Week in tech part 1

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

Japan

Hardware

- Hitachi Ltd. plans to expand the application of its HDD (hard-disk-drive) technology, currently used mostly for computers and servers, to home appliances including DVD recorders and digital cameras. The company aims to bolster sales of HDD-related products from the ¥480 billion (US$4.0 billion) projected for the current fiscal year to ¥780 billion (US$6.6 billion) in 2005. Hitachi recently set up an HDD technology R&D division for digital appliances, including DVD recorders with a built-in 1-2.5-inch HDD, car navigation systems, cellular phones and digital cameras. Since it purchased IBM's HDD operations last year, Hitachi has become the world's largest HDD manufacturer. The global market for HDD products is expected to grow from 250 million units now to 300 million units in 2005.

- A research team from the Tokyo Institute of Technology and Yamanashi University has developed an electride material that emits electrons and retains its properties at normal temperature and pressure. The material has promising uses in a next-generation type of flat-panel display known as the field-emission display (FED). In an FED, each pixel is driven by a separate tiny electron-emitter, similar to the electron gun that is scanned across the picture tube of a conventional CRT display. The advantage of FEDs is that they require very little power. The research team plans to investigate the properties of this new electride material, aiming to partner with material makers to design emitters and test actual products.

- A smart prepaid card usable in China, South Korea and Japan would help promote tourism among the three countries and should be issued ahead of the 2008 Beijing Olympics. A similar type of prepaid card was tested by Japan and South Korea when they jointly hosted the World Cup soccer finals last year. Fans could use the cards in both countries for shopping and transportation, eliminating the hassle of exchanging currencies and walking around with a pocket full of coins.

- The recent development of ultra-fine chip processing technology by Semiconductor Leading Edge Technologies Inc. (Selete) will likely open the way for mass-producing system chips with a line width of 65 nanometers by 2007. The new technology can process all parts of a 300mm-diameter silicon wafer with accuracy as fine as 30 nanometers, to make it into system chips with a 65-nanometer line width. Selete is an entity that is promoting an R&D project called Asuka, using photolithography and transistor technologies for system chips on which a 65-nanometer circuit is printed, with Toshiba Corp., Matsushita Electric Industrial Co. and Fujitsu Ltd. among the project participants.

Internet

- NTT East Corp. and NTT Bizlink Corp. intend to soon begin a joint service to develop and operate local area networks (LANs) on behalf of corporate customers. Under the BizLink Managed LAN Service, the two companies will also offer a maintenance service as well as a high-speed fiber-optic link between customers' LAN systems to NTT Bizlink's data center which hosts the servers. The two firms will also handle customer queries about how to use application software and check their systems for viruses. Companies can lower their telecom-related costs by 20% through using the service instead of building and operating LAN systems on their own, the officials claim. Monthly service charges for a LAN system comprising 300 computers will start at ¥2.9 million (US$24,500).

- Global Access Ltd., an affiliate of Marubeni Corp., will launch a service to back up data for corporate clients who need to exchange information with business units located far away. The service will be offered using a data transmission method called Fiber Channel (FC). In providing the service, the firm will use data relay equipment developed by Ciena Corp. that enables data to be backed up even if held by business units located several thousand kilometers apart. Conventional FC-based services can only back up data over a much shorter distance of up to 40km. The new service will allow, for example, a financial institution's business units in Tokyo and Osaka to share the same data. It will enable data that is updated at the Osaka unit to be instantly copied by the one in Tokyo, meaning the financial institution will have no problem if data at either unit is lost due to unforeseen disasters.

Media, Entertainment and Gaming

- Sega Corp. reported a fiscal first-quarter net profit of ¥1.9 billion (US$15.7 million) on stronger-than-expected sales of videogame-software titles. The firm did not disclose year-earlier figures because this was the first time the company reported quarterly earnings. Net profit and sales during the quarter ended June 30 were stronger than expected. Sega reported a group operating profit of ¥2.7 billion (US$22.6 million) and sales of ¥42.4 billion (US$355.2). The company maintained its earnings projections for the full year ending March 2004 with a net profit of ¥7.5 billion (US$63 million) on sales of ¥193 billion (US$1.6 billion).

- Major Japanese telecommunications companies are set to enter the market for online video games that enable people to play against each other over broadband networks. KDDI Corp. will begin to offer a service in September that allows users of the PlayStation 2 game console to play games online for a fixed monthly charge. KDDI's multi-matching BB service will let people play online games compatible with PlayStation 2 machines for a flat monthly fee of ¥900 (US$7.6) through ADSL or fiber-optic networks. It will cost ¥800 (US$6.7) for subscribers to KDDI's Dion Internet access service. Capcom Co. and Bandai Co. will release a total of four games compatible with KDDI's service by the end of this year, to be followed soon after by Taito Corp. and other firms. Use of some of the titles will require players to pay an extra fee.

- Nintendo announced plans for new products that would appeal to a broader range of game fans, saying the complexity of today's videogames is scaring off consumers and has lost its allure, as they are too difficult for the average users to enjoy anymore. Despite the popularity of high-tech games, The company said investing too heavily in developing them is perilous. Nintendo booked solid sales of its Gameboy Advance SP hand-held unit but poor sales of the home-use GameCube game console for the fiscal first quarter ended June 30. The firm believes new titles such as Pokemon Coliseum and an addition to the Mario Kart series will help boost worldwide GameCube sales by the end of March 2004.

Mobile / Wireless

- NTT DoCoMo Inc. posted earnings for the April-June quarter of ¥196.8 billion (US$1.6 billion) due to the introduction of new handsets and the expanded use of data-communications services, this representing 32% of its full-year net profit target of ¥618 billion (US$5.2 billion). It did not provide comparative figures because this is the first time the Japanese mobile-phone giant has posted quarterly earnings. The figure is close to the ¥212.5 billion (US$1.8 billion) profit it posted for the whole of last fiscal year. DoCoMo, however, warned that higher costs and severe competition in Japan's cell phone market could temper the pace of profit growth. It had group operating profit of ¥337 billion (US$2.8 billion) on group revenue of ¥1.3 trillion (US$105.2 billion) in the three months ended June 30, helped by the success of its handsets for its second- and third-generation wireless services.

Telecommunications

- NTT East Corp. and NTT West Corp., the regional carriers of Nippon Telegraph and Telephone Corp. announced the launch of IP (Internet Protocol) telephony service targeting corporations as soon as October. They also filed applications with the Telecommunications Ministry for approval to operate the service. The new service will initially be introduced in Tokyo and Osaka before being rolled out to the rest of the country. To improve the sound quality, client firms will be connected via dedicated fiber-optic lines. Based on current regulations, companies will be able to keep the same phone numbers even after switching to IP telephony if the sound quality is comparable to that of fixed-line service.

Venture Capital / Investments

- Softbank Corp made a net lost of ¥34.7 billion (US$289 million) during the April-June quarter, as it continued to pour money into a risky high-speed Internet-access business. Softbank's loss for the three months ended June 30 was around 60% of the group net loss of ¥55.8 billion (US$468.8 million) the company posted in the six months to September 2002. Softbank also said it had an operating loss of ¥24.1 billion (US$202.5 million) on revenue of ¥103.8 billion (US$872.1 million) in the latest quarter. Softbank attributes some of the losses to an investment to expand an ambitious Japanese broadband service called Yahoo! BB that is facing fierce competition from former phone monopoly NTT.

- NTT Electronics Corp. and Oki Electric Industry Co. will form partnership to cover a wide range of optical communication device businesses, including the integration of both firms' production lines. The move is aimed at improving the companies' product performance, cost competitiveness and management efficiency in this field. Under the agreement, the two will integrate their wafer-process and volume-production technologies for laser diode chips, photo diode chips, modulators and hybrid-function devices into NTT Electronic's production lines. They also plan to jointly develop new optical communication devices to broaden their lineups and strengthen their sales capabilities. In addition, the two said they will consider expanding the partnership to include the integration of assembly process and offshore manufacturing.

Korea

Hardware

- South Korea is set to challenge the European Union over duties it has imposed on imports of computer memory chips, according to the World Trade Organization. WTO officials said South Korea, which claims the duties breach global trade rules, made a formal request for consultations with the EU. Such a move is usually the first step to a full-blown legal dispute at the global trade body. In April, the EU imposed a provisional 33% tax on imports of computer memory chips made by Hynix Semiconductor Inc., accusing the South Korean firm of receiving illegal government subsidies. Hynix is the world's third-largest chipmaker. However, the EU cleared another South Korean chipmaker, Samsung Electronics Co., No. 1 in the business worldwide, of any wrongdoing.

- Samsung Electronics Co. announced that it has reached an agreement to make and sell Sony's memory sticks under its own brand name starting this September. The agreement came two years after the two electronics companies formed a business partnership when Samsung decided to incorporate the then new breed of memory devices into its products. Samsung has since been using memory sticks in its DVD players, digital camcorders and computers. Now that it has embarked upon the production of memory sticks on its own, Samsung plans to expand the use of the devices into other high-tech electronics products including handsets and digital cameras, flagship items of the firm. The memory stick is a portable storage medium that can carry various kinds of data including text, voice and video files of up to 128 megabytes in size.

- Samsung Electronics will sell 50,000 camera-embedded 3G handsets to a Taiwanese cdma2000 1x service operator. Asia Pacific Broadband Wireless will utilize Samsung's upscale 3G device, which is capable of sending and receiving data at rates of up to 153 kilobits per second. The phones are also equipped with a 352 x 228 pixel rotating camera, 40-poly ringer and multimedia video player. According to Samsung, APBW, Taiwan's first 3G mobile service provider, chose its mobile phones when the company started operations last month. Experts expect Taiwan to see an average of 47 percent annual growth in demand for the cutting-edge mobile communications service in the coming years.

Information Technology

- Regional needs differ for IT related hardware according to a Korean trade agency. Security and wireless communications equipment, displays and network systems will be promising export items to the North American market next year. The state-run Korea Trade-Investment Promotion Agency said demand for those IT items will increase next year in the United States and Canada, which combined account for 39 percent of the global IT market. For the European market, mobile and online games, LCD monitors and security and broadcasting equipment were cited as the products that would be in high demand. The agency believes mobile and online games, wireless communications and security equipment will be promising in China and Japan's main IT imports will be mobile solutions, online games and security software.

Internet

- The Ministry of Information and Communication will launch a Korean Hangeul Internet address domain system on Aug. 19 in partnership with the Korea Network Information Center (KRNIC), the country's Internet address registration agency. The ministry said that the use of Hangeul domains would help people unfamiliar with English to enjoy easy access to the Internet. Those who want to use the Korean-language domain names need to download a program from the ministry's website as Internet Explorer and other browsers do not support the use of Hangeul addresses. To minimize the chances of possible domain disputes and cyber-squatting, the KRNIC plans to let government office names and accredited corporate and brand names be registered first before opening public registrations.

- The Korean government is pushing for a law revision to toughen the punishment for computer hacking and enhance measures to protect private information online. The Ministry of Information and Communications said that those convicted of attempted hacking would face punishment of up to three years in jail or fines of 30 million won (US$25,410) starting next year. Currently, punishment is only handed out when the hacking attempt is successful. The ministry has recently drawn up a draft for the amendment that calls for punishment of hackers trying to access other networks without authorization or in excess of the permissible scope, the ministry said.

- KT Corp. has launched a web storage service, allowing subscribers to save their files, aided by encryption and automatic backup functions. KT's move is aimed at carving out a bigger share of the fast-growing corporate web-based storage market, which is dominated by its rival Dacom Corp., a unit of the LG Group. KT web storage service would help small enterprises to save and back up their critical database files. The service offers online storage capacity of 1 gigabyte and 10 user accounts for 10,000 won (US$8.50) per month.

Media, Entertainment and Gaming

- Webzen posted 14.6 billion won (US$12.3 million) in sales for the second quarter ended June 30, up 12 percent from the previous quarter. Its second-quarter operating profit reached 8 billion won (US$6.8 million), down 9 percent from the first quarter. Current profit stood at 10.7 billion won (US$9.1 million), up 18.7 percent from the previous quarter. Of the total sales, 2.6 billion won (US$2.2 million) came from royalty income for licensing its online game services in overseas markets like China while 11.9 billion won (US$10.1 million) came from Internet games in the domestic market. For the first six months of this year, Webzen posted 27.6 billion won (US$23.4 million) in sales, up 174.9 percent from the year-earlier period. Operating profit was 16.8 billion won (US$14.2 million) and current profit 19.6 billion won (US$16.6 million).

Mobile /Wireless

- While domestic sales of mobile phones dropped 4.3 percent overall from the previous month in July to 1.1 million units, individual sales performances are sending mixed signals throughout the industry. Samsung Electronics Co., Korea's largest mobile phone manufacturer, sold 590,000 units last month, down 6.8 percent from June, and accounting for a 54-percent market share. LG Electronics Co. sold only 220,000 units locally, representing a market share of 20 percent. LG's sales fell by 13.6 percent on a monthly basis due to sluggish demand for its camera phones. As a result, LG plans to introduce new products, like a camcorder phone and a touch-screen camera phone this month to regain market share. On the other hand, another cellular phone manufacturer, Pantech & Curitel Inc., has enjoyed surging sales of its camera phones, supplying 140,000 units in July for 7.7 per cent monthly growth. Pantech & Curitel Inc. was the biggest provider of camera phones, which accounted for 71 percent of its overall mobile phone sales, up from 53 percent in June. Motorola's sales also increased 15 percent to 61,000 units.

Telecommunications

- Shareholders of Hanaro Telecom Inc. rejected a proposal to issue new shares valued at 500 billion won (US$421.9 million), setting back LG Corp.'s plans to combine the company with its telecommunications affiliates. The rights offering was proposed by LG, Hanaro's largest shareholder, to counter a US$450 million equity-injection offer from a group of foreign investors including AIG Inc. and Newbridge Capital Inc., both of the U.S. The proposal was approved by Hanaro's board last month and required final approval from shareholders. Samsung Electronics Co., which holds 8.4% of Hanaro, and wireless operator SK Telecom Co., which owns a 5.4% stake, voted against LG's plan. Another major shareholder, Daewoo Securities Co., which has a 4.3% stake, voted in favor of the proposal. Hanaro is South Korea's second-largest high-speed Internet-access provider after KT Corp. LG, the holding company for South Korean conglomerate LG Group, holds a combined 15.9% stake through various affiliates.

Taiwan

Hardware

- Taiwan Semiconductor Manufacturing Company's (TSMC) sales in July was NT$17.7 billion (US$512.4 million), down 1.1 per cent from NT$17.9 billion (US$518.1 million) the month before, because of seasonal inventory adjustments by its clients. However the volume marked a 30.4 per cent rise from NT$13.5 billion (US$391.9) a year earlier. The company's sales in the seven months to July rose to NT$106.9 billion (US$3.1 billion) from NT$93.5 billion (US$2.7 billion) a year earlier. TSMC was reiterating its third-quarter guidance and expected wafer shipments in the third quarter to September to grow at mid-to-high, single-digit percentage points quarter-on-quarter. The company also expects the third quarter average selling price to hold firm, albeit with a potential to improve sequentially, and its capacity utilization rate to exceed 90 per cent.

- Midyear earnings reports of the Taiwan companies that make many of the world's electronic gizmos are fueling hopes that the global technology industry can sustain its momentum for the rest of the year. These companies, makers of semiconductors, personal computers, flat-panel displays and other products sold to consumers and businesses by big companies such as Hewlett-Packard Co. and Motorola Corp., recently announced relatively positive numbers for the second quarter and healthy outlooks for the current quarter. A sustained improvement for Taiwan's technology sector would be good news for the global tech industry, which is still struggling to regain firm footing after a lengthy slump. Given the number of different products and customers of Taiwan's technology companies, which make most of the world's notebook computers and a growing share of its digital cameras and mobile phones, they offer a useful window on the health of the broader industry.

- United Microelectronics Corp (UMC) said its sales in July fell 0.28 per cent from June. Last month, UMC posted sales NT$7.0 billion (US$203 million). The July figure was up 4.3 per cent from a year earlier. In the seven months to July, UMC's sales rose to NT$46.6 billion (US$1.4 billion) from NT$37.5 billion (US$1.1 billion) in the same period last year. The company expects its wafer shipments in the third quarter to come in a low- to mid-single-digit percentage point lower than the second quarter, with average selling prices flat to higher. The third-quarter capacity utilization rate was estimated to be close to 80 per cent, down from 85 per cent in the second quarter.

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:

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