Tag: Japan

Panasonic and Samsung plan tie up with troubled Olympus

It seems that the tech industry in the East is falling over itself to save the troubled camera maker Olympus.

Reuters claims that Panasonic and Samsung Electronics have each decided to propose capital ties with the outfit.

They are not the only ones trying to woo the cash strapped outfit. Olympus has a 70 percent share of the global market for diagnostic endoscopes. Fujifilm Holdings Corp has already proposed an alliance and Terumohas said it wants closer links.

An unidentified Japanese company is also expected to make Olympus a deal it might find difficult to refuse.

Olympus has to find $1.7 billion after years of accounting fraud.

Reuters points out that Olympus is unlikely to respond quickly to any approaches. It is too busy trying to sort out a new management team, due to be chosen at a shareholder meeting in April.

Problems for the company become public in October when Olympus fired its British chief executive Michael Woodford for daring to point out that its senior managers had been cooking the books and serving them up to shareholders in a white wine sauce.

The company is being investigated by Inspector Knasher of the Yard in several countries. However, it is being propped up by its major Japanese shareholders, who prefer bringing in an equity partner rather than selling the whole company or its assets. 

Japan working on a defensive cyber weapon

The Japanese equivalent of Q is apparently working on a bit of code which would act like a cyber army and track, identify, waterboard and disable sources of cyber-attacks.

According to the Yomiuri Shimbun newspaper, development of the virtual cyberweapon was launched in 2008. Since then, the weapon has been tested in a closed network environment.

It is assumed that such cyberweapons are already in use in countries such as the United States and China, but Japan has a few legal problems deploying the weapon.

After World War II, Japan has some pretty tough rules on who it is able to invade and there are no provisions on the use of cyberweapons.

This means that the Defense Ministry and Foreign Ministry have begun legislative consideration about how to use the virus.

While that happened, the Defense Ministry’s Technical Research and Development Institute, which is in charge of weapons development, outsourced the project to Fujitsu.

Three years later the virus is ready to defend Japan from North Korea, er, the rest of the world.

The technology has the interesting ability to trace cyber-attack sources and can find the immediate source of threats, but also can “springboard” computers used to transmit the virus.

It disables these and collects relevant information on the attacker. It could also shut down DdoS attacks and bring an end to the reign of low-tech hacks. 

Asia pushes for large scale LED adoption

Asian governments want to use environmentally friendly lighting while major firms attempt to drive down the price of the relatively expensive technology.

Governments in South Korea, China and Taiwan are all gearing up to increase the development and usage of LED lighting over the next year.

Korea is planning to replace some of its 2.7 million street lamps with LEDs, according to DigiTimes, while Taiwan wants to put LED lighting into 19,000 street lamps. China is thought to be about to announce an LED subsidy programme.

Japan has already been promoting the use of LEDs following the earthquake earlier this year.  This has involved many offices factories and businesses installing the technology. 

The technology is relatively expensive to put in place as well as to maintain and has not yet become commonplace.  

There is much optimism that LED lighting could soon become ubiquitous  with many companies working to create more viable products both for large scale and domestic use.  And while the initial outlay may be more expensive than conventional lighting this can be recouped by energy savings in the longer term.

Big name brands such as Samsung and LG are also hoping to make inroads into the LED lighting industry with the launch of their own 60W bulbs aimed at the consumer market.

The South Korean firms have received government backing to attempt to position themselves as world leaders in the market, according to CENS.  

Samsung and LG will offer bulbs at a lower price bracket, flogging the energy saving bulbs for between $10-12 while others moving into the market such as LSG in the US aim for $15.

All of which is rather worrying for Taiwanese firms all making money from LEDs as the might of Samsung begins to cast a shadow. 

But with the LED market expected to grow at an impressive rate until the end of the decade it is little surprise that the big-name brands are starting to get more involved.

Report tears open Olympus' enormous loss hiding scandal

A 200-page report on the biggest corporate scandal Japan has ever faced, Olympus’ billion dollar loss-hiding, has been published, and it really is quite messy.

The report, writes the Wall Street Journal, says Olympus’ management was “rotten” and that “contaminated other parts around it”. The scandal, unearthed by ex-CEO Michael Woodford who was thanked with a sacking, has seen Olympus’ shares plummet and risked having the company delisted from the Tokyo Stock Exchange.

Rather than face up to the dire situation the company was in, it allegedly created bogus funds around the world to buy off billions and billions of yen in bad assets. Later it tried to write everything off by buying start-ups at a hugely inflated price which subsequently vanished.

In the report, execs like Hisashi Mori, who was an executive vice president and his boss Hideo Yamada led the plans, along with a few others, to hide losses and make them disappear through made-up acquisition prices.  

The WSJ says, as Olympus faced a financial downturn in the mid-80s when the US dollar was devalued following the Plaza Accord, then-president Toshiro Shimoyama decided the best thing to do would be to plough money into other companies as part of its core business strategy. Many of the deals went sour and, coupled with other factors like the rise of the yen, it wasn’t looking good for Olympus. Mori and Yamada tried to fix it by gambling with derivatives and structured bonds.

Ex prez Toshiro Shimoyama denies any wrongdoing and used the useful line: he can’t really remember, said the WSJ.

Shimoyama left the company with the losses and was followed by Masatoshi Kishimoto as president, who, the report claims, didn’t do enough to fix the mess and left it up to Mori and Yamada to keep doing what they were doing. Kishimoto’s replacement, Tsuyoshi Kikukawa, was from Finance and well aware of Olympus’ situation.

Things really took a turn for the worse when changes to Japan’s accounting rules meant Olympus would have to go public with the securities losses – and the company had over $1 billion of that. It was then, the report says, that Mori and Yamada approached two brokers, Akio Nakagawa and Hajime Sagawa, to hatch a cunning plan.

It was as easy as moving Olympus’ dodgy assets away from the company and over to others that weren’t at all connected – avoiding having to disclose any at all on the official books. Nakagawa and Sagawa started a set up fund in the Cayman Islands called Central Forest Corp. This bogus company was to buy off Olympus’ assets. To fund the transactions, Mori and Yamada allegedly got Olympus to put ¥21 billion in Japanese government bonds into an LGT Bank account. The bank was then asked to give Central Forest an ¥18 billion loan.

To finance the whole operation, Mori allegedly lied to LGT bank and explained the whole bizarre situation away – claming Olympus was on a shopping trip to make a string of secret buys in Europe. Altogether, Olympus managed to shift ¥65 billion from Olympus in Europe.  

This scheme was, by and large, repeated in Singapore using accounts through Commerzbank AG and Societe Generale SA to move ¥60 billion away from its books, though the report doesn’t accuse the banks of being at fault.

Later, Olympus started another investment fund in Japan with an ex Nomura broker. That, too, was used to buy bad assets. Presidents Kishimoto and Kikukawa were told about the schemes, the report says. 

Olympus did get found out once. Auditor KPMG AZSA spotted some mysterious figures in the books and Olympus owned up to the loss-hiding – but it only admitted to one fund. 

Eventually the execs realised the decades-long plot was doomed and tried to write the whole lot off. They used three start-ups, a waste recycler called Altis, a cosmetics company called Humalabo and a microwave container company called News Chef. Olympus bought them all for  ¥73.2 billion before getting rid of them for good.

The report says Olympus then used that money to repay loans from LGT and shut down its dodgy European operations. Later, it offset the funds in Singapore, according to the report, by using $687 million it got from buying UK medi-tech company Gyrus Group PLC, which went through as recently as March 2010.

According to the report, there was a bizarre pervasive atmosphere at Olympus which discouraged anything other than yes-men: “The head of the company ran an autocratic regime over a long period, generating an internal atmosphere in which people hesitated to disagree. Among executives there was a rampant tendency to treat the company like their private possession. There was little awareness of loyalty to shareholders.”

Certainly that still rang true when current president Shuichi Takayama said of ex-CEO Woodford’s findings: “If this secret information hadn’t been leaked there would have been no change in our corporate value”.  

The accused orchestrators Mori and Yamada held onto their positions at the troubled cameramaker until the scandal was blown wide open. Olympus is now under a great deal of pressure to replace the entire board. Ex-CEO Woodford claims a takeover is out of the question because it isn’t normal business practice in Japan, but he does say Olympus needs a shareholders meeting ASAP and a different set of directors, as picked by the managers, urgently. 

Olympus is still on deadline for 14 December to post its most recent earnings or it risks being delisted.

Weak demand, strong yen forces Toshiba to slash chip output

Toshiba is shutting down chipmaking facilities in Japan and cut output elsewhere as demand slumps.

The chip plants for the chop are for discrete chips. Three of the semiconductor factories are due to be slashed at the start of April 2012.

Toshiba is on the back foot, like many other Japanese companies, because of the strength in the yen – so it needs to cut costs, reports Reuters. Toshiba will cut discrete chip output until January, it says. 

You’d think a strong yen would have a country leaping for joy, but actually it cuts the value of overseas money sent back to its shores. 

An analyst told Reuters that Toshiba’s decision isn’t exactly a surprise. The JP Morgan analyst said it’s down to weak demand, as well as domestic customers like electronics manufacturers also cutting their outputs. 

Meanwhile, Bloomberg claims Toshiba will also shuffle about 1,700 workers at the end of September 2012. 1,200 of them will go to group companies and the remaining 500 will be told to advance their careers elsewhere, as one factory halves its output of 150mm wafers. 

Olympus shareholders plead to bring back Woodford

Olympus President Shuichi Takayama seems set in stone in his refusal to reappoint ex-CEO Michael Woodford, the man who blew open a decades-long losses cover-up, but the major shareholders think otherwise.

Takayama initially blamed Woodford for the Japanese camera maker’s downward spiral – claiming that if he had kept his nose out, Olympus would still be worth a yen or two. At the time, he was kind of missing the point: the problem wasn’t Woodford finding out. It was corporate scheming on a grand scale.

Since the scandal emerged, shares have plummetted to their lowest ever. Since Woodford left for, officially, management differences, stocks have crumbled by as much as 80 percent of their value. 

In a statement seen by the Wall Street Journal, Elaine Morrison of Baillie Gifford & Co. – who holds roughly four percent in Olympus – said: “What Olympus needs now is a thorough cleanup, and we believe Michael Woodford is the best man for the job.” Meanwhile, CIO at Harris

Associates LP David Herro, who also has four percent in the company, said Woodford must be “strongly considered” to return as CEO.

The second largest shareholder in Olympus, Southeastern Asset Management, wheeled out its principal Josh Shores, who didn’t name Woodford as a candidate for CEO, but arguable suggested it. Shores, says the WSJ, requested Woodford stay “involved” with Olympus.

He went on to say the next CEO should have “a sterling reputation and character woh is going to be accepted by institutions and investors inside Japan and outside of Japan as unassailable.”

Japan’s Financial Services Agency and the Tokyo Metropolitan Police are both investigating Olympus.

It has until 14 December to list its earnings or the company faces having its shares delisted from the Tokyo Stock Exchange. 

Japanese supercomputer beats world record (again)

A Japanese supercomputer has taken the crown as the fastest in the world after performing over 10 quadrillion calculations per second.

Named the K Computer, it has more than 88,128 central processors, which makes it a tad more powerful than your average quad core home PC, setting a record 10.51 petaflops.

The K Computer, developed by Fujitsu and Riken, was able to smash its own personal best of 8 quadrillion calculations earlier this year.

It has not yet reached its theoretical top speed yet however. This is said to be a maximum of 11.28 petaflops.

The system uses 864 racks for its vast array of CPUs, and has an executition efficiency of 93.2 percent, pushing it even further ahead at the TOP500 list of supercomputers, having scored 93.0 percent previously.

Apparently the supercomputer showed high levels of reliability, running with 88,128 CPUs witout a single failure for 29 hours and 28 minutes.

The supercomputer will continue to be jointly developed by Riken and Fujitsu with the aim of shared use in November next year.  It is not known whether it will be subjected to the indignity of appearing on day time TV gameshows like IBM’s Watson.

In fact it is more likely it will be put to use analysing nanomaterials and could be used in the development of next generation semiconductor materials such as nanowires and carbon nanotubes.

It could also help in development of dye-sensitised solar cells with a much higher energy conversion efficiency, or in a variety of pharmaceutical applications.


Hard drive shipments stagnate in Q3

Further doom and gloom for the stagnant hard disc drive market, worldwide. 

HDD shipments will grow just three percent in the third quarter of this year. At least it’s some growth – up 165 units from the previous quarter. The problem is the tablet fad, as they generally don’t run your typical HDD, as well as the looming threat of economic woes in the western world. The US and Europe are typically the biggest buyers, but that has really slowed.

Then, of course, there is still the domino effect from the tragedy in Japan earlier this year. At the time, every electronics company in the world claimed it wouldn’t take hold on supply chain too much, but notebook manufacturers saw it as a good time to stockpile HDDs in case of future disruption.

According to Digitimes’ sources in the channel, that has caused a significant sequential comparative base for shipments, which is partly why growth sits at under five percent.

The hope for the HDD market rests, as ever, in the enterprise. Industry insiders hope that as cloud data picks up, manufacturers will be able to ship off more HDDs to prop up the boom and plug the consumer gap.

Distributors earlier this year blamed hot-shots such as Western Digital for dragging their heels on supply, all to keep prices where they want them. A distributor familiar with the situation said at the time, “because of the earthquake, this has all gone wrong and left our customers behind as we can’t supply their orders.”

“Tight supply means cheaper overheads, which means cheaper prices,” our source continued. “To keep up with them smaller companies are manufacturing even less, once again tightening distribution.”

Hackers take down Mitsubishi

One of Japan’s most important defence contractors has been hit by hackers.

The Yomiuri newspaper said that Mitsubishi Heavy Industries’ computer network was hacked.

Factories that build submarines and missiles and make components for nuclear power plants were hit in what is thought to be the first serious attack targeting Japan’s defence industry.

Yomiuri claims that the hackers seem to have found what they wanted. Data from the company’s computer system was seen stolen in a cyber attack.

Mitsubishi Heavy confirmed the cyber attack, but said the firm is still investigating the case. It was not sure if data had been stolen.

It looks like more than 80 virus-infected computers were found at MHI’s headquarters in Tokyo, and manufacturing and research and development sites, including Kobe Shipyard & Machinery Works, Nagasaki Shipyard & Machinery Works and Nagoya Guidance & Propulsion System Works.

Kobe is the one-stop shop for those who want to buy a submarine or components for nuclear power stations.

Nagasaki Shipyard makes escort ships, which are always useful if your ship needs an escort in foreign parts. The Nagoya plant makes guided missiles and rocket engines.

So far, no one has pointed the finger at China for the hack. It is a bit out of the league of North Korea and too well organised to be anything other than a foreign power. 

Double-dip looms over chip industry

Chip manufacturer TSMC has admitted that its strong growth targets look unlikely and out of reach because, of course, the market demand isn’t quite what it expected.

However, its CEO Morris Chang still believes it will outclass the industry average elsewhere for 2011 as a whole. Originally it wanted to hit 20 percent growth in sales. Digitimes believes TSMC knew what was up in the second quarter when it saw utilisation rates drop, and that its targets were too ambitious.

The belief is that end-market demand has slumped, despite additional foundry capacity, and as a result foundries have seen their average selling prices drop.

In fact, global foundry market growth for 2011 is expected to reach just five percent, compared to TSMC’s lofty seven precent predictions. 

Malcolm Penn, chief analyst at Future Horizons, tells TechEye that there are plenty of reasons the overall outlook is muddled, and that TSMC had the opportunity to get its act together.

“The issue is twofold but with a fundamental same common cause,” Penn begins, “manic short-termism and chronic over-reaction to the hourly drip-feed of data deluge and overload.

“We are just emerging form the summer silly season madness and, yes, TSMC should be firing on all cylinders by now given its August sales are its client’s September, the seasonally strong Q3, billings, so clearly we’re off to a slow start.”

The industry is saying it’s all about demand, demand, demand and little to do with the disruptions from the tragedies in Japan, however, as TSMC’s main rival GlobalFoundries is using the tsunami as a talking point to win contracts – it claims its foundries are relatively disaster-zone free – it’s hard to swallow entirely.

Meanwhile, others in Taiwan think that the tablet trend has caused confusion and, overall, semiconductors will be on track for a quarterly decline.

But being on the brink of, possibly, a double dip means there is bound to be a domino effect.

“The current bad economic data – especially from the US – is part of the problem together with the recent US political standoff on their debt ceiling issue,” Penn tells us. “Talk about irresponsibly holding the world economy to ransom for some selfish political mileage. And Europe’s equally shabby ‘leadership’ refusing to square up to the fact ‘Essex girl’ Greece is maxed out on her credit cards and is bust.

“Japan is like a rabbit frozen in the headlights and the UK stuck in a ‘principle’ issue of Titanic type blindness! Little wonder global economic confidence is sour; there is no concerted global effort to stop the west drifting back into recession, the much ‘awaited’ double dip, given the abysmally poor political leadership.

“So even if the emerging economies motor on, with half the world on its knees, it’s not enough to stop the whole slowing. The overall impact is the FUD – fear, uncertainty and doubt – factor is in control which means people, business and consumers, are putting off buying decisions, at least in the short-term.

“The impact of the quake has also been reasonably muddled through, at least on the surface, helped by the slowdown in demand which has taken the pressure off the typically strong 2H-11.”

All said and done, the semiconductor industry isn’t dead on its behind, far from it. Penn outlines some reasons shareholders needn’t panic.

“But, that said, the underlying conditions are still incredibly strong. Interest rates are low, with no sign yet of them increasing,” Penn says. “Banks are happy to lend money, at least to those who can afford to pay it back.

“Capacity is still tighter than the proverbial DA, with investment strongly cut back for the past 9 months in a row Inventories are still low, which means no stockpiles or safety stocks, despite the earthquake warning shot across the bows.

“The NAND flash market has already turned, DRAMs are in trouble but that’s structural not the market. Tablets are still selling, but only if it’s an iPad … this is a fashion item; you don’t buy Wall Mart’s trainers when your heart screams Nike.

“Chances are confidence will creep back, once the world doesn’t implode over the next few weeks and there’ll be a mad late-Q3 scramble as everyone tries to react to the delayed, pent-up demand. With no slack in the system – lessons were not learnt from Fukishima – there’ll be surprises all round when the market tries to recover.

“Hey ho. Words like piss up and brewery spring to mind, yet we’re paying these execs seven figure salaries, quite for what beggars belief!”