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Materials, electronics industries lead Japan's capex spending spree

Rising corporate earnings loosen purse strings

TOKYO -- Japan's materials and electronics industries, emboldened by a brighter business landscape, are leading the sharp increase in corporate capital expenditures this fiscal year.

Materials manufacturers plan to increase capex 16.8% for the current financial year ending March 2018. Backed by strong earnings, such as the record profit posted by Mitsui Chemicals last fiscal year, the sector is making aggressive investments for growth.

Toray is lifting capex 18.8% to 180 billion yen ($1.61 billion), part of which will go toward boosting carbon fiber production capacity in Mexico. President Akihiro Nikkaku said the company is "developing new applications" for the material, a mainstay of its earnings.

Mitsubishi Chemical Holdings, which will begin producing methyl methacrylate commercially in Saudi Arabia in July, is also ramping up spending associated with new plants.

Looming technological changes in consumer goods are also driving materials suppliers to reinforce production. Demand for new materials lighter than steel is growing among automakers, while electric vehicles are gaining traction in Western markets and China.

Japanese companies hold commanding market shares in separators and electrodes for lithium-ion batteries. Asahi Kasei, Hitachi Chemical and other peers intend to keep up the pace of production-boosting investments.

Meanwhile, in electronics, capex is poised to rise 14.8% this fiscal year, rebounding from a year-earlier 12.3% decline. Sony will lift investment by 27.7%. The group is expanding capacity for image sensors, an area in which it holds the top global share. Sony predicts that its current capacity will be inadequate by the end of fiscal 2018, given the rising demand for sensors used in smartphones.

At Panasonic, the internal company overseeing car batteries expects to increase capex about 100 billion yen to nearly 300 billion yen. The manufacturer has shifted resources from lithium-ion batteries for laptops and mobile phones to those for automotive uses, according to Panasonic President Kazuhiro Tsuga. Fresh investment is expected to flow into a U.S. factory jointly run by Tesla, as well as a new plant in Dalian, China.

(Nikkei)

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