| September 1999 CONTENTS: FEATURE MARKET NEWS NEW TECHNOLOGY MULTIMEDIA ALERT BIO-SCIENCE DEVELOPMENT ENVIRONMENT SEMICONDUCTORS SPECIAL SECTION STRATEGIC ALLIANCES PC Makers Take The Direct Route To Customers Although large PC makers realize the cost effectiveness of direct sales via the Internet, they must overcome several hurdles before implementing wide scale direct sale systems. In addition to checking email and shopping for books, net surfers will soon be able to directly purchase a new computer online. Due to the amazing power of the Internet as a marketing tool, large PC makers are rushing to the information superhighway. By March 2002, NEC Corp., Japan's largest PC manufacturer will begin direct sales via the Web. It has already introduced such sales of PC's and peripheral equipment to large corporate clients, and the company plans to expand its client base to general corporate users. Japanese PC makers initially wary of this approach are expected to follow NEC's lead. But a dam preventing the impending flood of direct Internet sales exists. Large PC makers face problems involving conflicts with existing sales channels. Compaq Computer KK of Japan has developed a unique solution to this dilemma. Already offering direct sales via the Internet and telephone through its DirectPlus program, Compaq established an entirely new brand called Prosignia for such sales and permits existing agents to receive orders. Its new sales system, Direct Partner, allows partner companies to sell Prosignia PCs indirectly. Three distinct reasons are responsible for the entrance of Compaq KK and NEC into the direct PC market. PC makers have long pursued traditional indirect sales through dealers and system integrators when targeting the corporate market. But they are rapidly losing ground to the two companies that introduced the direct sales concept, Dell Computer Corp. of Japan and Gateway Japan Inc. Both mavericks report brisk sales by selling low priced products and eliminating many layers of marketing intermediaries. Dell Japan's PC shipments increased by 33% in 1998, the second largest growth rate in the industry. Its market share is 9%. Second, as a result of the protracted economic slump, the amount of corporate clients seeking low priced PC's is increasing, and they have no problem purchasing PC's through direct means. Third, selling PCs directly over the Internet is gaining acceptance as an invaluable sales channel, and it is becoming extremely common in Japan. Askul KK, a Japanese office supplier, and Autobytel Co. of the U.S., an automobile retailer, are already conducting a thriving business via the Internet. But not all PC makers are jumping on the Internet bandwagon in a big way. Many are worried that direct sales will strangle existing sales channels. If direct sales skyrocket, it is distinctly possible that sales through traditional means may sharply decline. PC makers are also concerned that such sales will precipitate the need for increased support work since they are then responsible for products sold via the Internet. This is especially problematic for small and mid size companies, the targets of direct sales that are most often ill equipped with information system experts. Among the larger companies also adopting a wait and see attitude are Fujitsu Ltd. and IBM Japan Ltd., which have only tested such sales to a limited number of large corporate clients. They may be awaiting the fate of Compaq KK, which is racing towards the establishment of a wide scale direct sales system and has solved many problems associated with this approach. But even Compaq's foresight is not sufficient. Direct Partner program participants say that margins are too thin, making business too severe. Compaq did set an extremely low price for its Prosignia products and altered the organizational structure to allow for flexible pricing. Usually, two weeks are necessary to change prices, permission coming from the parent company in Texas. For Prosignia, the Japanese office can freely change prices within a range specified at the year's beginning. As for support, Compaq says plans are underway to build a special Web site for corporate users, allowing the company to provide adequate support services. Compared to Dell and Gateway's direct marketing systems, the Direct Partner program has some impressive features. Most notably, corporate users can turn to Compaq's Direct Partners and obtain PCs in addition to integrated systems. In the race to direct PC sales, Compaq is clearly ahead. But the finishing line is a far way off. Who knows which company will win and what the price structures will look like. MARKET NEWSNTT DoCoMo To Establish Group For Walking Navigation Service NTT Mobile Communications Network Inc. (NTT DoCoMo) said it will collaborate with 33 companies to set up a consortium to construct a unified platform for a pedestrian navigation system. The DoCoMo Location Platform (DLP) will enable users to employ its global positioning system (GPS)-based location information service, as well as the Imadoko Service for personal handyphone system (PHS) wireless phones. Companies that will join the group include makers of mobile information terminals, producers of GPS devices and providers of maps and other content. Tentatively called the DLP Study Group, the consortium will form unified interface specifications compatible with various positioning methods. Also, it will develop a pedestrian navigation system that won't be affected by the gap in different positioning methods, a spokesman for the consortium said. It's first meeting will be staged in late August, and regular meetings will be held every one or two months. The 33 firms to participate in the project include 10 content providers. Among them are Alps Mapping Co., Ltd., Zenrin Co., Ltd. and Recruit Co., Ltd. The makers of GPS devices include Furuno Electric Co., Ltd., Japan Radio Co., Ltd. and SnapTrack Inc. of the United States. And a total of 18 makers of mobile information terminals will join. They include Oki Electric Industry Co., Ltd., Casio Computer Co., Ltd., Citizen Watch Co., Ltd. and Sharp Corp. Also, NTT DoCoMo announced that it will launch a positioning information service using the GPS technology of SnapTrack in December, prior to start of the consortium. The leading mobile telecom carrier said it has developed "P-doco?." This product is a positioning information terminal for the Imadoko Service. It will be released in the autumn of 1999. The price and the fee for service have not yet been fixed. The information terminal, weighing about 60 grams and measuring 74mm by 41mm by 16.5mm, will have a battery life of about 600 hours. Internet Service Offered by Softbank, Microsoft and Tokyo ElectricSoftbank, Microsoft Corp. and Tokyo Electric Power Co. plan to establish a joint company offering cheap, fast flat rate Internet access service in Japan. Each of the three will own 31%; 5% will be controlled by Yahoo Japan Corp., a Softbank unit. Various Internet access levels will be offered via a communications network combining wireless communications, optic fibre cable and phone lines. Tokyo Electric's existing fibre optic network is the system's backbone. Beginning next summer in the Tokyo area, consumers will be able to access the Internet at a speed of one megabit/second, and corporate clients at one gigabit/second. Free Internet access service for 10 years will be offered to all schools in its service area. Nippon Telephone and Telegraph Corp. will also introduce a flat rate Internet access service. NTT will charge 10,000 yen monthly for Internet access at 64 kilobits/second; the joint company will charge half as much as the industry titan. NTT's stranglehold over Japan's telecommunications industry is loosening due to allegations that it is stifling Internet and electronic commerce growth by charging too much for local phone calls. Internet use in Japan is just a quarter of the U.S. level. As of 1998, Japan's business-to-business e-commerce market was worth 65 billion yen, 3% of the U.S. level. Although several companies aim to advance in Japan's potentially lucrative e-commerce market, they face hefty capital costs and technical difficulties. But the path to success has never been a smooth one. Intel Introduces White Box PC ServerThe Japanese unit of Intel Corp., Intel KK, will introduce a "white box," non-brand, PC-server in Japan by the end of 1999. The business target is strictly Internet Service Providers (ISPs). The product will not be supplied on an original equipment manufacturing contract, nor will it be sold to user companies. The new LB440GX server is a thin and rack-mounted type. The product is already being sold in the U.S., focusing on the enterprise and ISP markets via two sales channels. Intel product integrators, which use Intel-made parts to construct white box products, present one sales avenue and Intel application solution providers, a sales channel for business ISPs, provide the second avenue. Matsushita Electric Jointly Develops Electronic Interpreter Matsushita Electric Industrial Co. said it has developed a Japanese-English interpreting system for notebook computers jointly with The Advanced Telecommunications Research Institute International (ATR) in Kyoto. The basic technology for translating spoken language was developed by ATR, an industry-government venture set up in 1986. Matsushita contributed the technology to produce translated speech. Such interpreting programs have so far relied on high-performance computers, but the new system reduces the number of functions performed by a computer. They plan to commercialize the system in the next few years in an automatic interpreter for travelers abroad. Some 4,000 words often used in restaurants and hotels are registered in the program's dictionary. The system analyzes the spoken word's relationship to words in a sentence to come up with a spoken translation. For example, if the user says "O-susume-ryori-wa nan-desu-ka," (What dish do you recommend?) or "Kinenseki-wo o-negai shimasu," (I would like a seat in the no-smoking section, please), the system will interpret these phrases into English in a matter of seconds. It can also translate from English into Japanese. Olympus, Sanyo, Hitachi Maxell Unveil MO Disks For Digital Cameras Olympus Optical Co., Ltd., Sanyo Electric Co., Ltd. and Hitachi Maxell Ltd. unveiled newly developed 50mm-diameter magneto-optical (MO) disks to serve as recording media for digital cameras. The products comply with the "iD Format" standard, and each has a capacity of 730MB. The three companies intend to commercialize the disks in about a year. Kyocera Corp., Konica Corp., Nikon Corp., Minolta Co., Ltd. and Ricoh Co., Ltd. have already expressed support for the iD Format. Olympus is employing the SmartMedia for recording media for digital cameras. The new MO disk "does not aim to replace the SmartMedia." Instead, the company expects to use the MO disk for products that require a large capacity, such as digital cameras designed to store still photos and videos with audio. The disk is based on a single-plate disk and is 0.6mm thick. The large capacity of 730MB is made possible by employing the Central Aperture Detection (CAD) magnetic super resolution type disk, which can identify recording marks only within the central area of the laser optical spot. The new disk can record about 1,800 still photos, equivalent to 2 million pixels (about 400KB). In the case of animation films of 30 frames/second, it can record about 20 minutes of such film (320 x 240 dots). Also, the disk can support overwrite capabilities. Olympus aims to further boost the capacity. To do so, it is considering a move to apply the magnetic amplifying magneto-optical system (MAMMOS) and blue-color laser, which would bring about a large increase in capacity. Fueling Our Way To The Future Kogakuin University researchers have developed a liquid fuel that supplies hydrogen to fuel cells more effectively than existing methods, making the environment friendly fuel cell a tangible reality. Through a chemical reaction between hydrogen and oxygen, fuel cells generate electricity while producing water vapor and no waste. Sekisui Chemical Co., a housing-materials maker, and the university team are assessing the new technology's viability for providing energy to homes. But the possibility of an emission free fuel for automobiles is even more alluring. The first fuel-cell powered vehicles will roll off assembly lines around 2003. Supplying hydrogen to a fuel cell is not a new idea. Nissan Motor Co. introduced a vehicle with an onboard converter that transforms methanol into hydrogen gas. Toyota Motor Corp. uses an alloy to absorb hydrogen gas into a vehicle at a fuel station for later discharge into the fuel cell unit. Foreign auto-makers, such as DaimlerChrysler AG, are testing systems for storing liquid hydrogen or compressed hydrogen gas in a tank inside the vehicle. These systems have high production and running costs due to the weight and size requirements. The new innovation has 5 to 10 times the alloy system's hydrogen absorption capacity and boasts safe fuel storage in a plastic tank; it is a lighter system. The hydrogen in the fuel equals 10% by weight; a car can travel 400km on 50 liters, a volume comparable to the equivalent gasoline requirement. No converter is used and a metallic catalyst extracts the hydrogen without costly equipment. Zero emissions are produced. The fuel is a solution of a chemical compound of metals and hydrogen but is unusually stable. Mass production should cut down the price of the fuel in its highly purified form due to the employment of naturally occurring substances that do not need to be dissolved in highly purified liquid. With the new system, the user fills the car with hydrogen rich gas at a station, hydrogen is extracted, electricity is produced and the depleted fuel is later exchanged. Researchers are perfecting a means of recharging the fuel with hydrogen via an electrochemical reaction. Although the fuel cell concept has existed for over 100 years, the cheap availability of fossil fuels has precluded its development. The profit incentives of this new fuel stem from government concerns regarding global warming and pollution. MULTIMEDIA ALERTSeeing Your Way Through a Conference Call Just Got Easier Technology that is capable of delivering more natural and realistic videoconferencing has been developed by a team of researchers at NEC Corp.'s Kansai Research Laboratories. Existing videoconferencing systems allow participants to view each other's faces in addition to the conference materials. Many users complain that the current technology creates an unnatural communication environment, inhibiting active participation. The new innovation, called Cyber Circle technology, works over fast broadband networks and includes a remote control unit, which gives users the freedom to zoom in on a speaker's face or conference documentation. Newly developed services and software capable of combining real-time images of individuals at distant locations using a virtual conference room are contained in NEC's latest technological innovation. One-on-one or group exchanges and presentations gain an air of enhanced reality, allowing participants to feel as though they are actually attending the conference. This more realistic environment may encourage individuals to engage in more rigorous discussions. Videoconferences between NECK laboratories and offices using a prototype system are suitable testing grounds for the new technology. Depending on the number of locations requiring connection, the price of the system will vary. Japan's Sega To Tie Up With AT&T For Dreamcast Game Console Japan's Sega Enterprises Ltd. will tie up with US telecommunications giant AT&T, allowing Sega's Dreamcast game console to hook up with the Internet. With the tie-up, users will be able to connect Dreamcast to the Internet through AT&T's cable television networks, the Sankei Shimbun said, adding that the two companies would soon be announcing the deal. Dreamcast will go on sale in North America and Europe in September and is intended to tackle the market dominance of rival Sony Corp.'s PlayStation game. Since its release in Japan last November, sales of Dreamcast have been slower than the firm hoped, partly because of early production problems. To drive up sales here, Sega recently cut the price of the game by a third to 19,900 yen (173 dollars). In Europe, Sega has already formed an alliance with British Telecommunications Plc for the game's Internet connection. The company is also considering connecting Dreamcast with global telecom networks covering 52 countries, to be created by AT&T and BT later this year, the daily said. The Changing Landscape Of The Japanese Cell Phone Market In a move which would significantly alter the landscape of the intensifying cellular phone wars in Japan, Japan Telecom Co. has proposed to purchase Nissan Motor Co.'s shares in Digital Tu-Ka cellular phone companies. Nissan's equity stake in the six Digital Ku-Ta companies is the focus of the purchase; each currently holds equal stakes of 20%, making them the largest shareholders. Nine regional mobile phone companies, which the six Digital Tu-Ka companies are part of, are affiliated with Nissan. The remaining three companies, centered on the greater Tokyo, Osaka and Nagoya regions, have been spotted by the telecommunications company known as DDI Corp., affiliated with IDO Corp., the mobile-phone subsidiary of Toyota Corp. Twenty-six percent of Tu-Ka Cellular is held by DDI, which expressed an interest in obtaining Nissan's shares in the three companies. In the battle against NTT DoCoMo, which controls almost half of the cell phone market, the proposed alignments would strengthen DDI and Japan Telecom, the country's third and fourth biggest telecommunications companies, respectively. Nissan and DDI affiliates now compete for larger shares in the Kyushu and Tohoku regions, and they are jointly investigating the Tu-Ka cellular company in the Tokai area. As a step toward survival ahead of industry changes slated for 2001, when the Ministry of Posts and Telecommunications will permit companies to offer integrated nationwide services in the next generation cell phone business, DDI and IDO launched nationwide services. Improved capacity and performance in multimedia data traffic will result from the new digital format services and customers will be able to use their phones anywhere in the world. Due to the limited frequency bands for allocation, the ministry will allow the entry of only three operators in each region, spurring strategic alliances among NTT rivals. The huge investment necessary to construct the next generation infrastructure, estimated at 1-2 trillion yen, is also bolstering the formation of alliances. Not surprisingly, NTT DoCoMo, using its deep financial reserves, plans to be the first provider of next generation service, slating a spring start-up for 2001. The battle for a slice of the market does not end here. New players such as KDD Corp., Japan's dominant international carrier, and foreign carriers are expected to enter the fray. Relief For Allergies In Sight Asahi Breweries Ltd. and Torii Pharmaceutical Co. have jointly developed a new form of dust-mite desensitization therapy that provides relief to allergy sufferers who react strongly to these pesky little insects. In Japan, these creatures present a significant problem, causing allergy symptoms in a large percentage of the population. Although they can be countered with thorough house cleaning, some individuals only find relief by undergoing desensitization therapy. A commercial product may be ready by 2005 since the two companies have already confirmed the effectiveness of the new therapy through animal tests, and clinical trials will soon begin. The new procedure is based on rDerf2, a protein found in dust mites that is responsible for causing allergic reactions. The substance could induce anaphylactic shock if administered in an unmodified form. But once researchers modify rDerf2's molecular structure through protein engineering, it is 100 times less reactive. When it is administered in small quantities over an extended time period, the body is then gradually desensitized to the allergen. The effectiveness of this modified protein in desensitizing the immune system to dust mite allergens has been demonstrated only in mice and monkeys thus far. Intravenous injections of modified rDerf2 over a four week period have had positive effects as a therapy against sinus infections associated with dust mite allergens. BOC and Mitsubishi Debut New Anhydride Production MethodMitsubishi Chemical Corp. of Japan and U.S.-based BOC Gases have developed a new process for the production of maleic anhydride at a pilot facility in Kurashiki, Japan. Mitsubishi has already produced a catalyst used in commercial plants for the oxidation of butane. Based on this catalyst, the new process will operate at low butane conversion to maximize selectivity to maleic anhydride. It will employ a selective hydrocarbon separation system (PETROX) developed and patented by BOC Gases to recover and recycle unreacted butane from maleic anhydride and other selective oxidation processes. Maleic anhydride is used in the manufacture of synthetic fibers, resins, plastics, elastomers and rubber for a variety of consumer goods, including textiles, dinnerware and food containers. Optical Switches Get A Boost From Organic MoleculesThe Femtosecond Technology Research Association (FESTA) has developed a promising organic material for high-speed optical switches. The material is both extremely responsive and can be fashioned into switches that run on very little energy and are inexpensive to manufacture. This new material operates at room temperature and can be powered by just 80 femtojoules per sq. micron of film compared to similar materials with a power source of 1,000 femtojoules. Also, switches made with this material would be 100 times less expensive to produce than the semiconductor switches currently employed in optical networks. Fashioned into a thin film, the newly devised organic pigment molecules respond to light very quickly, altering their light absorbency in less than 100 femtoseconds. (One femtosecond is equal to one-quadrillionth of a second.) The construction of next generation optical networks with the ability to handle huge volumes of data of more than 1 trillion bits, or 1 terabit, per second is made possible by this change in absorbency, which can be used as a switch for optical signals. Akin to bricks on a glass substrate, the pigment molecules are carefully laid down to form an association of molecules in a thin film that is only around 1 micrometer thick. When light 800 nanometers in wavelength is shined on this film, it takes just 98 femtoseconds for the molecules to change light absorbency. Light signals may be switched in different directions by passing optical signals through this film and employing 800 nanometers of light from an external force, thereby controlling the film's absorbency. The new material is extremely promising due to its two innate characteristics: its fast response time and its low energy consumption. Switch designers need a material that changes its absorbency and refractive index in less than 100 femtoseconds. Materials with this kind of response have already been developed, but they require 1,000 femtojoules of power to run. Sharp, Mitsubishi Materials To Establish Recycling Company For Electric AppliancesSharp Corp. and Mitsubishi Materials Corp. announced they will invest their combined funds to establish a new company for recycling household electric appliances in October 1999. The name of the new company has yet to be decided. The initial capital will be 200 million yen, which will be equally shared by the two companies. (115.77 yen = US$1) The establishment of the new company is a response to the implementation of the Specific Household Equipment Recommercialization Law (Household Electric Recycling Law) that will be enforced in April 2001. For the time being, there will be four types of recycled items -- televisions, refrigerators, washing machines and air conditioners -- subject to the law. The recycling plant will be established in Hirakata City, Osaka prefecture, and will be owned by Mitsubishi Materials. It will be capable of handling 360,000 units of household electric appliances annually. Construction of the plant will start in the spring of 2000, and preliminary operations will start in January 2001. Business operation will begin in April 2001. The new company is also scheduled to increase its capital to 300 million yen around March 2000, prior to the business start-up. Sharp and Mitsubishi Materials are considering asking household electric appliance manufacturers to make an investment, since they will be the recipients of recycled materials. Honda's Cleaning Up Its EnginesIn Saitama Prefecture, Honda Motor Co. has decided to build a plant capable of producing 500,000 engines a year for low-emission vehicles. The plant will be constructed on land adjacent to an existing facility in Sayama in the latter half of 2000. Initial outlays for the project are estimated at just over 10 billion yen. It is the first time in five years that a domestic automaker has embarked upon a large capital-spending project in Japan. Two lines will be up and running in the new facility by 2002, and each will turn out 1,000 engines per day. The lines, able to handle a variety of engine types simultaneously, eliminate the need to shut down and spend billions on retooling for new methods. These lines will be the first of their kind in Japan. Dioxin Cleanup Improved With Coke A simple, small and relatively inexpensive device for the treatment of soil contaminated with dioxins has been developed by a research group from the Tohoku University Institute of Advanced Materials Processing. The system eliminates dioxins by mixing the soil with powdered coke and then incinerating the mixture in a downward-flowing reaction chamber. Tests suggest the process can detoxify nearly 99% of dioxins in the dirt while operating at one-fifth the cost of the much larger equipment used in the U.S. and Europe. The new treatment process involves mixing 3-5% powdered coke with the contaminated soil and then packing the mixture into a cylindrical device. A gas burner shoots flames into the top of the device, igniting the coke, while air is sucked out from the bottom of the cylinder. The area of combustion reaches temperatures of 900-1,000 C (1,620-1,980 F) and the downward flow of air slowly drags the combustion zone down through the contaminated soil, decomposing dioxins on the way. The toxic dioxin compounds decompose into carbon dioxide and hydrogen chloride that escape as gas is removed with a filter. In tests of the equipment, dioxin levels were reduced from 330 picograms per gram of contaminated soil to less than 3.5 picograms. These values hold true for even the most toxic of the dioxin compounds, and the effect can be increased even further by also mixing dried lime into the dirt before processing. In the devices conventionally used for the treatment of dioxin-contaminated soil, the soil is stirred while being incinerated in a rotating furnace. The new device is smaller, and requires less energy for combustion and stirring. The researchers calculate that operating costs with the new system are around one-fifth those of conventional procedures. Moreover, the new device is small enough to be carried around on a truck, so it could be used for on-site treatment, helping to further reduce costs by substantially reducing the expenses involved in transporting the contaminated soil. The Japanese government has made it obligatory to remove soil in urban areas when the level of dioxin contamination exceeds 1,000 picograms per gram. Many people believe that soil in farming areas should be cleaned to even lower levels of contamination. NEC Expands Flash Production In response to the current flash-memory supply crunch, NEC Corp. will expand its line of flash-memory products to include a 32-Mbit NOR-type flash device. Low volume production of the 32-Mbit devices will begin this month; output swelling to 1 million units per month by next spring or summer. Although NEC will initially focus on the Japanese market, in time the company plans to sell its products in regions such as Europe, where the demand for cell phones is soaring. Fashioned with 0.25-micron design rules, the devices will be produced at NEC's semiconductor fab in Hiroshima, one of several NEC fabs in Japan in which NEC has decided to increase its investment. With this device, NEC aims to satisfy the recent demand for flash used in such portable applications as cell phones. NEC's goal is to combine the flash chips with a 4 Mbit SRAM device in a multichip module, a packaging configuration widely embraced among Japan's semiconductor suppliers as a means of reducing the weight and size of cell phones. NEC's latest stab at the flash market signifies a turning point in the company's history. Throughout much of the decade, NEC, the world's second largest semiconductor maker, has vacillated between aggressively entering the flash market and leaving it to larger players such as Intel and AMD in the U. S. and Sharp and Fujitsu in Japan. The company has typically chosen to maintain a low profile in the market. It now produces about 300,000 of the 4- and 8-Mbit NOR-type devices per month. In 1997, the company did attempt to enter the flash market when it agreed to co-design an 80-Mbit flash device for data storage applications with SanDisk. NEC will only report that some chips are being produced as stipulated by this agreement. NEC researchers develop flash cells, architectures and manufacturing processes. As of 1998, NEC had about two dozen patents pending for flash device technology, including some for NAND-type flash, favored by companies such as Toshiba, AMD and Fujitsu for data storage applications. But NOR-type chips used heavily in cell phones remain the focus of NEC's operations. The company aims to make its most aggressive push into the flash market next year. Mitsubishi Electric Revamps Semiconductor Strategy Mitsubishi Electric Corp. announced a new strategy that enables its semiconductor business to focus more on system microchips. The company will reorganize its DRAM operations to maintain their profitability, while also moving towards enhanced production of system ICs. While fiscal years 1999 and 2000 are earmarked as periods for the company to restructure its ailing semiconductor business, stable profits are expected to emerge in fiscal year 2001. In the DRAM business, Mitsubishi plans to focus on reducing risks rather than enhancing business scale. Development risks will be shared through its tie-up in process technology with Matsushita Electric Industrial Co. Ltd. and Matsushita Electronics Industries Ltd. Mitsubishi will also reduce production costs. By downsizing its DRAM chips, the company plans to sharpen its edge over competitors. With a 32.8 sq.mm. chip size, Mitsubishi's 64Mb DRAM is the smallest in the industry, featuring a 0.18 micron design rule. 2 million - 2.5 million units of the chip were produced monthly beginning in July on a wafer-input basis. Since some system IC models suffered losses due to intense competition, Mitsubishi decided to increase the number of its high value added products using its engineering and process technologies, thus avoiding such futile competition. Sanyo Develops Chipsets For BS Digital TVs Sanyo Electric Co., Ltd.'s collaborative effort with IBM has yielded the first chipset for use in BS Digital TV sets and Set Top Boxes (STB) that are equipped with a downdecoding function, meaning users can now enjoy a BS Digital Broadcast with their existing TV sets. Sanyo has designed the main circuit of the decoder system, composed of five chips. Sample shipments will begin in November of 1999. Monthly production will be 10,000 kits per model beginning in June 2000. An agreement between Sanyo and IBM was forged in July of 1998 that covered system LSI business enterprises for digital information consumer applications. Three-Five Systems And Mitsui & Co. To Market Microdisplays In Japan Three-Five Systems, Inc. and Mitsui & Co., Ltd. of Japan have completed an agreement under which Mitsui will conduct marketing, sales and distribution activities in Japan for Three-Five Systems' advanced display products, including its industry-leading microdisplay technology. The agreement with Mitsui marks Three-Five Systems' entry into the Japanese market with its advanced display products. The agreement covers all three advanced display products currently in or nearing production at Three Five: LCiD (Liquid Crystal intense Display), LCaD(TM) (Liquid Crystal active Drive), and LCoS(TM) (Liquid Crystal on Silicon). The LCoS technology, scheduled for production during the first quarter of 2000, is Three-Five's microdisplay technology, a thumbnail-size display with the resolution of high-definition television screens. The microdisplay is expected to be the technology platform for a variety of new products, including large viewing screens, high-definition televisions and computer monitors, and mobile telephones featuring video display linkages to remote computer terminals and to television broadcasts. Under the agreement, Mitsui will conduct sales activity in Japan, including both pre-sales customer development and post-sales follow-up and support. Three-Five Systems' displays sold by Mitsui in Japan will bear Three-Five Systems' name and logo. Three-Five Systems will provide the necessary technical and sales support, including development kits, product samples, advertising and sales materials. Three-Five Systems personnel will also be made available for customer meetings in Japan. Mitsui will initially market microdisplays into products including rear projection systems, virtual systems products, and cellular telephones that provide users with the ability to connect with remote computer systems through the Internet, via their wireless telephone service. The advent of personal information appliances, the continuing growth of wireless telephones, and the development of portable multimedia terminals, all operating within a broadband wireless infrastructure that enables wireless video communications, are creating a market for Three-Five's display products. The advantages offered by Three-Five's LCoS(TM) technology -- high information content, low power consumption, very small size, high resolution, better system performance and the potential for higher level system integration - are all features that create important advantages in such products. In addition, the LCoS(TM) technology relies on existing manufacturing systems already in place at Three-Five's Tempe fabrication line. The characteristics of Three-Five's microdisplay also make it a logical display technology for use in high-definition televisions and computer monitors, particularly in large screen applications where current display technology limits the screen size. The current worldwide market for televisions and computer monitors of all sizes (including large screen) is approximately 240 million units per year. Under the agreement with Mitsui, Three-Five's products will have access to the Japanese share of this growing global market. In addition to being applicable to televisions and monitors currently being produced, Three-Five's LCoS(TM) microdisplay is expected to make possible high definition televisions exceeding 35 inches in size, and computer monitors exceeding 19 inches, the current size limits using currently available display technologies (principally cathode ray tubes). Mitsui & Co. is one of the world's largest trading and industrial firms, with 1998 sales of over $135 billion. Mitsui was the first general or integrated trading company, established in 1876. Mitsui's wide-range of products and services include iron and steel, machinery, foodstuffs, non-ferrous metals, electronics and information technology, textiles, chemicals, energy and property development. In the fields of electronics and IT, Mitsui is active in the areas of computers, semiconductors, electronic equipment and computer software. The company also is involved in the operation of telecommunications and telecommunication-related services including mobile, long-distance, international and satellite communication. Mitsui's two core competencies include facilitating clients' international trading activities through a broad range of specifically tailored services and putting a wide spectrum of information, human, financial, and other resources to work with clients around the world to create new trade flows, new companies and new industries. STRATEGIC ALLIANCES JAPAN IN THE UNITED STATES Sankyo Starts Direct U.S. Drug Sales Sankyo Co. Ltd., a Japanese pharmaceutical maker, announced its plans to directly market its drugs in the United States by taking complete control of a local joint venture. But the company refused to issue any comments as to whether or not it also plans to take over the marketing of two of its top-selling drugs in the U.S.: Rezulin, a diabetes drug currently marketed by Warner-Lambert Co., and Pravachol, a cholesterol lowering drug marketed by Bristol-Myers Squibb Co. As of now, Sankyo licenses local pharmaceutical firms to market its drugs in the U.S. A company spokesman announced that the company is planning to acquire full ownership of Sankyo Park Davis, a 50-50 joint venture with Warner-Lambert. Sankyo drugs that are now under development in the U.S., including an anti-hypertension drug and an anti-infection drug, will then be marketed by the new unit. The workforce at the U.S. unit will be increased by more than 100 after Sankyo has transformed it into a fully owned subsidiary. Sankyo's new marketing approach comes at a time when its products are in great demand. Pravachol, Sankyo's biggest selling drug, is worth over a quarter of its worldwide sales, racking up $1.02 billion in U.S. sales in calendar year 1998. On the domestic front, Pravachol, which is marketed under the name Mevalotin, totalled 128.3 billion yen in the business year to March 1999. TTNet Sets Up Wholly Owned U.S. Subsidiary On Aug. 2, Tokyo Telecommunication Network Co., Ltd. (TTNet) set up a wholly owned subsidiary in the United States capitalized at US$1 million, the company announced. TTNet America Inc., located in Los Angeles, Calif., is headed by TTNet managing director Masaomi Kiyama and is expected to start with a staff of around four, the company said. TTNet has obtained the proprietorship of Japan-U.S. Cable, an undersea cable that directly connects Japan to the United States. The cable is scheduled for operation in the third quarter of 2000. TTNet Computer Network (TTCN), TTNet's high-speed Internet service, and Tokyo Denwa Internet, another TTNet dial-up Internet service, will use the cable, the company explained. TTNet America will take the role of procuring and running facilities such as routers and terrestrial circuits used in the United States. TTNet plans to apply for approval with the Federal Communications Commission of the United States to be designated as a telecommunications carrier that owns its proprietary facilities. Short News
STRATEGIC ALLIANCES THE UNITED STATES IN JAPAN U.S. Seeks Faster Telecom Deregulation In Japan At the 36th Japan-U.S. Business Conference, attended by 50 Japanese business leaders and 50 from the U.S., AT&T's CEO, Michael Armstrong, questioned Japan's Minister of International Trade and Industry regarding the steps toward deregulation planned for the coming year. Telecommunications was the main target of the U.S. side; Armstrong pressing for connection fees paid to Nippon Telephone and Telegraph by U.S. long distance carriers to be reduced to fuel competition. High local telephone and provider connection fees are stalling the reformation of Japan's information industry. Since international standards must be established in preparation for the telecom market's liberalization, the "Joint CommuniquÈ on Electronic Commerce," which proposed the establishment of private sector initiated rules for the protection of privacy and the stepped up liberalization of telecom businesses, was adopted by the Business Conference. It will be submitted to the U.S. and Japanese governments; similar approaches will be made to international groups such as the World Trade Organization (WTO). The U.S. and Europe have discussed e-commerce through the Trans-Atlantic Business Dialogue (TABD). Japan will be included in this trend with the latest communiquÈ. Ultimately, the U.S. side aims to create a large market beyond national boundaries through e-commerce. Critical Path And Mitsui Leverage The Power Of The Internet With the Internet rapidly taking root in Japanese society, major companies are forming new alliances that will capitalize upon Japan's dynamic information technology landscape. The latest two players to announce a formal alliance agreement are Critical Path Inc., a San Francisco-based provider of business to business Internet messaging solutions, and Mitsui & Co., Ltd., one of Japan's largest general trading companies. Critical Path plans to leverage Mitsui & Co.'s outstanding presence and relationships in Japan by allowing the Tokyo-based company to act as the exclusive reseller of its advanced, Web based, in language messaging services to Japan's businesses. Through this relationship, Critical Path will assume a pivotal role in the development of Web hosted applications in Japan. And the time is ripe for Critical Path to enter the Japanese market. A joint survey conducted by Access Media International and the Internet Association of Japan has found that Internet usage in Japan increased by 50% in the past year. As of today, 16.7 million Japanese consistently access the Internet, a figure expected to swell to 18.5 million by year-end. ADSL Service Company formed in Japan Sonet International Corp and Surigiken Co., Ltd. formed a joint venture, Tokyo Metallic Communications Co., Ltd., that will provide low cost, high speed Internet access services over existing telephone lines. Asymmetric digital subscriber line (ADSL) technology will be employed to quickly transfer data via phone lines. Data will be sent at a higher frequency band than usual due to the use of copper cables, or dry copper. Nippon Telephone and Telegraph Corp. is installing such cables in its telephone networks. By decree of the Ministry of Posts and Telecommunications, NTT was forced to make its cable available to other telecom service providers, thus increasing competition. Short News
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