The Communication and Information network Association of Japan (CIAJ) announces the telecommunication equipment production and trade figures for Q1 (April-June) of FY2019 as follows.
I. Summary
In April through June 2019, the Japanese economy expanded for a third consecutive quarter, with real GDP increasing at an annual rate of 1.8%, according to preliminary estimates. As private consumption and business spending remained firm, domestic demand continued to expand. However, exports fell for a second straight quarter amid weaker foreign demand, dampened by slowdown in China, Europe and other economies and rising trade tensions.
Looking specifically at the telecom market, demand for wireless terminal equipment and network equipment fell, reflecting the start of the changeover period for the generation of wireless telecommunication systems. However, looking ahead to expansion in 4k and 8k video transmission and 5G transmission capacity, a sharp increase in data traffic is expected and demand for wireline network equipment that will form the backbone network is, therefore, starting to increase.
(1) Domestic Market Trends
The value of the domestic market (= value of domestic production – value of exports + value of imports) in April through June was 553.3 billion yen. The domestic market increased in size for the first time in three quarters, showing positive growth of 3.5% over the same quarter of the previous year. This was because the value of domestic production improved and the value of imports increased.
(2) Domestic Production
The value of domestic production in April through June was 90.1 billion yen, representing negative growth of 2.7% over the same quarter of the previous year and marking the eighth straight quarter of decline in a losing streak which began in the second quarter of FY2017. Domestic production fell year on year due to a sharp drop in production of wireless mobile terminal equipment and base station telecommunication equipment, reflecting the start of the changeover period for the generation of wireless telecommunication systems, despite increased production of wireline terminal equipment and wireline network equipment.
(3) Exports
The total value of exports in April through June was 77.5 billion yen, representing negative growth of 19.4% over the same quarter of the previous year and continuing a steak of sharp declines. Against the backdrop of economic slowdown in China and other emerging Asian economies, smartphone production decreased, and exports of parts used in the production of smartphones fell sharply. Meanwhile, foreign equipment demand also weakened amid rising trade tensions and the total value of exports fell for a sixth straight quarter.
(4) Imports
The total value of imports in April through June was 553.9 billion yen, representing positive growth of 2.1% over the same quarter of the previous year and moving into positive territory for the first time in two months. The total value of imports increased because imports of mobile phones started to recover from the general reluctance to buy in anticipation of changes to phone plans and because imports of « other data telecom equipment (transmission equipment, communications equipment, modem, etc.) » in the data telecom equipment category increased due to strong domestic demand for wireline network equipment.
II. Domestic Market Trends
(Aggregated by CIAJ based on Indices of Industrial Production and Trade Statistics of Japan)
(1) Detailed trends by categories
The size of the domestic market (including the value of imports of foreign brands) was calculated from government figures, the Indices of Industrial Production and Trade Statistics of Japan, according to the following formula:
Domestic market size = value of domestic production – value of exports + value of imports
Terminal equipment
363.5 billion yen (-0.6% over the same quarter of the previous year)Network equipment
188.0 billion yen (+12.8% over the same quarter of the previous year)
Table: Domestic Market (by categories/quarter)
III. Domestic Production
(Aggregated by CIAJ based on Indices of Industrial Production compiled by the Ministry of Economics, Trade and Industry)
(1) Detailed trends by categories
Wireline terminal equipment
12.2 billion yen (+6.5% over the same quarter of the previous year). Of which, telephone sets was 0.8 billion yen (+13.2% over the same quarter of the previous year), key telephones was 3.6 billion yen (+2.7% over the same quarter of the previous year), and intercoms was 7.8 billion yen (+13.0% over the same quarter of the previous year). Categories that meet personal and household security needs are in an upward trend. Production of key telephones still tends to remain flat in Japan as the downward trend caused by the decline in value of fixed line telephones is partially offset by positive factors such as usage as BCP measures, increased functionality and last-minute demand ahead of the consumption tax hike.
Mobile terminal equipment
22.4 billion yen (-22.3% over the same quarter of the previous year). Of which, mobile phones (including public-use PHS) was 15.8 billion yen (-22.9% over the same quarter of the previous year). Production of mobile phones recorded the eighth straight quarter of decline in a losing streak which began in the second quarter of FY2017, reflecting lengthening of the replacement cycle due to the increased device cost and the continued shift to offshore production.
Wireline network equipment
28.1 billion yen (+10.9% over the same quarter of the previous year). Of which, central office switching systems was 1.6 billion yen (-15.4% over the same quarter of the previous year), PBXs was 2.0 billion yen (+59.9% over the same quarter of the previous year), digital transmission equipment was 8.7 billion yen (+6.4% over the same quarter of the previous year) and other transmission equipment was 14.5 billion yen (+12.6% over the same quarter of the previous year). For PBXs, replacement demand was robust due to strong business spending but exports decreased amid the slowdown of foreign economies. Domestic production of digital transmission equipment continued to expand due to increased demand for wireline network equipment such as backbone systems in anticipation of an increase in data traffic.
Wireless network equipment
12.2 billion yen (-12.6% over the same quarter of the previous year). Of which, fixed telecommunication devices was 5.9 billion yen (+12.3% over the same quarter of the previous year) and base station equipment was 6.3 billion yen (-27.6% over the same quarter of the previous year). Total production of wireless network equipment was below the level a year earlier due to decline in base station communication equipment for mobile networks, which outweighed growth in domestic production of emergency/ MCA radio base stations for government, microwave communication equipment for the private sector and satellite communication equipment for government.
Network access equipment
8.3 billion yen (+55.6% over the same quarter of the previous year). Total domestic production of network access equipment was above the year-ago level due to growth in demand spurred by the replacement of existing devices for cloud computing, IoT and 5G, and IT investment to strengthen security.
Wireline parts (includes relay equipment for wireline systems)
6.9 billion yen (-9.7% over the same quarter of the previous year). Production of parts continued to fall due to decline in overseas demand for parts used in the production of smartphones.
IV. Exports
(Compiled by CIAJ, based on Ministry of Finance’s “Trade Statistics”)
(1) Detailed trends by category
Actual figures for April through June by category are as follows (the facsimile category is no longer indicated from January 2018):
Telephone sets and terminal equipment 6.5 billion yen (+40.6% over the same quarter of the previous year)
Of which, mobile phones was 5.9 billion yen (+56.0% over the same quarter of the previous year), cordless handsets for landline phones was 60 million yen (-56.1% over the same quarter of the previous year), and other was 600 million yen (-22.5% over the same quarter of the previous year). Exports of mobile phones to the U.S. increased sharply for the eighth straight quarter in a winning streak which began in the second quarter of FY2017.
Network equipment 29.7 billion yen (-3.0% over the same quarter of the previous year)
Of which, base stations was 700 million yen (-44.8% over the same quarter of the previous year), data communication equipment was 27.8 billion yen (-2.3% over the same quarter of the previous year) and other network equipment was 1.2 billion yen (-42.4% over the same quarter of the previous year). Exports of data communication equipment declined due to a dip in demand caused by the downturn of overseas economies.
Parts (both wireline and wireless) 41.4 billion yen (-32.2% over the same quarter of the previous year)
The decline is largely attributable to decreased exports of parts used in the production of smartphones amid reduced production of smartphones in China and other parts of Asia.
(2) Detailed trends by region
A breakdown of results for April through June by region shows that Asia was 45.1 billion yen (-31.5% over the same quarter of the previous year), of which China was 14.4 billion yen (-52.6% over the same quarter of the previous year). North America was 19.1 billion yen (+10.9% over the same quarter of the previous year), of which the U.S. was 18.9 billion yen (+11.5% over the same quarter of the previous year). Europe was 10.4 billion yen (+8.0% over the same quarter of the previous year), of which the EU was 9.1 billion yen (+7.3% over the same quarter of the previous year).
Given that the percentage of total parts exports accounted for by exports to China fell further to 28.1%, production of smartphones, etc., is shifting away from China to other parts of Asia.
(3) Comparison and breakdown by regions
| First: | Asia | 58.2% (-10.4% over the same quarter of the previous year) |
| Second: | North America | 26.6% (+8.7％ over the same quarter of the previous year) |
| Third: | Europe | 13.3% (+3.3% over the same quarter of the previous year) |
| Other regions: | 1.9% (-1.7% over the same quarter of the previous year) |
V. Imports
(Compiled by CIAJ, based on based on Ministry of Finance’s ‘Trade Statistics”)
(1) Detailed trends by category
Actual figures by category for April through June are as follows (the facsimile category is no longer indicated as of January 2018):
Telephone sets and terminal equipment 337.2 billion yen (+1.6% over the same quarter of the previous year)
Of which, mobile phones was 334.5 billion yen (+1.7% over the same quarter of the previous year), cordless handsets for landline phones was 1.2 billion yen (-24.5% over the same quarter of the previous year) and other was 1.5 billion yen (+4.9% over the same quarter of the previous year). Imports of mobile phones started to pick up partly due to last-minute demand ahead of the consumption tax hike despite a general reluctance to buy in anticipation of changes to phone plans.
Network equipment 169.1 billion yen (+10.7% over the same quarter of the previous year)
Of which, base stations was 8.8 billion yen (+14.8% over the same quarter of the previous year), data communication equipment was 155.6 billion yen (+11.5% over the same quarter of the previous year) and other network equipment was 4.7 billion yen (-13.9% over the same quarter of the previous year). Imports of « other data telecom equipment (transmission equipment, communications equipment, modem, etc.) » in the data telecom equipment category showed positive growth of 29.9% over the same quarter of the previous year due to growing domestic demand for wireline network equipment such as backbone systems.
Parts (both wireline and wireless)
47.6 billion yen (-17.9% over the same quarter of the previous year).
(2) Detailed trends by region
A breakdown of results for April through June by region shows that Asia was 511.3 billion yen (+1.2% over the same quarter of the previous year), of which China was 374.4 billion yen (+1.0% over the same quarter of the previous year). North America was 18.3 billion yen (+14.6% over the same quarter of the previous year), of which the U.S. accounted for 17.2 billion yen (+14.2% over the same quarter of the previous year). Europe was 10.7 billion yen (-25.0% over the same quarter of the previous year), of which the EU was 10.4 billion yen (-26.3% over the same quarter of the previous year). Imports of « other data telecom equipment (transmission equipment, communications equipment, modem, etc.) » in the data telecom equipment category increased from all regions (Asia, Europe and North America).
(3) Comparison and breakdown by regions
| First: | Asia | 92.3% (-0.8% over the same quarter of the previous year) |
| Second: | North America | 1.9% (-1.2% over the same quarter of the previous year) |
| Third: | Europe | 3.3% (+1.3% over the same quarter of the previous year) |
| Other regions: | 2.5% (+0.7% over the same quarter of the previous year) |
VI. Trends in Orders Received and Shipped
(from CIAJ statistics)
(1) FY20191st quarter actual
CIAJ statistics for total orders received and shipped in April through June amounted to 367.4 billion yen, representing positive growth of 3.2% over the same quarter of the previous year. Of which the total value of domestic shipments totaled 293.2 billion yen, representing positive growth of 8.2% over the same quarter of the previous year) and exports was 74.2 billion yen, representing negative growth of 12.7% over the same quarter of the previous year).
*CIAJ statistics for total orders received and shipped = orders received and shipped by CIAJ member companies
(=value of shipments for the domestic market (domestic production + foreign production) + value of exports = value of domestic production + value of imports of products produced abroad)
(2) Trend by categories
Wireline terminal equipment 126.5 billion yen (-4.6% over the same quarter of the previous year).
Cordless telephone sets and other telephone sets held firm but exports of personal and office-use facsimiles (including multi-functioning devices), which are easily influenced by overseas economies, continued to fall.
Mobile terminal equipment 122.1 billion yen (-4.7% over the same quarter of the previous year).
Demand for mobile phones was weak amid a general reluctance to buy in anticipation of changes to tariff plans. Exports of other mobile equipment (commercial/MCA radio terminals, etc.) were brisk.
- Wireline network equipment 46.3 billion yen (+15.5% over the same quarter of the previous year).
Exports of wireline network equipment such as digital transmission devices were lackluster but domestic demand expanded substantially, resulting in growth over the same quarter of the previous year.
- Wireless network equipment 54.9 billion yen (+52.0% over the same quarter of the previous year).
Government demand for emergency and MCA radio networks, private sector demand for microwave communication equipment and government demand for satellite communication equipment increased, leading to positive growth over the same quarter of the previous year.
- Other network equipment 9.9 billion yen (+10.4% over the same quarter of the previous year).
Demand for LAN switches for data centers, etc. remained strong, resulting in positive growth over the same quarter of the previous year.
- Communication equipment parts
7.1 billion yen (-26.5% over the same quarter of the previous year)
