Japanese domestic production of electronics and information technology products dropped in 2005 for the first time in three years but will rise in 2006, according to estimates released by a trade organization.

Total production of electronics and IT at Japanese factories totaled ¥19 trillion (US$163 billion) in 2005, down 4 per cent on the previous year, said the Japan Electronics and Information Technology Industries Association (JEITA). JEITA's figures are based on estimates from its members, which include most major Japanese electronics companies.

Production of electronic components, which make up almost half of all domestic electronics production, dropped by 6.2 per cent to ¥9.2 trillion. The drop was in part due to IT makers cutting back on component orders after poor business results in the first part of the year left them with surplus inventory.

The inventory adjustments at these companies are now almost complete and so 2006 should see an overall increase in parts production, said JEITA. The organization is forecasting a 2.4 per cent expansion from 2005.

TV demand

Lower production of cell phones and computers hit the overall value of industrial electronics production, which slipped 3.1 per cent to ¥7.3 trillion. For 2006 production is expected to grow by 2 per cent in part due to anticipated demand for new mobile phones brought on by the start of number portability in Japan.

The consumer electronics segment, which is the smallest of the three industry segments that make up the report, was the only one to record a rise in production. It was helped by strong demand for flat-panel televisions and car navigation systems and total production in the segment rose 2.3 per cent to ¥2.5 trillion, said JEITA.

In 2006 the consumer electronics sector will continue to be driven by flat-panel TV demand while production of DVD-related devices and digital cameras slackens, said JEITA. The consumer electronics sector is expected to grow by 2.5 per cent, the study said.

Overall domestic production in Japan in 2006 is forecast to rise 2.3 per cent in 2006 to ¥19.4 trillion, the organization said.