OSAKA -- Leading Japanese electronics component makers saw orders for their products barely grow in October-December 2015, with slowing Chinese device production bringing an end to nearly three years of double-digit year-over-year quarterly rises.
Orders to six major parts makers -- Kyocera, TDK, Murata Manufacturing, Nidec, Nitto Denko and Alps Electric -- totaled just under 1.4 trillion yen ($11.8 billion) for the quarter, only about 1% above the year-earlier level, the Nikkei calculates. For Nidec and Nitto Denko, sales figures were used in place of order values. The total is close to a record high, but marks the slowest growth since January-March 2012, when after-effects of the March 2011 earthquake and tsunami in Japan's northeast and flooding in Thailand kept orders below the year-earlier level.
Orders from the smartphone and auto industries helped the components market at large keep growing despite China's deepening economic deceleration. But the sector was nevertheless shaken as production by Chinese companies slumped and global growth lost speed.
Kyocera's orders shrank more than 6%, led by a decline in Chinese demand for semiconductor component protectors and other parts used in telecommunications base stations. Construction of those stations had surged as carriers moved to provide high-speed mobile service. But the pace of expansion has reportedly slowed. Nitto Denko's sales also shrank for the quarter, weighed down by falling demand for liquid crystal display components as the smartphone market slowed.
Murata's orders rose 5-10%, far below the 20-30% growth seen up to now. Demand for a wider array of components helped keep orders rising, as smartphones become more highly functional and more electronics were included in automobiles.
Even Nidec, where brisk sales of auto electronics parts kept sales growth around 10%, apparently faced strong headwinds from the Chinese market for air conditioning motors and other items, as a residential and commercial property supply glut caused construction to stagnate. Chinese air conditioner inventory has reportedly reached tens of millions of units. "It will likely take a while for sales to pick up again," a Japanese air conditioner maker said.
Production cuts anticipated for Apple's latest-model smartphone in January-March 2016 weighed on orders as well. While the iPhone 6, with its newly enlarged screen, surged to the top of the Chinese smartphone market upon its 2014 launch, last year's iPhone 6s was seen bringing little new to the table. Sales fell roughly 20%, a source close to the matter said.
Parts orders could continue to face zero growth or decline in the first quarter of 2016, many believe. "Orders for smartphone components look to take a turn for the better from summer" as Apple's next iPhone prepares to enter production, Akira Minamikawa of IHS Technology said. "But parts destined for construction and other industries will likely face a tough market throughout the year."
Automobiles and electronics components are two key pillars of Japan's export sector, accounting for 14.9% and 5% of the 2014 total. Exports of semiconductors and other electronics parts were valued at 3.69 trillion yen that year. Strong vehicle demand in North America and new-model car sales offer hope for recovery in the auto sector. But a continued decline in the parts industry could still deal a heavy blow to Japan's economy amid its current standstill.