Nikon plans to chop 2,000 jobs, or 10% of its workforce, primarily on account of a downturn in its mainstay digital camera enterprise and structural modifications within the international semiconductor trade, highlighted by sluggish efficiency of high American chipmaker Intel.
The Japanese multinational is now staging a price-cutting offensive out there for semiconductor manufacturing tools, in line with trade officers.
As soon as the world’s largest maker of semiconductor manufacturing tools, Nikon has seen its market share fall to 7%, affected by structural market modifications symbolized by US chipmaker Nvidia overtaking Intel when it comes to market capitalization.
Whereas Nikon has been supplying 70% to 90% of its chipmaking machines to Intel, it’s now looking for out new prospects with a price-cutting technique to be able to cut back its extreme reliance on the Santa Clara, California-based firm, a securities analyst stated.
Nikon is reportedly advertising and marketing the machines to chipmakers in China and elsewhere. Earlier in November, nevertheless, Nikon President Toshikazu Umatate admitted that the efforts had been proving to be a problem, saying, “We haven’t advanced the development of new customers as fast as expected due to the effect of the novel coronavirus crisis.”
Nikon had expanded its semiconductor manufacturing equipment enterprise consistent with home electrical and digital tools makers dealing with pc chips. However as these corporations successively pulled the plug on or trimmed down their chipmaking operations within the decade from 2000, Nikon has elevated the provision of its merchandise to Intel.
When Nikon fell into monetary difficulties in 2002, Intel offered it with a growth value of JPY 10 billion yen (USD 96.33 million), by accepting convertible bonds issued by the Tokyo-based firm.
It seems that the long-standing mutual reliance between the 2 corporations is beginning to backfire.
Nikon offered 9 chipmaking machines within the April-September interval, half of what it offered in the identical interval a 12 months earlier, Nikon stated at a outcomes briefing in November. “Unit sales of semiconductor exposure machines decreased sharply partly because a major customer’s investment in them has run its course,” Nikon stated, referring to Intel.
“As the chip business has come to a difficult phase, we may need to flexibly review it, depending on our main customer’s situation,” Umatate stated.
However a extra critical matter for concern is Nikon’s small presence out there of apparatus for the intense ultraviolet lithography (EUV) technique of transferring circuit patterns onto silicon wafers. Whereas demand for the cutting-edge know-how is predicted to develop, Nikon has retreated from creating such tools reportedly due to the excessive prices concerned. The retreat happened because the administration of Nikon on the time concluded that the financial rationality of the operation couldn’t be justified, in line with the corporate.
ASML of the Netherlands, the world’s largest provider to the semiconductor trade by offering lithography programs for the manufacture of built-in circuits, is the only firm that has succeeded in business manufacturing of EUV tools.
Intel has thus procured the tools from ASML however is taking time to construct new manufacturing strains. Within the meantime, the American chipmaker is dropping its competitiveness, trade analysts stated.
Intel, which has been producing semiconductors by itself, will think about farming out the manufacturing to a significant contract producer, Chief Government Bob Swan stated in late July.
Swan made the assertion apparently as a result of Nvidia, which has topped Intel in market capitalization, has succeeded in its fabless enterprise model of designing and creating chips however outsourcing manufacturing.
If Intel cuts again by itself manufacturing of semiconductors, Nikon is more likely to be immediately hit by a drop in gross sales of its chipmaking machines.
In fiscal 2020, ending on March 31, 2021, Nikon is forecast to log JPY 430 billion in consolidated gross sales, down sharply from JPY 840 billion in fiscal 2015. The projected gross sales decline is basically ascribable to an anticipated drop in gross sales to 140 billion yen, from JPY 520 billion, within the cameras and different image-capturing units division.
The division is forecast to incur an working lack of JPY 45 billion within the present fiscal 12 months. Of Nikon’s 4 divisions, working revenue is predicted solely in semiconductors and liquid crystal show panel manufacturing units, although it will possible be a meager JPY 1 billion.
Nikon can be in an unfavorable place relative to home rival Canon out there for steppers that switch circuit patterns onto silicon wafers within the chip manufacturing course of. Though the 2 corporations break up the marketplace for publicity tools for Flat-panel shows, Nikon doesn’t produce deposition apparatuses used to make natural electroluminescent panels within the subsequent course of. A Canon subsidiary is thought to be having the most important share of the worldwide marketplace for these.
Available in the market for mirrorless cameras which have lured customers away from single-lens reflex cameras, Canon can be edging forward in growth and gross sales.
Additionally aggressive about new operations, Canon is increasing its enterprise of monitoring cameras for company use via Axis Communications, a Swedish firm that makes a speciality of community cameras for bodily safety and video surveillance, that it acquired in 2015. As well as, Canon is planning a overview of its enterprise portfolio together with business printing providers and medical tools.
As China is striving to extend home manufacturing of semiconductors within the wake of US sanctions on chip exports, trade officers stated there was a possibility for Nikon to seize prospects amongst Chinese language chipmakers.
In addition to its plans to search out new prospects, the corporate additionally has a technique of actively increasing its chip enterprise for the upkeep of current tools and the manufacturing of peripheral machines, together with testing units relevant to EUV know-how and varied different chipmaking strains.
In response to a structural reform plan introduced Nov. 5, Nikon will cut back the division’s working bills by JPY 63 billion via transferring the manufacturing of cameras from Japan to Thailand and job cuts. Focusing manufacturing on cameras for professionals or images fans, Nikon will search to deliver the division into the black in fiscal 2021, regardless of operational reductions.
The reform, although drastic, may find yourself merely saving the corporate time if Nikon fails to show across the chipmaking tools enterprise and develop new areas of operation.
This text first appeared on Nikkei Asia. It’s republished right here as a part of 36Kr’s ongoing partnership with Nikkei.
