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In Japan, the electronics industry is one of the largest in the world, though the share of Japanese electronics companies has significantly declined from its peak due to competition from South Korea, Taiwan, China, and the United States.^[1]

Japanese companies have been responsible for a number of important innovations, including having pioneered the transistor radio and the Walkman (Sony), the first mass-produced laptops (Toshiba), the VHS recorder (JVC), and solar cells and LCD screens (Sharp).^[2]

History

Japan's foreign direct investment in the consumer electronics industry was motivated by protectionism and labor costs, encouraging foreign capital to invest in a country with lower production overhead and prewar industrial know-how to be competitive in the electronics market. After three years of voluntary export restraints, seven Japanese firms located plants in the United States by 1980.^[3] Japanese firms continued production of the most technologically advanced products, especially in Japan but also the U.S., while shifting production of less-advanced products to developing countries in Southeast Asia.^[4]

Circa 1997, Japanese children had a relatively large amount of savings, with the average having about 110,000 Japanese yen (about $900 U.S. dollars) in allowances, which stimulated purchases of electronic goods like Tamagotchi.^[5]

21st century

Since the beginning of the 21st century, several of the largest Japanese electronics companies have struggled financially and lost market share, particularly to South Korean, Taiwanese, and Chinese companies. Japanese companies have lost their dominant position in categories including portable media players, TVs, computers, and semiconductors.^[6] Hit hard by the economic crisis of 2008, Sony, Hitachi, Panasonic, Fujitsu, Sharp, NEC, and Toshiba reported losses amounting to $17 billion.^[7] The relative decline has been ascribed to factors including high costs, the value of the yen and too many Japanese companies producing the same class of products, causing duplication in research and development efforts and reducing economies of scale and pricing power.^[8]^[9] Japan's education system has also been highlighted as a possible contributing factor.^[10] The lack of adaptation to the Digital Revolution and the shift from hardware to software-oriented product development has also been cited.^[11]

One response to the challenges has been a rise in company mergers and acquisitions. JVC and Kenwood merged (forming JVCKenwood),^[12] and Renesas Technology and NEC Electronics -the semiconductors arm of NEC- to merge forming Renesas Electronics.^[13] In a similar move, in 2009, Panasonic acquired a voting stock majority of Sanyo, making the latter part of the Panasonic Group. Also, some of the bigger players resorted to merging some of their operations, as Hitachi, Casio, NEC, Fujitsu, and Toshiba, did with their cellphone business.^[14] On 15 November 2011, facing tough competition from Samsung and LG; Sony, Toshiba, and Hitachi signed a deal to merge their LCD businesses, creating a new company called Japan Display by spring 2012.^[15]

As of 2013, most Japanese companies no longer enjoy the same reputation they did about one to two decades ago. Currently, the international electronics consumer market is a competition between Japanese, South Korean, Chinese, Taiwanese, and American industries. Quite a few Japanese companies still have significant international market share. The future of the Japanese electronics industry is debated.^[16]