Japanese Chip Industry Experiences Anemic Growth Whilst Blood Pumps to Other Regions.

Business Editors/High-Tech Writers

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Sept. 19, 2000

As the Internet revolution spreads worldwide, spurring economies to unprecedented productive gains, Japan remains debt laden and reluctant to undertake the necessary reforms to break up an entrenched bureaucracy, according to Cahners In-Stat Group.

In a series of regional reports, the high-tech market research firm has found that Japan is the only region out of the world's top semiconductor consuming regions that has not blossomed in the era of the "New Economy."

The United States is in its 110th consecutive month of growth, Europe is rapidly adapting to the new economic roadmap in spite of the rigid political and social systems, and Asia Pacific has successfully reformed many of its inefficient and corrupt institutions and is poised for another economic miracle.

In-Stat predicts that a solid global economy will translate into exceptional growth for the electronics and semiconductor industries in these regions.

However, according to Grant Johnson, industry analyst for In-Stat's Semiconductor Research service, "The economic crisis in Japan is unlikely to disappear this year and it is probable that effective reform will not occur until the year 2002. Restructuring the economy will be a daunting task, as 50 years of complacent entrenchment will not be easily dismantled overnight."

In order for the Japanese economy to be successful, In-Stat believes that the government needs to take immediate action that regains the support and confidence of the world and creates a more liberal, democratic system. Such a miracle recovery will only come after drastic structural reform is undertaken, a process that would undoubtedly take several years.

"If Japan can overcome these hurdles in a rapid manner," said Grant, "the Japanese semiconductor companies and the Japanese market will revive swiftly. Remember, a restructured Japan is going to be a powerful competitor in all sorts of businesses. If we thought Japan was mighty in the 1980s, the post-Internet version will be incredible."

In-Stat has also found that:

-- The global Internet and mobile phone boom is helping Japanese electronics
companies post healthy profits in spite of the recessed economy. The Japanese
electronics consumption market will remain consistent with a Compound Average
Growth Rate (CAGR) of 6.9 percent by 2004. The fastest growing end-use segment
in Japan is communications at 10.0 percent, and the largest segment is EDP at
$59 billion by 2004.

-- America keeps booming while Japan stays bust for simple structural reasons.
American businesses invest wisely while Japanese corporations squander their
money. American markets are open and competitive while Japanese markets are
closed and cartelised. American business faces the discipline of competitors
and shareholders while Japanese firms hide from both.

-- The Japanese semiconductor market will grow from $32.8 billion in 1999 to
$69.7 billion by 2004, a CAGR of 16.3 percent. In 1999, Japan accounted for 22
percent of worldwide consumption. By 2004, Japan will hold steady at 22.1
percent of the market, while Asia Pacific jumps from a 24.9 percent share in
1999 to 29.6 percent in 2004.

The report, Japanese Chip Profile: Breaking the Shackles (No.SI0010SF) covers the economy of Japan and expands on growing electronics market opportunities for chipmakers. The worldwide semiconductor market forecast through 2004 is included, with a regional breakdown of growth rates and market shares.

The semiconductor equipment and fab industries are also forecast through 2004. The forecast is supported by a brief analysis of the political and economic landscape in Japan. Government policies pertaining to foreign investment and electronics market opportunities are also highlighted.

To purchase this report, or for more information, please visit http://www.instat.com/catalog/cat-si.htm - si0010sf or call Matt Woods at 617/630-2139; [e-mail]. The report price is $2,495 USD.

This report is part of In-Stat's Semiconductor Industry Service, a unique service that provides a country by country breakdown of the semiconductor industry and unparalleled coverage of the economies, political environments and resulting markets in the four major semiconductor consuming regions: Japan, Western Europe, the Americas and Asia Pacific.

For additional information and special pricing, please visit http://www.instat.com/catalog/cat-si-regions.htm.

Cahners In-Stat Group (http://www.instat.com) covers the full spectrum of digital communications research from vendor to end-user, providing the analysis and perspective that allows technology vendors and service providers worldwide to make more informed business decisions.