Magic Quadrant for Enterprise Backup/Recovery

Ailing Japanese electronics giants Sony and Toshiba are set to splurge a combined total of over $US14bn (£8.7bn) on chips next year to support a range of new products they hope will turn their fortunes around, according to market watcher IHS iSuppli.

The analyst revealed in its IHS Semiconductor Spend Analysis report that Sony’s chip spend would jump by five per cent from $8bn (£4.9bn) this year to $8.4bn (£5.2bn) next, while Toshiba will increase outlay on processors by two per cent to $6.1bn (£3.8bn) in 2013 and then by 6.3 per cent the following year to reach $6.5bn (£4bn).

All four have suffered an annus horribilis in 2012 thanks to a variety of factors including the continued economic slump in key markets like Europe and increased competition from Asian rivals and Apple. Taken as a group they will see revenue drop seven per cent from 2011 to 2012, according to the analyst.

Panasonic recently received a £4.7 billion bailout from Japanese banks after posting a record loss of ¥772.1bn (£6bn) last fiscal year.

Sharp, meanwhile, managed to sign a ¥360bn (£2.9bn) bailout deal with the banks after it revealed plans to slash 11,000 jobs, and also received a ¥9.9bn (£75m) boost from Qualcomm, who will take a stake in its IGZO display business.

Sony, whose credit rating was recently dropped down three notches by Fitch to double-B-minus, even lower than Panasonic’s, was forced to sell its chemicals business to the state-run Development Bank of Japan and issue five year convertible bonds in order to generate a profit this year.

It’s also in the process of cutting 10,000 jobs by the end of fiscal 2012 and is selling off manufacturing plants and shares in joint ventures.

Toshiba is faring better than most and still hopes to generate a net profit despite losses in the past two quarters.

IHS said that despite the gloomy headlines, innovation at the firms could yet herald a resurgence in the market, pointing to a wide range of smartphones, tablets, TVs and cameras on show at Japan’s CEATEC show in October.

In particular it highlighted a Bravia 4K LCD TV and hybrid tablet-laptop devices from Sony as well as plans for a PlayStation 4 console, as well as new REGZA HDTVs, ultrabooks and tablets from Toshiba.

IHS is predicting mixed fortunes for the two, however, with Sony likely to see 3.7 per cent revenue growth while Tosh is set to suffer a further one per cent decline.

“All the Japanese consumer electronics OEMs are struggling financially – prompting them to take measures to cut costs in order to shore up their profits,” said IHS analyst Myson Robles-Bruce, in a canned statement.

“But even in these grim circumstances, Sony and Toshiba remain optimistic about the future, and are taking steps to invest in innovative products. This will cause their spending on semiconductors to rise in the coming years.” ®

Magic Quadrant for Enterprise Backup/Recovery