KYOTO, Japan -- Japanese electronic component makers are ringing up record orders, driven by the recent release of new Apple iPhones. Soon, however, the sector's main driver is expected to shift to electric vehicles.
The Nikkei recently caught up with Murata Manufacturing Chairman and President Tsuneo Murata to discuss the industry's direction and how he plans to steer his company through competition with Asian rivals.
Murata Manufacturing has successfully met demand for smaller, higher-performance components. Its multilayered ceramic capacitors and surface acoustic wave filters -- both key devices for communications and other products -- hold 40% and 50% global market shares, respectively.
Looking ahead, though, batteries are set to become a major focus; the company completed its purchase of Sony's battery business in September.
Q: Murata Manufacturing is enjoying brisk orders now, but there are concerns that smartphone-driven demand for electronic parts may soon peak.
A: We've seen fairly solid sales for parts used in new products by U.S. and South Korean smartphone makers. Sales in October and November were high. Sales to Chinese manufacturers had been poor but have gradually improved and reached a level that is not too bad.
Unit sales of smartphones may hit a peak but there is still an overall trend where manufacturers are upgrading products. The number of electronic parts used in a smartphone is also increasing due partly to factors such as the use of multiple frequency bands. We'll be seeing specific moves ahead of the start of the next, fifth-generation [mobile] communications service in 2020.
Q: Don't you feel Murata's sales rely too much on smartphone-derived demand?
A: It's necessary to be able to address multiple markets if you aim to continue to grow. Communications technology-related parts, including for smartphones, represent about 50% of our sales. To be sure, there are fluctuations in demand for digital products. Technologies shift, too. You never know how long you can continue to make products that remain No. 1. We're looking at automobiles, energy and health care as key new markets.
Q: Do you think the global shift to electric vehicles will change who drives the electronic parts market -- say, Tesla rather than Apple?
A: For now, I think, all we have are expectations. I don't think that will happen in the next three years. I would guess the transition may progress slowly, starting with [automotive] safety technology.
Electric vehicle and self-driving technologies are based on those used in electronic parts for communications. The market shift won't lead to the emergence of completely new technologies -- much of it is about enhancing communications technologies to produce new products.
Q: Do you think you will face more direct competition from Asian rivals in electronics parts, as Japanese home electronics makers did?
A: There aren't many companies that can supply 1 trillion multilayered ceramic capacitors a year. I think it would be difficult to catch up with us.
Q: Murata has continued to make aggressive moves, including the acquisition of Sony's battery business.
A: We raised capital expenditures in the current fiscal year from 170 billion yen ($1.5 billion) to 260 billion yen. In particular, we see growth potential in the increasing use of electronic parts in automobiles. And so we are going to make large investments in our energy-related operations -- including batteries -- in China.
This is an area where we see a lot of promise. There is a plan to develop safe, solid-state batteries for use in wearable devices. We're going to take advantage of our multilayered technology in batteries.
Interviewed by Nikkei staff writer Naoki Watanabe