<<<< Japan High-Tech Update>>>>
A monthly review of the latest developments in Japan’s IT, telecom, and life sciences sectors

May 2004 - Volume VII, Issue V

Triangle Technologies is the leading Japan Israel business development and investment advisory firm
www.triangletech.com

Dan's Desk

From Triangle's CEO

I attended the Israel-Japan Chamber of Commerce board meeting the other day and, not much is really happening between Israel and Japan, certainly when compared to 1997-1998-1999, post-Oslo-crimes, midst-of-the-high-tech-bubble, and prior-to-the-current-Intifada-paradise period (well, look, if Oslo was a crime, then we must be in Heaven now, right? well, maybe not, I don’t see 47 virgins....wait a second, is it Heaven where the virgins hang out, or is where the virgins hang out?).

The Israeli embassy in Tokyo is admirably trying to launch a "teyul" of IT and security companies to Japan, but sign up still is short. Actually, we have heard some good things about these nice events, so take a look at [http://www.export.gov.il/Heb/_Delegation/Item.asp?CategoryID=225&ArticleID=48], but hurry.

Despite the fact that almost no Japanese companies are visiting Israel, Triangle we have a flush pipeline of deals that we expect to close in the coming 3 months, at least 4 major agreements, probably closer to 6. 2 financial investments, 2 distribution agreements, 1 strategic investment, and 3 projects in which we are selling heavy duty IP to large electronics companies. And for the first time in our history we have been turning down some clients (I cant believe that I am actually writing that...).

My explanation for the apparent contradiction is that (a) business has settled into a kind of status quo - we (Israeli high tech companies) have gotten used to the fact that we need to go to Japan to do the deals - the mountain wont come to us, but (b) the appetite in Japan for new technologies is still strong, in fact, stronger - they need to fuel their growth with new medical, IT, electronics, s/w, and materials technologies.

So in subsequent newsletters we hope to be telling you about some of these deals and how they were closed!!

Good luck, Dan

ISRAEL-JAPAN NEWS

+SIGNIFICANT GROWTH IN BILATERAL TRADE IN Q1 2004

(Israel-Japan chamber of commerce) Israeli export to Japan on first quarter of 2004 was US$165mm (13% more than same quarter last year). Main exports are mechanical and optical equipment, medical equipment and diamond. Import from Japan was US$267mm (45% increase) which is mainly cars.

***BUSINESS NEWS***

+TRAVEL WAKES UP

(Yahoo.com, May 6)The feel good factor is seeping down to regular citizens, as proven by the number of travelers in Japan during Golden Week. According to JR, passenger volume was up 24% to 8.38m people, the biggest annual increase ever, and the Japan Highway corporation said that the average volume of vehicles on expressways was 3.3% up on last year, to 4.33m vehicles (a day), creating more traffic jams. Unofficial poll on air travel increases, shows that overseas travel would be up almost 50%.

+FY 2003 REVENUES UP IN 4 OF 6 JAPAN CORPORATE SERVICE INDUSTRIES

(Nikkei, May 14th) The Japanese corporate service sector generally fared well in fiscal 2003, with four of the country's six major corporate service industries seeing their revenues grow from the previous year, the government said Friday. The value of orders received in the engineering industry climbed 2.1 percent to 8.78 trillion yen in the year that ended March 31 and those in the credit card industry gained 4.8 percent to 25.58 trillion yen. Revenues in the information service industry grew 1.1 percent to 9.23 trillion yen and sales at advertisement-related companies expanded 1.3 percent to 5.29 trillion yen.

***GENERAL TECHNOLOGY NEWS***

+JAPAN TO HANG ON TO NUCLEAR POWER AS MAIN ENERGY SOURCE

Japan will hang on to nuclear power as a main energy source while trying to expand other energy sources to diversify risks, according to an annual report on national energy policy. Despite a data cover-up scandal involving Tokyo Electric Power Co. two years ago. After the TEPCO scandal, the government implemented steps to tighten safety regulations on nuclear power generation such as making inspections mandatory instead of voluntary.
According to the International Energy Agency, Japan's self-sufficiency rate in energy supply is the lowest among the Group of Seven leading industrial countries at 4 percent, which mostly stems from hydroelectric power.
As an energy resource-scarce country, Japan has been trying to diversify its energy sources with the dependency ratio on oil dropping to 49.4 percent in fiscal 2001 from 77 percent in fiscal 1973. Nevertheless, oil accounts for nearly half of national energy supply, and about 90 percent of it comes from the Middle East. As part of efforts to promote use of new energy sources, the government put a new law into force in April 2003 which requires power suppliers to use a certain percentage of designated new energy sources such as wind power and ground heat.

+THREE-WAVELENGTH OPTICAL HEAD FOR BLU-RAY, DVD AND CD FORMATS

(Nikkei Electronics, May 20th) Sony Corp has developed an optical head technology that features a three-wavelength laser. The single optical head is capable of recording and playing back three kinds of disc formats, Blu-ray, DVD and CD. In the Blu-ray Disc technology, data are recorded and played back by a blue-violet laser diode, whose wavelength is around 405nm. DVD uses a red laser diode with the wavelength of around 650nm, while CD uses a near infrared laser diode of about 780nm wavelength. The newly developed technology is a semiconductor laser chip, which can output these three wavelengths from one package, and an optical system using this chip.

+CELL PHONE CAPABLE OF RECEIVING TERRESTRIAL DIGITAL TV BROADCASTING

(Nikkei Electronics, May 17th) KDDI announced that the company, jointly with KDDI R&D Laboratories Inc and NHK Science & Technical Research Laboratories, developed a prototype cellular phone that can receive terrestrial digital TV broadcasting.

+ALPS ELECTRIC DEVELOPS LOW-ENERGY CONSUMPTION, TINY WIRELESS LAN MODULE FOR CELL PHONES

(NE Asia Online, May 24) Alps Electric announced that it has begun to mass-produce a compact-size wireless LAN module for mobile phones, called the "UGGZ" series, which is compliant with the 11Mbps IEEE802.11b standard. Alps Electric expects this product to be incorporated in small devices such as cell phones and PDAs. The company also foresees it to be applied for the "Mobile Centrex" service starting this summer, which uses cell phones as VoIP terminals connecting to a wireless LAN.

***LIFE SCIENCES AND ENVIRONMENT NEWS***

+HEALTH EXPERTS, FIRMS NOTICE JAPAN'S NEW TREND: FAT

(Reuters, May 16) - More and more Japanese -- especially middle-aged men -- are carrying extra weight. In a country where obesity was once a rarity, the trend has experts worried and the makers of diet products sitting up and taking notice. Obesity is measured by body mass index (BMI), an international standard calculated by dividing weight in kilograms by height in metres squared. A BMI of 30 or more is considered obese in the West, while the figure for Japan is 25 or higher. The percentage of obese Japanese males is lower than in the United States, where nearly 68 percent of men aged 20 to 72 are at an unhealthy weight. But the trend is worrying. A government survey in 2002 showed that more than 30 percent of Japanese men aged 30 to 69 were obese, a rise of more than 40 percent from two decades earlier. Work habits also play a big role in Japan's obesity problem. Kao Corp , Japan's largest maker of household goods, has scored a success with a fat-burning green tea targeted at middle-aged men. A year after its release, Healthya has seen sales of about 20 billion yen ($175 million), with middle-aged men accounting for about 60 percent of its consumers, he said.

+BIOPHARMA INDUSTRY WORTH JPY1.6TRN

(asiabiotech.com, May 13th) According to the Japan Bioindustry Association, the biopharma market in Japan in 2003 was worth JPY1.66trn (US$15bn), a 15% increase over 2002. The breakdown by sector was: pharmaceuticals 33%, agricultural and nutritional products 26%, and chemicals 26%.

+NEW SKIN CANCER TREATMENT

(nikkei.co.jp, May 13th) Ushio Inc. and the Toin University of Yokohama have developed a device and treatment which not only detects skin cancer by light irradiation, but treats it as well. Conventionally skin cancer is treated by excising visible affected tissue and testing it in a lab. This is slow, painful, and often requires return visits. The new device comes with an ointment which when exposed to 400nm irradiation, highlights the affected skin. Then, the doctor switches the device to 600nm, and irradiates the affected areas - causing the ointment to generate "active oxygen" [sic], which apparently kills the cancer cells.

+BROWN RICE MAY PREVENT ALZHEIMER'S DEMENTIA

(JCNN, May 20th) Japanese cosmetic manufacturer FANCL has announced that its research group has discovered the effectiveness of pre-germinated brown rice against Alzheimer's disease in collaboration with Meijo University Professor Makoto Ukai. Based on their animal experiments, they have confirmed that there is a possibility that a continuous intake of brown rice effectively inhibits learning and memory deficits induced by beta-amyloid protein. Beta-amyloid protein is considered one of the factors to cause Alzheimer's dementia.