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Japan

Mobile/ Wireless

Korea and Japan have a half of the world's patent for mobile communications. In the Asia Pacific Mobile Industry Observatory released by the GSM Association, Korea accounts for 14 percent of the world's patent for mobile communications technology. With Japan which has 36 percent of the world's mobile communications patent, the both countries in the Asia Pacific region sweep the world's patent for mobile technology. The mobile communications industry also made both direct and indirect impacts on job creation. In Korea, the industry created 277,000 jobs, much higher than Australia’s 106,000, New Zealand’s 19,000, Hong Kong’s 37,000 and Singapore’s 40,000.

Semiconductor

Toshiba Corp. (OTCPK:TOSBF) will grow its Chinese business by at least 10 percent on the year in 2010 according to Takaaki Tanaka, the firm's chief representative in China. Growth of at least 20 percent is targeted for the social infrastructure segment, which includes a power generation equipment business. This is expected to offset a slump in semiconductors and other electronic devices stemming from falling prices. Toshiba aims to boost its market share in China by accelerating the releases of home electronics and personal computers developed in Japan. The Chinese business posted sales 76.8 billion yuan (US$11.2 billion) for 2008.

Telecommunications

The Yomiuri newspaper reported that Softbank (OTCPK:SFTBF) may purchase Japanese PHS services provider Willcom on condition that the company's lenders waive a portion of its 93.5 billion yen (US$1.05 billion) debt. Willcom has about 4 million subscribers. Softbank spokesman Katsumasa Tochihara told Bloomberg News that the report was based on speculation. Willcom said in September that it would seek talks with creditors to reschedule debt repayments.

Korea

Telecommunications

LG Telecom Ltd. won shareholder approval to merge with LG Dacom Corp. and LG Powercom Corp. as it seeks to step up competition against KT Corp. (KTC) and SK Telecom Co. The merger, scheduled for completion by December, will create a company with annual sales of about 8 trillion won (US$6.8 billion) as LG Telecom seeks to lure customers by bundling high-speed Internet with wireless and fixed-line phone services. South Korea’s telecommunications industry has undergone consolidation in the past two years as operators attempt to cut costs in a market where more than 90 percent of people own a mobile phone and nine out of 10 homes have broadband Internet connections. LG Telecom sees the venture to aid it pare costs, including marketing expenses, by 0.8 percent to 2 percent of revenue from next year until 2014. LG Telecom said it will offer 2.149 shares for each LG Dacom stock and 0.742 share for every LG Powercom stock.

SK Telink said that its annual revenue would reach 303 billion won (US$257 million) with the growth driven by the B2B business. The company is expanding its business from the international call, famous with the identification number of 00700, to the B2B market like the line-rental business, the VoIP service and the nationwide identification number for financial institutions.

Semiconductors

The market share of Korean DRAMs is up 7.9 percent with 57.2 percent worldwide. A market survey shows that Samsung Electronics (OTC:SSNLF) remains at the top with 35.5 percent market share by sales revenue amount in DRAM market in 3Q. Hynix follows with 21.7 percent to record a 20 percent market share for 4th consecutive quarter.

Samsung Electronics will accomplish Triple Crown this year in shipment, sales revenue and operating profit this year. A market survey reports that Samsung Electronics is only company among global big 5 to expect plus growth in all 3 growth rates. Samsung is seen to record 219 million units in shipments, up 12 percent from a year ago, and 22 percent and 32 percent increases in sales revenue and operating profit. LGE has shown remarkable growth in sales revenue but is seen to show minus growth in operating profit. Top 3 firms like Nokia (NOK), Samsung and LG (OTC:LGERF) are seen to record surplus in cell phone business this year but Motorola (MOT) and Sony Ericsson (SNE) will have deficit. Nokia, Motorola and Sony Ericsson showed less growth in all 3 areas. But only Motorola, which has changed its fundamentals, will have higher growth in operating profit.

The South Korean government cooperated with the leading semiconductor manufacturers on a project to develop a next-generation memory chip, an effort to help the country maintain its lead in the industry. The project calls for the government to work with Samsung Electronics Co. and Hynix Semiconductor Inc. in conducting research and development to make the world's first spin transfer torque-magnetic random access memory devices. Samsung and Hynix, which effectively control the world's memory chip market, are vying with Japanese companies to become the first to manufacture a STT-MRAM chip. The market for the advanced memory device with faster processing time is projected to top US$53 billion worldwide in the target year. The joint R&D effort will also give the country an opportunity to gain insight into basic technologies that can further buoy the country's world-class competitiveness in the semiconductor industry.

Creditors of Hynix Semiconductor Inc. will re-invite fresh bids for a major stake in the company next month and accept letters of intent from potential investors by the end of January. The move comes after Hyosung Group, a midsize South Korean conglomerate, decided earlier this month to drop its bid for a 28.07-percent stake in Hynix Semiconductor. Managers for the sale of the chipmaker will send out invitational notices on the Hynix sale. Nine creditors agreed 100 percent on the resale of Hynix Semiconductor. The invitations, as with the previous ones, will be made only to South Korean companies. The chipmaker was put under joint supervision by the creditors in October 2001, when it faced a credit crunch amid a faltering semiconductor business climate. Starting in 2001 and up to 2002, KEB and other creditors injected US$4.6 billion to bail out Hynix by swapping the chipmaker's debts to stocks.

China

Internet

Online travel services provider eLong (LONG) booked net income of 7.5 million yuan (US$1.09 million) in the third quarter of 2009. Hotel commissions have increased 5 percent year-on-year, driven by a 13 percent year-on-year increase in room nights booked in the quarter but offset by a 7 percent year-on-year decrease in commission per room night, due to a higher proportion of budget hotel bookings. Revenue from air ticketing commissions increased 27 percent on an annual basis. eLong would have net revenue for the fourth quarter of 2009 increase by 5-15 percent year-on-year.

Alibaba.com (OTC:ALBCF) has recorded more than 10.5 million users from outside of China, an increase of 50 percent compared with this time last year. Over 45 million small and medium-sized companies have registered on Alibaba's overseas platform. Alibaba's online payment tool Alipay had more than 200 million users.

Mobile/Wireless

Hurray! Holding Co., Ltd. (HRAY) and the shareholders of Ku6 Holding Limited agreed to the sale of Ku6 to Hurray!. The agreement includes an all stock transaction under which all of the outstanding capital shares of Ku6 will be sold to Hurray! and all of the outstanding employee stock options of Ku6 will be cancelled, in exchange for an aggregate of 723,684,204 Hurray! ordinary shares, of which 44,438,100 will be represented by American Depositary Shares of Hurray!, each representing 100 ordinary shares of Hurray!. Ku6 will retain its brand name and become a wholly-owned subsidiary of Hurray!. The Board of Directors of Hurray! has unanimously recommended this transaction. The transaction is expected to close in the first quarter of 2010.

Orsus Xelent (ORS) saw its revenues in the third quarter drop by 34.6 percent to US$19.13 million from US$29.24 million in the year-ago quarter. The company's net income fell by 53.16 percent to US$1.37 million or US$0.05 per share, from US$2.93 million or US$0.10 per share in Q3 2008. Most sales in the third quarter were in the lower end of the Chinese telecommunications market where price wars and intense competition served to boost industry sales, but this left little room for introducing higher margin, high-end products. The company sees full year net income and revenues to be slightly slower than in 2008.

Lenovo Group (OTCPK:LNVGY) is acquiring the entire interest of Lenovo Mobile Communication Technology Ltd. from a group of investors led by Hony Capital, the private equity arm of Legend Holdings. Lenovo Mobile now ranks No.3 in China’s mobile handset market and is the No.1 domestic brand. The transaction is conditional upon Lenovo independent shareholder approval. Convergence between the personal computing and mobile handset industry has been a key technology trend over the past several years worldwide. The two technologies produced different user experiences that are evolving and combining to create new generations of devices, applications and Internet services. China is entering a high growth phase. Driven by the government and telecom service carriers, the demand for mobile Internet devices has created a huge market.

Telecommunications

The user base of China's 3G services will reach 7 million, and the proportion of China-made 3G equipment exceeded 75 percent of the 3G market by the end of the first half of this year. Li Li, deputy director of the Department of Science and Technology of MIIT, said at the Next Generation Broadband Wireless Mobile Communications Development Forum that the number of China's mobile phone users was more than 700 million at present, and 3G mobile communications is a long-term focus of attention for the industry. China Mobile (CHL) had total TD-SCDMA service subscribers of 2.31 million; China Unicom's (CHU) WCDMA users topped 1.02 million, including 215,000 users of wireless network interface cards; and the user base of China Telecom's (CHA) mobile services reached 49.92 million.

Hardware

TPV Technology Ltd. said that Chi Mei Optoelectronics Corp. has no plans to dispose its stake in TPV. Chi Mei, which bought a 7.66 percent stake in TPV in 2007, will continue to supply panels to Hong Kong-listed TPV. TPV was considering shifting orders from Chi Mei to AU Optronics Corp. and Samsung Electronics Co, and that Chi Mei might sell its stake in TPV following its sale to Innolux Display Corp. Third-quarter net profit was US$39.50 million. The figure reflects 26 percent growth compared with the US$31.35 million recorded in the same period of last year, due to a decrease in financial costs.

Media, Entertainment and Gaming

· China has 69.31 million online gamers, higher 24.8 percent from 2008. Large-scale casual game and MMORPG users account for 67.9 percent and 61 percent of the total respectively, higher 19.8 percent and 11 percent from the previous year, while 38.9 percent of total users are female. Students comprise 37.2 percent of online gamers, with 46.1 percent of the online gamers between the ages of 10-19. 222 million of China's 338 million Internet users used online video sites, higher 23.8 percent year-on-year.

· The9 (NCTY) had net loss of 73.6 million yuan (US$10.8 million), a 7 percent reduction from a net loss of 79.2 million yuan (US$11.6 million) in the prior quarter and compared with net income of 80.5 million yuan (US$11.8 million) in the third quarter of 2008. Total net revenues were 25.5 million yuan (US$3.7 million) in the quarter, down 91 percent sequentially and 94 percent year-on-year, which the company attributed to the expiration of its license agreement to operate World of Warcraft (WoW) in China in June. Net revenues attributable to operations of non-WoW games increased 55 percent quarter-on-quarter.

· Giant Interactive Group Inc. (GA) announced net income of US$29 million and net revenue of US$42.5 million for the third quarter of this year. The company's active paying accounts for online games, including ZT Online and its various editions, Giant Online, and My Sweetie, decreased 7.9 percent quarter on quarter, but increased 18.3 percent year on year to 1.1 million in the third quarter. The average revenue per user fell 13.5 percent quarter on quarter and 8.1 percent year on year to 259.40 yuan (US$37.97). Yuzhu Shi attributed the quarter-on-quarter fall in revenue and user number to the forced canceling of its game products' Treasure Box feature in July, in response to China's newly issued official rule on the use of virtual currency. Giant Interactive had a 14.75 quarter-on-quarter decline in net profit or an increase of 47.43 percent year-on-year. The company also had a year-on-year increase of 9.42 percent in total revenue. Giant Interactive is reorganizing its game R&D structure, and will implement revenue-sharing programs to third-party game R&D teams.

· NetDragon (OTC:NDWTF) saw revenue climb 10.4 percent year-on-year but sank 7.4 percent quarter-on-quarter to 150.9 million yuan (US$22.1 million) in the third quarter of 2009. Third quarter profit was higher 62.7 percent year-on-year and 7.9 percent quarter-on-quarter. The company recorded 519,000 peak concurrent users (PCU) in the third quarter, declined from 632,000 in the previous quarter and 544,000 one year ago. Average concurrent users came out to 273,000 in the quarter, declined from 310,000 in the second quarter of 2009 and 311,000 in the third quarter of 2008. NetDragon will launch 2.5D Chinese fantasy MMORPG Tian Yuan, 2.5D Q-style turn-based MMORPG Disney Fantasy Online, and the English version of Eudemons Online expansion "Demon Rising" before the end of the year. Games in the pipeline include CJ7 Online and Dungeon Keeper Online to be launched in 2010 and a new version of in-house 3D MMORPG Ultima Online in 2011.

· Shanda (GAME) will spend US$100 million to increase its stake in music production, artist development and wireless value-added services provider Hurray! Holding to 75.5 percent through a new share issue. Shanda will merge the company with online video site Ku6.com into a new company under the Hurray! brand with Ku6.com CEO Li Shanyou as president. Li has signed an agreement with Shanda to make the company profitable within two years or leave.

· The number of massive online game players in China will amount to 69.31 million in 2009, up 24.8 percent from the year before. The number of massively recreational game players is seen to reach 47.06 million this year, higher 19.8 percent from 2008, and the number of massively multiplayer online role-playing game players is estimated to grow 11 percent. Of those online game players, 38.9 percent are women, 46.1 percent are aged 10 to 19, and 37.2 percent are students, the report noted. More than 70 percent of the parents do not have a clear-cut standpoint of online games.

Software

Kingsoft had net profit of 69.1 million yuan (US$10.1 million) in the three months ended September 30, 2009, representing a decrease of 28 percent quarter-on-quarter or 33 percent year-on-year. Revenue increased by 3 percent sequentially and 13 percent year-on-year, of which the entertainment segment was higher 3 percent quarter-on-quarter and 9 percent year-on-year. The company had daily average peak concurrent users (PCU) over the quarter of 1.06 million, an increase of 11 percent against the prior quarter and 7 percent compared with the year-ago period, which the company attributed to the commercial launch of its in-house developed 3D martial arts MMORPGJX Online 3 and the launch of 2D MMORPG JX Online World in Vietnam.

Linkage Technologies International Holdings Ltd. (BOSS) plans to raise as much as US$175 million from an initial public offering of American depositary shares on the New York Stock Exchange. The company sees to benefit from the recent restructuring of China's telecom industry, which increased competition and likely will require companies to spend more on information technology and new technology, it said in a filling with the U.S. Securities and Exchange Commission. Proceeds from the share offering will be used for research and development and new offices and possibly for acquisitions of businesses and technologies. In April 2002, Intel Capital Corp and Softbank China Venture Capital injected US$14 million into the company. The company's profit in the first half of this year nearly tripled from a year earlier to US$15.1 million while revenue doubled to US$66.6 million.

The core business of Kingsoft continued to expand. Revenue boosted by 13 percent year-over-year. Two major operational indicators, daily average peak concurrent online games users and monthly average paying online games users, increased by 7 percent and 25 percent year-over-year respectively because of the commercial launch of JX III in China, the Company's first 3D MMORPG (multi-player online role playing game), and the commercial launch of JX World in Vietnam. Gross profit boosted by 12 percent year-over-year. Profit attributable to owners of the Company for the period had a year-over-year declined 33 percent because of higher cost of revenue as well as selling and distribution costs incurred by the launch of JX III, coupled with increased research and development costs. Revenue from entertainment software business and applications software business represented 66 percent and 33 percent respectively of total revenue. Revenue from entertainment software business increased by 9 percent year-over-year.

Semiconductor

Huawei Technology will partner with the government of German state North Rhine Westphalia to invest 20 million euros (US$29.9 million) to establish an innovation center in the state capital Dusseldorf. Construction of the center is scheduled to start next year. The company recorded US$4 billion in terminal sales in 2008 and targets sales of US$5 billion in 2009. The company's terminal division hires at least 6,000 staff.

ST-Ericsson has shipped 5 million TD chipsets in China, confirming its leadership in the TD-SCDMA standard. The operator has also reached a milestone by offering its service to more than 100 models of TD devices, including handsets, data cards and embedded devices. The company works with both global and local players to offer basic communication to high-speed mobile internet and advanced multimedia, across all technology standards.

Alternative Energy

LDK Solar (LDK) and multi-crystalline photovoltaic (PV) module manufacturer Trina Solar (TSL) both had improved financial results for the third quarter of 2009, reflecting the PV industry's fast recovery. In the third quarter, LDK Solar achieved prime operating profits of US$56.8 million, in contrast with its US$205.5 million net loss in the second quarter. Its gross profit margin reached 20.1 percent, compared with 22.7 percent in the previous year's quarter and negative 90 percent in the second quarter of this year. Trina Solar shipped approximately 123 MW of solar modules in the third quarter, an increase of 91.9 percent from the previous quarter and 84.7 percent year on year. Total revenues reached US$249.7 million, up 66.5 percent from the second quarter but down 14.4 percent year on year. Gross margin was 28.5 percent. Net income amounted to US$40.1.

Outsourcing

The Chinese outsourcing market is dominated by foreign competition. The Chinese government has set up 20 cities for outsourcing business and the made large investments in infrastructure, education, training and tax incentives in an attempt to grow business. However, Ovum senior analyst Patrick O’Brien, has produced a report showing that the Chinese outsourcing market is being dominated by foreign in the sphere who are setting up their own Chinese subsidiaries.

Source: Asian Tech Stock Weekly Review (November 23–29, 2009)