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Japan

Hardware

Hitachi Ltd. (HIT) may need more funds to finance a revamp after selling a record 350.7 billion yen (US$3.9 billion) in stock and bonds. Hitachi needs money to finance factory closures and job cuts to focus on growing businesses such as trains and medical systems. Hitachi aims to reverse a multi-decade strategy of expanding into everything from televisions to vacuum cleaners and nuclear reactors after reporting a record loss for a Japanese manufacturer last fiscal year. The company will reduce about 200 units, merge its unprofitable chip subsidiary with a rival and relocate workers in its plasma-display and automotive units to cut 260 billion yen (US$2.9 billion) in costs this year.

Hitachi Ltd. has bought software assets related to next-generation mobile communications systems from Nortel Networks Corp. (OTCPK:NRTLQ) for US$10 million. Hitachi said the acquisition will help its development of equipment for Long Term Evolution mobile technology, a fourth generation technology that promises faster download speeds than third-generation mobile technology. The acquisition includes intellectual property, equipment and other assets. Parts of Nortel's assets have been sold in a number of auctions after Nortel filed for bankruptcy protection in January this year. L.M. Ericsson Telephone Co. (ERIC) said it would buy Nortel's global system for mobile communications, or GSM, business in the U.S and Canada for US$70 million, after buying the bulk of its second-generation mobile networks.

Internet

eAccess (OTC:ECLTF) will turn its mobile affiliate EMOBILE into a wholly-owned subsidiary by the end of March next year via a stock swap. Under the plan, each EMOBILE share will be exchanged for 1.6 to 1.7 eAccess shares. A final agreement is to be signed in mid-January next year, subject to shareholder approval at extraordinary meetings in late March. Currently, eAccess holds 38.28 percent of the voting rights in EMOBILE. The deal would combine the fixed broadband and mobile phone service businesses of the two companies. Through integrating facilities and sales channels, eAccess aims to promote efficiency and growth in Japan's highly mature and competitive telecoms market. eAccess' ADSL has faced increased competition from fiber-based internet-connection services, being aggressively rolled out by the incumbent NTT (DCM).

Semiconductor

NEC Electronics Corp. (OTC:NELTY) is expanding Chinese sales of system chips used in set-top boxes for receiving satellite broadcasts. Working with local design firm Beijing Cycle Century Digital Technology Co., the Japanese electronics producer has developed a module based on its Emma series of system chips that combines semiconductors, electronic components and application software in a single package. Emma contains functions to reproduce image data distributed via satellite transmission. The new system chips conform to ABS-S, China's unique satellite broadcast standard, while also meeting set-top-box makers' specifications. The set-top-box market in China is expanding due to government policies to enhance communications infrastructure, such as telephones and the Internet, as well as enable mobile and broadband communications in mountainous inland areas and remote regions. With demand for more than 4 million set-top boxes projected in the next few years, NEC Electronics is anticipating a surge in orders for Emma. It is looking to expand sales to communications companies that handle set-top boxes, with the aim of realizing around 15 billion yen (US$166.4 million), in system chip sales in fiscal 2010.

Panasonic Corp. (PC), the world’s largest plasma-television maker, acquired 50.19 percent of Sanyo Electric Co. (OTC:SANYY), the world’s largest maker of lithium-ion batteries, for 403.8 billion yen (US$4.6 billion). The company purchased 3,082 million shares in the public offering it started on Nov. 5. Panasonic is strengthening energy-related businesses such as lithium-ion batteries as television sales growth slows because of intensified competition with Samsung Electronics (OTC:SSNLF). The company estimates the global lithium-ion battery market will increase fivefold by 2018 from this year.

Mobile/ Wireless

Domestic shipments of mobile phones in Japan surged by 95.2 percent year-on-year to 2.1 million units in October. This is the second consecutive month the shipments increased. The increase is mostly due to record low shipments in October 2008 of 1.08 million units. PHS handset shipments went up 1.9 percent o 64,000 units while shipments of mobile handsets went up 101 percent to 2.04 million units in October this year.

Telecommunications

Japan ended November with 110.18 million mobile subscribers, up by 282,800 from October. Softbank Mobile again led in subscriber additions in November due to the popularity of Apple's (AAPL) iPhone that Softbank sells in Japan as well as brisk sales of new handsets with a function to connect to wireless local area networks, which debuted in November. Softbank added 87,500 new subscribers, bringing its total to 21.50 million followed by Emobile which gained 70,500 new customers, to reach a total of 2.05 million. KDDI (OTC:KDDIF) ended November with 31.33 million mobile customers after signing-up 69,200 new customers, and NTT DoCoMo (DCM) won 55,600 new subscribers to reach a total of 55.29 million. PHS provider Willcom lost 38,400 subscribers, bringing its total to 4.35 million. Willcom saw the number of customers using its 'Core 3G' service rise to 72,000, up from 65,800 in October.

Information Technology

Accenture Japan (ACN) and Cisco Systems (CSCO) have extended the scope of their strategic alliance by expanding a virtual group to include a team focused on the Japanese market. The Accenture & Cisco Business Group will provide customers with design, configuration and operation services that integrate unified communications and collaboration tools into multiple applications across companies' information technology infrastructures. The virtual group will target customers in all sectors, ranging from communications, manufacturing, health care, financial services, and resources and energy to government and social infrastructure. The services focus on data centre, infrastructure and network, unified communications, and collaboration and customer contact transformation services. The virtual group will provide consulting services for data centre optimization that support ERP platforms and cloud computing. The services are based on the Cisco Unified Computing System.

Data Center

Equinix (EQIX) has appointed Kei Furuta as the managing director for Equinix Japan. In this role, Furuta will be responsible for the overall performance of Equinix's operations in Japan, where the company currently operates two data centres. Previously Furuta served as regional head at AboveNet (ABVT) and Sprint (S) where he managed operations in Japan and Korea. He was also a founder of Energy Initiative Japan. David Wilkinson, the former managing director for Equinix Japan, will take on the new regional role of senior director, business development, Equinix Asia Pacific, to oversee the company's growing business from financial services companies in the region.

Korea

Telecommunications

SK Telecom Co. has nearly concluded talks with Hana Financial Group to buy a stake in Hana Bank's credit card unit. This move is expected to help the mobile carrier boost profit by diversifying its business away from South Korea's highly saturated local telecom market. SK Telecom, South Korea's largest mobile carrier, will buy a 49 percent stake in the credit card unit for about 400 billion won (US$344 million). Hana Financial and SK Telecom will hold board meetings and will announce the final business tie-up plan afterward. Analysts largely welcomed the move and said they expect other domestic telecom giants, which have been under severe pressure in recent years to yield profit from the highly saturated and competitive market, to follow suit.

Mobile/Wireless

Mobile telephone subscriptions are spreading fast and due to reach 120,000 early next year in communist North Korea, where an Egyptian provider started a service a year ago. The project with Egypt's Orascom, a joint venture called Koryolink has set up a third-generation mobile network. Orascom’s manager, whose name wasn't given, was quoted as saying that cell phone use was not only spreading among the political and business elite, but also citizens in the showcase capital city, Pyongyang. North Korea began a mobile phone service in November 2002, but shut it down without explanation 18 months later and began recalling handsets. This year North Korea's official media has said the country was expanding its telecom network nationwide, laying fiber-optic cables from the capital to all provinces and renovating its broadcasting sector. Mobile phones in use in Pyongyang are made in neighboring China and priced at 200 euros (about US$300) each.

China

Internet

Chinese regulators have closed down hundreds of video sharing Web sites in a new push to control Internet content. Several well-known Web sites were either closed down or ordered to delete all links to downloaded films or TV series in the past week. Most content offered by peer-to-peer Web sites violates copyright and isn't above board. The State Administration of Video Film and Television ordered it to shut down because it has no license to provide audio and video content. UUbird.com would delete all links for downloading TV series and films by mid-February to firmly support and comply with the state's laws and regulations. As of Nov. 30, authorities had shut down 414 video and audio Web sites this year for operating without a license or for containing pornography, copyright-violating content or other "harmful" information.

Google China (GOOG) will have a new business strategy, under which it will use its international technology to serve Google users in China. Google China intends to reduce investment into wholly localized products but continue to offer its global products in China. Employees including tech chiefs and project managers from webpage, maps, mobile search and other teams have left in the past few months. Google China planned to suspend its free weather forecast short messaging service in 2010.

Media, Entertainment and Gaming

· Focus Media (FMCN) made a net loss of US$127.6 million compared to a loss of US$23 million in the second quarter of 2009, and against net income of US$51.4 million for the third quarter of 2008. Total net revenue for the quarter was US$166.6 million, declining 3 percent sequentially and 26 percent year-on-year. Poster frame advertising revenues amounted to US$22.1 million, declined by 17 percent quarter-on-quarter and 50 percent year-on-year, while the company's in-store network revenues came to US$7.6 million a 16 percent decline on a quarterly basis but representing an annual increase of 7 percent. The company's LCD display network revenues, previously listed under discontinued operations in the last two quarters in preparation for a proposed merger with Sina (SINA), were US$56.0 million for the third quarter of 2009, up 4 percent from the second quarter but declined 32 percent against the comparable period last year. The company incurred a depreciation expense of US$17 million for the LCD display assets to be sold to Sina after the two companies abandoned the merger at the end of September.

· NetDragon (OTC:NDWTF) will release a new in-house developed 2.5D MMORPG, Vampire Online, in early 2010. The first-round alpha testing is scheduled to begin in the first week of December. 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.

Software

CDC Corp.'s (CHINA) online games subsidiary CDC Games said that its Chief Executive Officer Peter Yip has resigned and been replaced by Simon Kwong Chi Wong. CDC Games did not disclose a reason for Yip's departure, but would continue to serve as vice chairman of CDC Games' board of directors. Wong will continue to serve on CDC Corp's and CDC Games' boards of directors, positions he has held since 2005.

Alternative Energy

Suntech Power Holdings (STP) has signed three long-term supply agreements for up to 490MW of modules to be delivered over the next three years to three European customers. The contract stipulates that Suntech will supply 115MW in 2010, 155MW in 2011 and 220MW in 2012.

Disclosure: None.

Source: Asian Tech Stock Weekly Review (December 7-13, 2009)