Murata forecasts muted recovery

Japan-ese electronic parts maker Murata Manufacturing, which counts Apple and Nokia among its clients, said a full recovery in demand would take longer than expected, as macro-economic fears dent consumer sentiment. Orders, which fell in the first months after the massive quake and tsunami in March, are not rising as they usually do ahead of the year-end holiday season, and remain slightly lower than last year, Murata's president said. The firm's factory usage rate will stay flat in October-December against 94 per cent in July-September, as solid demand for parts used in smartphones, tablets and auto parts is countered by slumping orders for PC and audio-visual product parts, he said. "Orders are not peaking, but I'm not worried because there's no dip either," Tsuneo Murata said yesterday on the sidelines of Ceatec (Combined Exhibition of Advanced Technologies), one of Japan's biggest electronics trade shows. Yen surge He declined to give a forecast for October-December orders. "Everything is very unclear," he said. Murata is the world's biggest maker of ceramic capacitors, tiny parts that control the flow of electricity in electronics ranging from TVs to car engine controls to game consoles. The Kyoto-based firm, like home rivals Kyocera and TDK, is fighting a profit-sapping surge in the yen, steadily expanding production capacity overseas as it chases a 30 per cent production ratio target. Murata, whose overseas sales make up 85 per cent of total revenue, is also under pressure from clients who demand it diversify its production bases away from quake-prone Japan with power outage risks. It most recently announced a new plant site in the Philippines. Murata, which recently announced it would buy chipmaker Renesas Electronics's power amp operations, is seeking to expand in non-ceramic businesses, such as in solar cell materials, secondary lithium-ion batteries and biosensors. In the past, it has taken control of Panasonic's multi-layer ceramic capacitor business and has taken a stake in Tokyo Denpa, its partner in quartz crystal product development. Murata now increasingly competes against low-cost products from South Korea's Samsung and Taiwan's Yageo. Shares in Murata were down 0.5 per cent prior to the news, outperforming a 1.2 per cent fall in Tokyo's electrical machinery sub-index .