Japan's Murata unconcerned about reliance on Apple for sales: CEO

[October 07, 2014]  By Sophie Knight and Yoshiyasu Shida

CHIBA (Reuters) - Murata Manufacturing Co Ltd's chief executive said rising demand for electronic components from Chinese smartphone makers could buffer any future fall in sales from its two largest customers, known to be Apple Inc and Samsung Electronics Co Ltd.

Half of Murata's revenue from smartphones comes from those two companies, Chief Executive Tsuneo Murata told Reuters in an interview without identifying them by name on Tuesday at CEATEC, one of Japan's biggest electronics trade shows.

"There's nothing bad about relying on something strong," Murata said.

"If it goes bad maybe that would be a problem. But if you look at a pie chart of smartphone makers, we cover basically all of it. Even if the slices of that pie chart change it wouldn't affect us much."

Murata's confidence is unusual among Apple suppliers, many of whom are moving to reduce their reliance on the Californian technology company after being hurt by the volatility of its product cycle or by the tightness of its margins.
 

Murata's mainstay products are ceramic capacitors, tiny parts that control the flow of electricity in electronic devices from game consoles to car engine controls. The majority are used in smartphones, which account for around 40 percent of Murata's overall sales.

Because of their size and the fact that they do not need to be custom-designed for different phone models like display panels, Murata can more flexibly make up for a shortfall in orders from a big customer like Apple than companies that make niche or custom-made parts.

Other Japanese parts makers such as Sharp Corp are seeking to lower their dependence on Apple while sapphire manufacturer GT Advanced Technologies Inc filed for bankruptcy on Monday after signing an exclusive contract with Apple to supply sapphire glass from a new factory.

Murata said that his company's performance for the three months to Sept. 31 was in line with expectations and that sales to China had been strong, although lower than initially expected after the largest carrier there, China Mobile Ltd, pulled back from a recommendation for higher handset specifications that had increased demand for Murata's components.

However, Murata remains bullish about the company's reliance on smartphones for profit even as other Japanese makers of high-end parts fret about slowing demand for pricier phones and expanding sales of low-end phones.

"We are not selling cheaply to Chinese makers... There is an ongoing shift from 3G phones to 4G and that is creating additional demand for our parts. So an increase in low-end Chinese smartphones is anything but a minus for us - it's a plus."

Murata is still on track for record sales for a second straight year after logging 846.7 billion yen ($7.8 billion) in revenue for the year ended March 31. It is guiding for 34.1 billion yen in operating profit for the quarter from July to September.

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