• Sony Corp. (SNE) cut the price of its PlayStation 3 console by 25 percent, bowing to demands from game publishers and increasing the pressure on industry leader Nintendo (OTC:NTDOY) to follow. PlayStation 3's price will be US$299 in the U.S., with comparable reductions in Europe and Japan. Nintendo offers the Wii for US$250 and Microsoft Corp (MSFT) sells its Xbox 360 machine for as little as US$200. Sony chairman Howard Stringer, who rebuffed calls for cheaper prices as recently as last month, reversed course after PS3 sales tumbled to a two-year low. Sales of Nintendo's market-leading Wii dropped for the first time last quarter as the global recession drove down consumer spending.
• Sony’s sales of televisions in Japan may exceed its estimate, helped by government incentives to buy energy-saving home appliances. Sales of flat-panel TVs in the world’s second-largest economy increased 30 percent in July from a year earlier, the biggest gain in the past two years. The number of sets sold that month increased 54 percent. Sony, the maker of Bravia TVs ranked fourth by shipments after Sharp (OTC:SHCAY), Toshiba (OTC:TOSBF) and Panasonic (PC). Buyers of refrigerators, air conditioners and TVs that meet government-set energy efficiency criteria earn points that can be exchanged for travel vouchers, railway tickets, coupons for rice and other goods.
• Softbank (OTC:SFTBF) is seeking cooperation with Taiwanese companies to establish a mobile software market platform in Taiwan by end-2009 or early 2010. Softbank is in meetings with Chunghwa Telecom, Far Eastone Telecommunications (FET), and Vibo Telecom. Softbank plans to set-up an open software market for all handset brands and models. The company established the Joint Innovation Lab with Verizon Wireless (VZ) and Vodafone (VOD) to innovate mobile value added services.
• Combined sales at NEC Electronics (OTC:NELTY) and Renesas had 1.2 trillion yen (US$12.8 billion) last year and a merger would create Japan's biggest chipmaker, surpassing Toshiba with 30 percent of the global microcontroller market. Negotiations between NEC Electronics, which had originally hoped for a merger with either the chip operations of Toshiba or Fujitsu (OTC:FJTSY), and Renesas have been rocky. The two companies had earlier targeted an official agreement in July, and had already postponed it once for an August date. The two sides needed to reach an agreement by August to get regulatory approval in time for an April merger. NEC Electronics and Renesas Technology may receive a US$2.1 billion bailout from their parent companies to bring about the merger. The main sticking point in the deal was estimated at about 250 to 300 billion yen (US$2.66 billion- US$3.19 billion). Hitachi Ltd (HIT) and Mitsubishi Electric Corp (MSHBY) would allocate most of the 200 billion yen (US$2.1 billion) in aid being discussed while NEC Corp would shoulder some of the restructuring costs.
• Fujitsu Ltd. said its chip business will record a 10 billion yen (US$107 million) profit next fiscal year as the company cuts costs and outsources production. Sales in the unit will rise to about 310 billion yen (US$3.3 billion) in the 12 months to March 2011. The company maintained its July outlook for a 15 billion yen (US$160 million) loss from the operations this year. Cost cuts at the chip unit will save it 80 billion yen (US$854 million) in two years to March 2011. The company is also selling its money-losing hard- disk-drive business to Toshiba. Fujitsu aims to reduce expenses at the business by 65 billion yen (US$170.8 million) in the 12 months to March 31 and 15 billion yen (US$160 million) next fiscal year.
Media, Entertainment and Gaming
• So-net Entertainment Corp. will offer a popular Internet game in Taiwan, Hong Kong and Macau through a tie-up with a top Taiwanese game developer. Through game developing unit Gamespot Inc., So-net will license operation of the Livly Island gaming community site to Soft-World International Corp. The Taiwanese firm will operate the Chinese-language site of Livly Island in the new markets through a subsidiary on its community site, Glog City. Players of Livly Island raise small creatures called Livly on their own islands, and communicate with other players by visiting each other's islands. Most of Livly Island's features are available free of charge in Japan, and in the new Asian markets, Glog City members will be able to use the game's basic services at no cost as well.
• Mixi Inc. plans to boost the number of its users to 30 million from 17 million within four years. Mixi expects to attract more users by adding more functions and content to its site, opening up registration and through a marketing campaign. Launched in February 2004, it logs over 15 billion monthly views, a quarter of which are via mobile phones, but the number of its users is still a fraction of those of News Corp's (NWS) MySpace or of Facebook.
• According to Yonhap News Agency citing the Korean Central Broadcasting Station, North Korea is expanding its telecommunications networks nationwide and will be renovating its broadcasting sector. Fiber-optic cables have been laid to link the capital to all provinces, laying the foundation for digitized telecommunications. The modernization of the broadcasting sector is also being pushed through with full force. The government controlled access to outside information, and fixed the tuning controls of radios and televisions to official stations. North Korea first launched mobile phone service in Pyongyang in November 2002, but banned it after a deadly explosion in the northern Ryongchon train station in April 2004, apparently to prevent word of the accident from spreading. In December 2008, Orascom Telecom, an Egypt-based mobile carrier set up a joint venture in North Korea to establish a third-generation mobile network, North Korea's only cellular network open to individual subscribers. Koryolink, in which Orascom owns a 75 percent majority stake, had 47,863 subscribers at the end of June, more than twice as many as at the end of April of 19, 2008. The remainder 25% stake of Koryolink is held by the state-run Korea Posts and Telecommunications Corp.
• South Korean chipmakers will likely solidify their leadership while the prices of dynamic random access memory (DRAM) chips are on the rebound. The price of the benchmark DDR2 DRAM chip soared to US$1.41, a 74.1 percent increased compared to January when, it hit bottom at US$0.81. The price of a DDR3 DRAM chip, the improvement on its predecessor, the DDR2 DRAM chip, increased 77.2 percent to US$1.56 four months after it reached a low of US$0.88. As demand for personal computers, especially laptop computers, is growing along with signs of economic recovery, it will have a positive impact on Samsung Electronics Co. (GM:SSNLF) and Hynix Semiconductor Co., which have a technological edge over their global competitors.
• LG Electronics (OTC:LGERF) will produce more LCD TV panels from Taiwan this year for them to meet strong demand from overseas. The Korean brand plans to replace Sony to be the world's second-largest LCD TV brand. LG claimed that its procurement value from Taiwan this year is expected to be the same as last year's of about US$1.5 billion level. LG will purchase panels from AU Optronics Corp. and Chi Mei Optoelectronics Corp. There has been a global supply shortage of LCD TV panels in recent months, especially the Full High-Definition (HD) or 1080p-resolution 42-inch panels with about 30 percent gap. LG contracts local Ya Hsin Industrial Co., Ltd. to supply locally assembled LCD TV sets using imported TV panels and HD tuners from South Korea. The Korean brand aims to sell 150,000 LCD TVs on the island this year, making it the No. 1 nameplate in the domestic market.
• Samsung Electronics Co. and LG Electronics Inc. will buy at least 40,000 17-inch wide LCD computer-monitor panels every month from LG Electronics' display unit LG Display Co., while LG Electronics will buy back the same number of 22-inch wide panels from Samsung's LCD division. The cross purchase has been strongly encouraged by the South Korean government because it can boost the South Korean manufacturers' leadership in the LCD market.
• China reached a mobile phone export volume of 230 million in total during the first half of 2009, valued at US$16.08 billion, down 7.2 percent and 7.7 percent year on year respectively.
• China Telecom (CHA) gained a net 2.45 million new mobile service subscribers in July. Its operator’s total user number increased to 41.73 million. Broadband user base grew by 820,000 to total 49.87 million during the reporting period. Drawing an opposite path, its fixed-line service subscribers continued to lessened to 1.67 million to 197.69 million. China Mobile is expected to have up to 80 million 3G subscribers within the next two years. This is a tough call because China Mobile must use China’s own TD-SCDMA standard. The 80 million is lower than the earlier number of 100 million subscribers. TD-SCDMA subscribers in China will reach 10 million by the end of this year. China Mobile plans to spend around US$8.6 billion during 2009 on rolling out its 3G network, deploying some 60,000 base stations in 238 cities in the process.
• China Unicom (CHU) gained 680,000 mobile service subscribers in July. It boosted the total number of the carrier's mobile service users to 141.057 million. The telecom operator enjoyed a net increase of 814,000 broadband users, but lost 331,000 subscribers of its fixed-line services, falling to a total of 108.121 million.
• HTC Corp. and China Mobile Ltd. (CHL) signed a memorandum of understanding and plan to launch one TD-SCDMA phone in 2009 and six in 2010. The companies will launch five phones in 2010. In order for the market to grow, prices of smartphones in China should decline.
• China Telecom has placed a 4-million 3G handset order with dozens of domestic mobile phone makers, the biggest such order ever in China. The multi-billion yuan order, which includes 63 different customized models, will greatly expand China Telecom's 3G handset portfolios and is expected to help it attract more users. The 4-million customized handsets China Telecom ordered, bigger than its original plan of 3.6 million, are mostly priced in the 1,000 yuan (US$142.9) range and some are priced as low as 500 yuan per handset, a pricing that analysts say will make it more competitive and affordable to more customers. The lack of 3G-capable handsets has been hindering the growth of the 3G services in the country.
• China Telecom Corp.’s CDMA handset sales jumped 345 percent year on year to 13 million units in the first half of the year. China Telecom has partnered with more than 160 CDMA handset manufacturers and that the total number of CDMA handset models has hit 350. In the first six months of this year, the combined sales of 3G handsets based on all three standards rose by 113 percent, led by EV-DO handset sales. Full-year sales of 3G handsets will reach 5 million units, with sales in the second half accounting for 90 percent of the total, predicted Ma. China's mobile phone market grew 7.3 percent year on year in the first half, when 80.41 million units were sold. The country is likely to have 130 million 3G users in 2012 and about 500 million in 2015.
• ZTE Corp. (OTC:ZTCOF) had better than expected results for the first six months, citing strong domestic order flows. Net profit jumped 40.54 percent to 783 million yuan (US$114 million) after revenue surged 40.44 percent to 27.7 billion yuan (US$4.05 million). The company did not declare an interim dividend. Stripping out 28.61 million yuan of extraordinary items, which included government grants of 30.63 million yuan (US$4.5 million) and 36 million in non-operating expenses, net profit jumped 38.31 percent. The results beat analysts' forecasts of 10 to 35 percent growth.
• Huawei Technologies had garnered a 10 percent share of Europe's telecommunications equipment market and expected to gain more ground this year. The Shenzhen-based firm was targeting a huge improvement in Europe this year, with a focus on wireless equipment. The company won US$3 billion in contracts out of the US$30 billion awarded in Europe last year, a 20 percent gain from a year earlier, with sales to all major operators, including Vodafone Group and Telefonica. Huawei also made a significant breakthrough in the U.S. The company's gains defy the trend in the industry, which has been hurt by falling demand and intensifying price competition. Its net income rose 20 percent to US$1.15 billion last year while its major rivals, Ericsson (ERIC) and Nokia (NOK) Siemens (SI) Networks, suffered an almost 50 percent drop in annual profit, and Alcatel-Lucent's (ALU) full-year loss widened 48 percent.
• Reliance Communications Ltd. and China Telecommunications Corp. will open their terrestrial cable link, which is the first between India and China. Bookings for traffic on the 300-kilometer cable are already in progress. Undersea cables to connect the two countries are already in place, but a land link will help reduce the risk from complete dependence on undersea cables. Traffic on undersea cables has been disrupted in recent times due to natural causes such as typhoons and earthquakes. A terrestrial cable link is also less costly to put up and maintain.
• China Mobile Ltd. will sign a bilateral cooperation agreement related to 4G technology with Taiwan's Industrial Technology Research Institute. The developing next-generation 4G technology is now in progress. The company plans to start testing of its 4G network next year.
• MediaTek Inc. and China Mobile Ltd. agreed to develop the TD-SCDMA wireless technology. MediaTek is still offering high-quality products and services to help China Mobile introduce China's homegrown TD-SCDMA wireless technology. In China Mobile's last two procurements of TD-SCDMA handsets and data cards, 60 percent of the products have chips developed by MediaTek.
• China Telecom Corp. had first-half profit decreased to 28 percent after the company increased spending to market its mobile-phone services. Net income declined to 8.41 billion yuan (US$1.23 billion) from a year earlier. The profit, which excluded gains from fees the company used to charge to install fixed lines. China Telecom boosted sales incentives and upgraded networks in its wireless business to close the gap on China Mobile. Costs may rise further as the nation’s carriers step up marketing of high-speed services this year. First-half sales increased 15 percent, as revenue from China Telecom’s mobile- phone division helped compensate for declining fixed-line income.
• China Telecom plans to launch a procurement meeting for buyers of CDMA cell phones without getting profits. The carrier's mobile terminal management center has informed its province-level branches, mobile phone agents, and manufacturers about the procurement meeting. China Telecom will put cell phone manufacturers face to face with distributors for negotiations, which may even result in on-the-spot orders. The tightest bottleneck the telecom operator faces is its inadequate cell phone models. China Telecom would focus on managing cell phones rather than sales.
Media, Entertainment and Gaming
· China online game developer NetDragon (OTC:NDWTF) reported profit for the first six months of 2009 was down approximately 42.4 percent to 66.39 million yuan (US$9.7 million) from 115.19 million yuan (US$16.9 million) same period last year. NetDragon's revenues grew approximately 4.3 percent year-on-year to 336.77 yuan million (US$49.3 million) from 322.90 million yuan (US$47.3 million) in the same period last year, which the company attributed to the launch of self-developed a cartoon version of the turn-based online game Way of the Five, the company's crackdown on private servers for in-house developed 3D fantasy MMORPG Eudemons Online and the launch of several expansion packs during the period.
· Blue Mobile, on offline arcade game developer signed contract with Flyhigh Group to supply local arcade game. Flyhigh Group runs arcade game theme mall in 22 places including Shanhai. The company will have right to supply games from planning stage to final delivery if local developers meet the requirement proposed by Flyhigh Group. As a result, it will remove problem of illegal copy and circulation, the largest obstacle in advancing into China through Flyhigh Group. It will bring fresh air into local arcade game market, which is in downturn. The company is in process of assessing to provide 13 local arcade games with Flyhigh Group, so the contract will be done soon.
• SVA (Group) Co., Ltd., a troubled LCD panel maker in China, is likely to pick Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd. as the buyer for its loss-making 5G LCD panel production line. Tianma Microelectronics Co., Ltd. is losing interest in the production line after a sweeping investigation. Tianma Microelectronics, which offered 2.55 billion yuan (US$373 million) for the production line in the previous round of quoting, lowered its offer after completing the investigation on August 14. Such an offer-cutting will also lower possibilities for the Shenzhen bidder to take over the operation. The conscious pull-off, on the other hand, will probably push Wuhan Zhongheng Group closer to the seller and win out in the bidding with an offer of 2.8 billion yuan (US$409 million).