Wall Street loves to speculate on whether Apple Inc.'s latest gadget is a winner or a dud. But here in Japan, the tech giant has another constituency desperate to see iPhones disappearing from store shelves: The nation's once-proud electronics producers.
Executives and employees of companies like Sony, Panasonic, Toshiba and Sharp watch Apple with trepidation - not because it is a competitor, but because their livelihoods and the performance of their companies depend on it.
And that's not necessarily a good thing, according to Japanese authors Naoyoshi Goto and Jun Morikawa, who co-wrote the critically acclaimed book Appuru Teikoku no Seitai (The Real Apple Empire).
"Apple is very popular in Japan and it has a great image. But there is a hidden side for contracted firms and workers," Naoyoshi Goto told GlobalPost.
The book's argument: Apple's triumph is partly due to the technology of its component suppliers, who reap big rewards, but face big risks. Low margins on each component sold to Apple are counterbalanced by the sheer volume ordered. Because Apple generates a significant portion of their revenues, the companies find themselves dangerously dependent on its success.
Imagine a situation in which the new iPhone does not sell well.
What happens to the Japanese manufacturers supplying Apple? "They can't survive on their own," Morikawa says.
Apple suppliers - a who's who of former Japanese greats - have seen their market capitalization plummet since the beginning of the century. Profits at these companies have shrunk or disappeared, and investors have lost faith in them.
Take Sony, whose shares are worth around 2,000 yen ($20.56) today, compared to a 16,300 yen all-time high in March 2000. Last year, the company's profit margin shrank to a miniscule 1 percent. By comparison, Apple's was more than 25 percent.
Japanese electronics makers appear incapable of making the world-winning products that they made a generation ago. Even credit agencies are not optimistic about their prospects. Sony's credit rating? Junk. Sharp? Junk. Panasonic? Junk.
Research by Morikawa and Goto shows how in 2012 Japan's electronics giants were using Apple as a life support system.
Some of the figures are staggering.
At Sharp's Kameyama No. 1 factory near Osaka, 100 percent of liquid-crystal display panels were devoted to Apple. Of the camera sensors from Sony's Kumamoto factory, 50 percent were for the US company's devices. Half of the DRAM production at Elpida's Hiroshima factory: for Apple.
Source: NewsOnJapan
