingTel introduced its plans as a new rule tookeffect, which requires telephone companies to allow customers the free retention of their phonenumbers should they decide to switch providers. The new calling plans might stem customer defectionsand force the country's third mobile-phone company, MobileOne, to follow suit.

- Telekomunikasi Indonesia (Telkom) has completed the purchase of a local telephone venture from AT&T Wireless Services and other shareholders after a delay of almost a year. Telkom, thecountry's largest phone company, paid US$25.3 million in cash for 100 per cent of AriaWestInternational and assumed US$197 million of its debt. Telkom also paid AriaWest US$58.7 million incash and US$109.1 million in promissory notes to be paid every six months in exchange for AriaWestdropping an arbitration claim filed in May 2001 against the firm. Telkom also agreed to drop itsarbitration claim, filed in November 2001, against AriaWest.

Hong Kong

Information Technology

- Wing Lung Bank has completed an overhaul of its storage infrastructure to a high-speed storage area network but it is re-evaluating further information technology investment due toeconomic constraints. The storage upgrade includes a disaster-recovery installation and is part of athree-year revamp of its core retail banking system started by IBM in 2001 on a HK$100 million budget.The revamp marked the last critical item on a list of priority IT upgrades to improve efficiency and aimfor zero downtime.


- New World Telecom (NWT) took the fixed-line telephone price war to a new level by offering new subscribers a promotional monthly tariff of just nine cents. Hong Kong's No. 4 operator isoffering the tariff for the first two months and the final month of a one-year contract. The averagemonthly tariff is HK$66 – 40% less than the regular HK$110 charge by dominant operator PCCW, buthigher than City Telecom's HK$57. Wharf T&T is offering an average monthly rate of HK$68, whileNo. 2 operator Hutchison Global Communications has yet to join the latest price war, keeping itsHK$84 tariff.

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