The epidemic has dragged down the electronics supply chain, Canon cameras are about to increase prices across the board
(Source: "21st Century Economic Report" 2020-03-13 Page 3)
When China was entering a critical stage of fighting the epidemic and ensuring stability, to everyone’s surprise, the new coronavirus epidemic began to spread around the world. The situation in Japan is not optimistic either. As of 3 pm local time on March 12, a total of 641 cases of COVID-19 were confirmed in Japan, including 17 deaths. On that day, the Nikkei 225 Index closed down 4.4%. The decline this year has exceeded 20%, and related industries have also cast a shadow.
Previously, Japan's Canon Company had temporarily closed five impact equipment manufacturing factories, located in Oita, Miyazaki and Nagasaki prefectures in mainland Japan. Since then, Canon has also used overtime and other methods to supplement production capacity.
A reporter from the 21st Century Business Herald learned that Canon China will start raising prices for its products on April 1. The company stated in a notice sent to dealers, "Due to changes in the yen exchange rate and the supply of spare parts, the Japanese factory has temporarily suspended production. The shipping prices of full-frame and some lens products will be increased."
In response to this, Canon China related personnel said in an interview with a reporter from the 21st Century Business Herald that they need to verify with the company headquarters, and as of the deadline, there has been no reply.
Electronic components are out of supply
According to media reports, due to the impact of the new coronavirus epidemic, some parts imported by Canon from China have been delayed. Canon's five factories in Japan began to suspend operations on March 2. The company will make up for the production losses caused by the suspension later this year when the supply of parts stabilizes.
The shortage of spare parts has had an impact on Canon’s flagship SLR camera EOS-1D
In the context of shortages, price increases for electronic components have also followed. Since the beginning of this year, due to the imbalance between supply and demand, the global memory chip market has begun to fluctuate, and key electronic components such as CMOS image sensors (CIS, complementary metal oxide semiconductor image sensors) and passive components have also been out of stock to varying degrees.
Analysts point out that digital cameras are composed of high value-added parts and materials such as lenses that require precision processing technology, semiconductors for image processing, and anti-shake sensors. However, many of the main factories that assemble finished products are in China, so parts and material manufacturers have also formed an industrial chain. Currently, the entire electronics industry is experiencing supply shortages, further exacerbating the trend of terminal price increases.
Japanese companies occupy an important position in the field of semiconductor materials. In the first five months of 2019, Japan produced 52% of global production of semiconductor materials. During the same period, the value of photoresist imported by South Korea from Japan reached US$110 million.
As for the issue affecting the Canon factory, the aforementioned relevant person in Canon China said that there is currently no more information to disclose.
Performance continues to decline
Many analysis institutions believe that how long the price increase of electronic components will last depends on the one hand whether the epidemic can be effectively controlled globally, and on the other hand whether the supply of upstream production capacity can meet the demand. From the perspective of sensor shipments, the global smartphone camera sensor supply chain is highly concentrated. In terms of regional distribution, mainland China accounts for about 30% and South Korea accounts for about 40%. The market is still worried about the global semiconductor industry chain, and this pressure is not small for Canon at the moment.
Canon Group’s 2019 financial report shows that the group’s revenue was 3,593.299 billion yen, a year-on-year decrease of 9.1%. Among them, the medical system business grew steadily, and the network camera business achieved revenue growth. Sales of color digital composite machines and new products for the production-oriented digital short-run printing market continued to be strong, and the full-frame micro camera market performed well. In 2018, Canon Group's revenue reached 3,951.937 billion yen, a slight decrease of 3.1% year-on-year.
Among them, the camera market, which has attracted much attention, is still shrinking. Canon disclosed in its financial report that in 2019, due to the impact of smartphones, entry-level camera sales continued to shrink, and the interchangeable lens camera market shrank by 15%, with sales falling to 8.8 million units.
Canon predicts that the camera market will continue to shrink at a similar rate in 2020, and the market size will fall to about 7.5 million units. However, on the other hand, the market demand for professional cameras and high-end cameras is increasing. High-end mirrorless cameras will be a new revenue growth point this year. The camera comes with a new sensor, new image processor and more advanced features.
Today, the outbreak of the new coronavirus epidemic has brought great uncertainty to the global economy. The uncertain supply chain may hinder Canon's high-end camera strategy.
Professor Wang Zhimin, director of the Institute of Globalization and Chinese Modernization at the w88 casino and researcher at the National Institute of Opening-up, said in an interview with a reporter from the 21st Century Business Herald that the spread of the epidemic will undoubtedly affect global w88 and industrial chains. When people, capital, information, logistics and industries cannot flow, it will naturally be impossible to maintain the flow of economic growth. China is the world's factory, both on the supply side and on the demand side. In the global environment, it is impossible for any country to produce all parts and components. Once interrupted, it will be terrible. "I think China's manufacturing industry can take advantage of opportunities to improve its industrial structure and increase investment in industry, technology, and basic science. There is little point in developing low-end manufacturing."
In his view, it is a good opportunity to increase cooperation among Asian countries in special times and promote bilateral relations and industrial cooperation as a whole.
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