Asian Tech Stock Weekly Review (December 21–27 2009)

by: IRG Ltd


Mobile/ Wireless

The Nikkei reports that NEC Casio Mobile Communications, the entity which will be created through the merger of the mobile businesses of NEC (OTC:NELTY), Casio and Hitachi (HIT), aims to ship some 5 million handsets overseas in fiscal 2012. This would be an increase of 200 percent of the aggregate shipments for fiscal 2008. NEC Casio Mobile Communications will launch new handsets, including smartphones, in North America, as well as in Mexico and Australia, by the end of fiscal 2011.


Panasonic Corp. (PC) has developed a rechargeable battery that can store 10 percent more power than a model introduced earlier. Panasonic increased the lithium-ion battery’s power to at least 3.4 amperes per hour. The consumer electronics maker said on Dec. 18 that it began mass production of a 3.1 amperes per hour rechargeable lithium- ion battery suitable for laptop computers. Panasonic estimates the global market for such batteries will increase fivefold from this year to 3.2 trillion yen (US$35 billion) in 2018, driven by expansion of low-emission vehicles and mobile electronics.

Panasonic has received regulatory approval from the Federal Trade Commission Bureau for the acquisition of SANYO Electric (OTC:SANYY), under the condition that SANYO Electric will sell its portable nickel metal hydride battery business. SANYO Electric will sell the business to FDK Corp., a subsidiary of Fujitsu Ltd. (OTCPK:FJTSY). Panasonic has received regulatory approval from the China's Anti-Monopoly Bureau, the European Commission and the Japan Fair Trade Commission to acquire SANYO Electric.


Softbank Mobile (OTCPK:SFTBF) will terminate its 2G (PDC) service on March 2010. Softbank has informed its 2G subscribers of the imminent discontinuation and is encouraging them to migrate to its 3G services. Rival NTT Docomo (NYSE:DCM) earlier announced that it would end its 2G (Mova) service but will not terminate until end-March 2012.

The telecommunication equipment market in Japan is expected to be approximately 3.3 trillion yen (US$36.1 billion) this year, a 8.5 percent drop from the previous year. As mobile phone upgrade cycles continue to grow longer and the global recession depresses demand, the market is forecast to hit bottom in 2010 and remain flat or show slight growth in 2011. The Communications and Information Network Association of Japan (CIAJ) forecasts total market value in 2014 would have a decrease of 6.0 percent over the figure for 2008. In 2008, the Japanese equipment market saw continued large-scale investment in infrastructure, including preparation for NGNs, but with the maturity of the mobile handset market and the launch of new sales plans, upgrade cycles grew longer and drastically reduced demand.



South Korea's unification ministry said that a new military telecommunication line will soon link South and North Korea. It is set to be ready by early January and will promote better inter-Korean communication. South Korea started working on upgrading the existing communication equipment by installing fiber-optic cables last October. Chun Hae-sung, South Korean unification ministry spokesman said that the cable connecting operations are being conducted in the east and west sea area between the north and south. He also said that once the cable is launched, it expects more prompt and stable exchanges of information regarding crossing the border and better traffic for its people.


Samsung Electronics (OTC:SSNLF) targets a 30 percent share of the Taiwanese handset market and hopes to overtake Nokia (NYSE:NOK) as the number one handset brand next year. The company currently has a 22 percent share on the Taiwanese handset market and is the number two supplier, which is lower than the company's market share in other regions. Samsung recently launched the Pixon12 M8910 and 18910 HD mobile phones in Taiwan. The M8910 comes with a 12-megapixel camera with a 28mm wide angle and 5x optical zoom, while the 18910 HD features an AMOLED touchscreen, 720p HD video recording, and a 8-megapixel camera.


Hynix Semiconductor Inc. raised its investment budget for 2010 to 2.3 trillion won (US$2 billion). Its capital spending plan for next year will be more than 1.5 trillion won (US$1.3 billion). The expenditure for 2010 may change depending on market and business conditions. The chipmaker will use most of its 2010 investment to upgrade to a more advanced computer-memory chip processing technology and for research and development. Hynix had its first quarterly profit in two years in the third quarter on higher prices helped by an industry wide production cut.

Media, Gaming and Entertainment

CJ Shopping Co. will buy a controlling stake in On*Media Corp. for 434.5 billion won (US$369 million) to help expand its customer base. CJ will acquire a 55.17 percent of On*Media, which operates channels ranging from movies to cartoons to online games, from Orion Corp., the owner of the largest stake, and other shareholders. It will pay 6,669 won per On*Media share. The purchase will ease competition in the industry and may help CJ Group to turn around its unprofitable media businesses, said Lee Sang Hun, an analyst at HI Investment & Securities Co. CJ Group also operates CJ Media Co., a program provider, and cable operator CJ HelloVision Co.

Wemade Entertainment said that it reached an agreement with Samsung Electronics to cooperate in the gaming and content business. With the agreement, various gaming contents developed by Wemade will be inserted to personal computers and smartphones made by Samsung Electronics. In addition, the gaming contents of Wemade will be distributed to all around the world through the sales channel of Samsung Electronics. As the first phase of the cooperation, Samsung Electronics will manage the global service of Wemade's latest game. This agreement will give a strong momentum for the growth to Wemade which has been a frontier of the Chinese gaming market. By taking advantage of strength that the both companies have, the two companies will create a win-win situation in the global business.



The Ministry of Industry and Information Technology (MIIT) called on domain name registration management and service institutions nationwide to improve management measures to prevent websites evading supervision by changing domain names. The MIIT requires institutions to establish or update blacklist systems to keep track of owners of websites that had been shut down. It also require to keep tabs on domain name applicants to provide true and accurate registration information, and to require re-registration for domain names that are transferred to other people. This will prevent the publication of websites for which domain names are not registered, and to suspend website publication if government departments confirm that they contain pornographic content or are involved in illegal operations. This would also solve associated problems including those related to promotional partners, co-operation models, promotional models and network connections.

China's instant messaging (IM) user numbers will reach 277 million by the end of 2009, a 23.7 percent increase year on year. Among total users, one-third accessed IM via their mobile phones, with the number hitting 91.41 million. Most IM users’ age between 20-29 years, the number of whom amounts to 111 million, accounting for 40.2 percent of the total. The IM user age structure shows that younger people are more inclined to use the Internet application. However, the age group requires advice and instructions when using IM software, since they are vulnerable to outside influences and can't easily distinguish between healthy and harmful information. When using IM software, 75.5 percent of users believe that account number security is the most concerning issue, and 48.7 percent of users have lost their accounts to theft or forgetfulness. Meanwhile, the general security awareness among IM users is low, as 74.2 percent of them never or seldom change their account passwords. (OTC:ALBCF) expects profits to climb in 2010 on the back of its growing subscriber base, rising domestic consumption and the mainland's improving foreign trade. The company also intends to target new investment opportunities. Alibaba Group made 1.2 billion yuan (US$175 million) last year.'s net profit fell in the past three quarters because of investments in increased marketing worldwide, key acquisitions and hiring more staff to support marketing and product development programs. The company had 10,796 employees at the end of September, up from 6,895 last year. In the past quarter, the company's deferred revenue and customer advances increased 42.1 percent.


ChinaVision Media Group has acquired all shares of an integrated wireless value-added channel Youline Technology Company, which will allow it to become a value-added business partner with the mobile telecommunication operators in China. Youline provides personalized information and entertainment services to mobile handset users via the internet and other modern technologies in the form of SMS, MMS, WAP, interactive voice response, Java applications, CRBT, and other value-added services. Youline holds a PRC value added telecommunication services permit and its key management team has signed agreements with the group to continue to serve the company.

Amoi Electronics Co. Ltd. has found a buyer for its handset manufacturing assets. Amoi had tried selling its handset manufacturing assets, including the brand and patents, in a public auction but received no bids. The assets were offered at a starting price of 146.78 million yuan (US$21.48 million) at the auction. A new joint venture between Jiuzhou Electric Group Co. Ltd. and Chinese venture capital firm China Science & Merchants Investment (Fund) Management Co. Ltd., successfully bid for the assets at 135 million yuan (US$19.76 million) during a second auction. Former Lenovo Mobile (OTCPK:LNVGY) head Liu Zhijun will preside over the new JV. Amoi had invested aggressively in expanding its 3G handset manufacturing capabilities, which subsequently plunged the company into financial troubles.


China Telecom (NYSE:CHA) had a total of 191.09 million fixed-line subscribers by the end of November, after losing 1.84 million during the month, while the carrier's broadband subscriber base grew by 690,000 to 52.84 million at the end of November. China Telecom's mobile user base increased during the reporting period by 3.07 million to a total of 52.99 million, including CDMA and PHS subscribers. China Unicom (NYSE:CHU) had the previous day that it added 605,000 2G users in November to reach a total of 144.21 million 2G subscribers. Unicom added 801,000 3G users in November to a total 1.82 million. The company gained 325,000 broadband users in the month to reach 38.33 million, while fixed-line users fell by 1.25 million to 104.93 million.

China's integrated telecom tariff level will drop 9 percent in 2009 compared with that of the previous year. China has made steady progress in the structural reform of the telecommunication industry and the telecom infrastructure sharing has achieved positive results. The 3G network construction and business promotion have been in full swing after China issued 3G licenses. It is estimated that investment in 3G mobile technology will reach 143.5 billion yuan (US$21 billion) in 2009, with 285,000 3G base stations built and more than 10 million of the nationwide number of 3G users. The total telecom business will grow about 12 percent in 2010 and business revenue will increase about 4.5 percent, while the integrated telecom tariff level will drop about 9 percent. The software and IT services revenues will raise 20 percent.

UTStarcom Inc. (NASDAQ:UTSI) which makes telecommunications terminals has signed a contract to sell production assets in Hangzhou City, Zhejiang Province, for 950 million yuan (US$139.1 million) to the Zhongnan Group of Companies. UTStarcom will sell a 2.6 million square foot manufacturing facility, research and development department as well as related real estate to Zhongnan Group. UTStarcom will lease some of the offices from Zhongnan Group to continue its operations in Hangzhou. The deal is scheduled to be completed in the first quarter of 2010.

In November, China Mobile Ltd. (NYSE:CHL) added 4.58 million users from a month ago, which boosted the total number of users to 518 million. The company's 3G subscribers increased by 670,000 to 2.98 million last month. In the first 11 months of this year, the company's net addition of customers was 60.9 million. China's mobile users increased 17.3 percent year on year or 1.3 percent month on month to 717 million in November.

Revenue of China's telecom industry will grow 5 percent year on year in 2009, said Li Yizhong, Minister of Industry and Information Technology. Li predicted that the telecom sector's total business volume will increase 14 percent this year. The number of telephone users will reach 1.06 billion by the end of this year, including 740 million mobile phone subscribers, said Li. Investment in 3G network construction is expected to hit 143.5 billion yuan (US$21 billion) this year, and 285,000 base stations will be built. The number of 3G users will exceed 10 million by the end of this year. For 2010, China aims to achieve a 12 percent growth in total telecom business volume and a 4.5 percent rise in telecom business revenue, said Li, adding that overall charges in the telecom industry will drop 9 percent next year.

China United Network Communications' WCDMA user base exhibited faster growth than that of China Mobile's TD-SCDMA service in November. China Unicom had 1.82 million WCDMA users as of Nov. 30, 2009, an increase of 43.96 percent month-on-month, while its major competitor China Mobile saw its TD-SCDMA user base grow by 22.41 percent from October to 2.98 million. China Telecom added 3.07 million new CDMA service subscribers in November, bringing its total number of mobile phone subscribers to 52.99 million, up 5.79 percent from October. It has yet to disclose its CDMA2000 user figures for November. China Mobile's GSM network subscriber base grew by only 0.76 percent to total 515.07 million as of Nov. 30, 2009, while China Unicom's GSM network subscribers inched up by 0.42 percent from the previous month to total 144.21 million as of the end of November.

China Telecom will issue 10 billion yuan (US$1.5 billion) in five-year bills on the inter-bank market. This batch of bills will be issued at face value and the coupon rate will be determined during the process of book building. The proceeds from the issuance will be used to replenish working capital and repay bank loans. Both value date and payment date will be 29 December. China Merchants Bank and Agricultural Bank of China have been assigned as the main underwriters for the sale.

Minister of Industry and Information Technology (MIIT) Li Yizhong expects the total traffic volume of the telecommunications industry this year to have increased by 14 percent while telecom business revenues are expected to have grown 5 percent this year. China has invested 143.5 billion yuan (US$21 billion) the industry and built more than 285,000 base stations, the report said. Average charges for telephone services have dropped by 9 percent compared to last year. The telecommunications industry business revenues are expected to grow 4.5 percent year-on-year while traffic volume is set to increase 12 percent and telecommunication charges slide another 9 percent. Revenues for the software service industry are expected to increase by 20 percent.

Media, Entertainment and Gaming

· Beijing-based online game company Fantasy Age has raised US$40 million from several investment companies in its first round of financing. The capital raised will be spent on game development over the next two years. The company has conducted three rounds of technology testing of its in-house developed oriental myth-themed online game Xiyou Tianxia.

Alternative Energy

LDK Solar (NYSE:LDK) has agreed with VMS Investment Group to sell between US$50 million and US$80 million of shares in a to-be-created subsidiary which will hold and operate LDK Solar's polysilicon business. The polysilicon business is valued at US$1.30 billion to US$1.65 billion. The investment is expected to close by the end of March 2010. LDK Solar expects to increase its total annualized polysilicon capacity to 18,000 metric tons (MT) by the end of 2010. LDK Solar said that it is offering 18.9 million American depositary shares (ADS), to raise net proceeds of approximately US$164 million, of which the company will use US$120 million to pay off short term debt. The company had a net working capital deficit of US$1.15 billion as of September 30, 2009, and faced uncertainties in obtaining additional funding for capital expenditures and working capital. LDK Solar will use around US$30 million dollars from the share issue to fund on-going construction of the polysilicon plant, as well as expanding its module business, with a target capacity of 1.5GW.

JA Solar’s (NASDAQ:JASO) Board of Directors has approved a share repurchase program, effective Dec. 14, 2009. Under this program, JA Solar is approved to repurchase up to an aggregate of US$75 million of its ADSs representing its ordinary shares. The purchases will be made subject to restrictions relating to volume, price and timing. The timing and extent of any purchases will depend upon market conditions, the trading price of our ADSs and other factors.

Disclosure: none

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