"The last year was the worst year ever, since the Japan Electronics and Information Technology Industries Association (JEITA) started," said Yoichi Morishita, chairman of JEITA ,citing the group's estimate that total production contracted by 15.3% compared with levels seen in 2000. Morishita is also chairman of one of Japan's largest electronics manufacturers, Matsushita.
Results were worst in the electronic component and device sector, which saw a drop of 21.8% compared to the year earlier. Total production in 2001 is expected to total ¥22.2trn (£118bn).
There were three main reasons behind the drop: a sudden downturn of the IT industry in the U.S., which affected electronic device markets; a shift in manufacturing bases from Japan; and the clearance of saturated stock inventories, especially in mobile phone- and PC-related products, Morishita said.
The same conditions are expected to continue in the first half of 2002 as the falling price of PCs and the shift of manufacturing for consumer electronics to overseas plants are expected to keep affecting Japan's domestic production, JEITA said.
However, the upcoming Winter Olympics and World Cup are expected to lead to an increase in consumer spending on audio visual products, according to JEITA.
"We see this year as a turning point for televisions, from cathode ray tubes (CRTs) to LCDs," Morishita said.
The trend in this direction can already be seen. In 2001, total domestic production of LCD-based televisions rose 59% while that of CRT-based televisions dropped by 2.4%, according to estimates released by JEITA earlier this week.
However, at 679,000 units for 2001, production of LCD-based televisions is still only a fraction of the 9.6 million CRT-based sets produced in Japan.
The increasing popularity of LCD-based TV sets is also expected to influence demand for electronic components and devices in related LCD products. JEITA predicted that inventories of mobile handsets and PCs will be cleared and their related electronic products will become more popular.