JEITA (Japan Electronics and Information Technology Industries Association) released figures last week estimating a 2.9% year-on-year rise in the domestic production of electronic equipment and devices in Japan for 2005.

The government industry body believes that output of electronics and IT goods will rise for the fourth consecutive year, a judgment based on expectations of robust demand for car navigation systems and flat-panel TVs. While the forecast calls for continued growth, it is slower than the 6.1% growth expected for 2004. JEITA predicts that total domestic production of electronic equipment and devices -- both consumer and industrial use -- will reach as much 21.07 trillion yen (US$202.9 billion; US$1 = 103.85 JPY)in 2005. 2004's total is expected to hit 20.48 trillion yen (US$197.4 billion).

In terms of market segment, JEITA forecasts 13.8% growth in the production of consumer electronic equipment -- color TVs, DVD, video cameras, digital cameras, and car navigation systems -- for a total of 3.02 trillion yen (US$29 billion) in 2005. 2004 is likely to post 14.6% growth for the consumer segment. Domestic production of LCD (Liquid Crystal Display) and PDP (Plasma Display Panel) TVs, DVD recorders, and digital cameras have all racked up stronger than double digit growth in 2004. However, various factors such as falling prices will likely put a dent in the numbers for 2005.

TVs lead the pack with 47.3% growth in 2004, and they are expected to grow by 46% in 2005 to total 909.8 billion yen (US$8.8 billion). TV manufacturing in Japan had been falling due to the shrinking market for CRT (Cathode-Ray Tube) TVs, but rising output of pricier flat-panel models has put a spring back into the step of the ailing sector. Digital cameras registered 28.4% growth for 2004 and will likely expand by 10.5% in the new year to a total of 840 billion yen (US$8.1 billion). After enjoying 25.5% growth in 2004, production of car navigation systems will continue to rise in 2005, by about 11.9% to reach a total of 475 billion yen (US$4.6 billion).

After growing by 3.7% in 2003, production of what is termed industrial electronic equipment, which includes mobile phones and PCs among other items, is expected to fall by 0.4% to 7.77 trillion yen (US$74.9 billion) in 2004, and then drop by a further 1.4% to 7.66 trillion yen (US$73.9 billion) in 2005. Delays in the rollout of 3G have held down production of mobile phones in 2004, posting negative growth of 6% for a total of 1.8 trillion yen (US$17.4 billion). 2005 is expected to bring only paltry growth of 0.1% for mobile phones. Demand for PCs and other related equipment continues to be weak, while more and more companies are shifting production offshore. Domestic production of PCs in 2004 will likely reach 2.66 trillion yen (US$25.7 billion), a decline of 1.6%. 2005 will bring a decline of 5.5%, as production drops to around 2.5 trillion yen (US$24.2 billion).

As for electronic components and devices, this segment of the market is forecast to grow by 3.3% next year to reach 10.4 trillion yen (US$100.2 billion). While 3.3% growth is significant, it nevertheless falls well short of the 9.5% expansion that this segment has enjoyed in 2004 on the back of the digital market boom. Production of liquid crystal devices increased by 22.5% in 2004 to reach nearly 1.9 trillion yen (US$18.2 billion), and 2005 is expected to yield 12.7% growth. Production of ICs (Integrated Circuits)- has held steady at 8.1% growth for the last two years, but JEITA sees ICs entering an adjustment phase in 2005. Therefore, only slight growth of 0.4% is expected for a total of 3.7 trillion yen (US$36 billion).