4-1 The Technological Development of Sumitomo Electric Industries _

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					The Technological Development of Sumitomo Electric Industries (SEI)

Cheng, I-lin 2003

A. Sumitomo’s Origins:
 Sumitomo Group started in Kyoto 400 years
ago by Masatomo Sumitomo, selling medicines and books.  The copper business was started in 1590 and opening of the Besshi Copper mine in 1690; the latter was very productive and profitable until early 20th century, which actually played a pivotal role in the birth of many core companies of the Sumitomo Group today.

 Based on the Founder’s percepts, in 1891, Sumitomo
formulated its Business Principles (value) as : -explain the necessity of acting in good faith in order to maintain the other party’s trust. -urges that the social trend should be studied in order to meet social changes with active responses. -advises against being attracted to easy profits before fully investigating the commercial viability of ventures.

 The igeta symbolizes sparkling water gushing
constantly from a fountainhead, which forms a might river before flowing into a vast ocean.

The Emblem of Sumitomo: the “igeta”, a frame placed around a well in pre-modern Japan

The meaning of SEI’s mark:
 Sumitomo Electric’s corporate mission is to serve society by
applying technological innovation to the development of tomorrow’s products and services. This mission is represented graphically by the communication symbol, which features three diagonal lines extending form the tops of the Company’s initials, SEI. These three lines denote the key words that sum up Sumitomo Electric’s operations: Reliability, Vitality and Creativity.

B. Business Principles– based on the ethics for over four hundred years
Offer the very best goods and services to satisfy
customer needs. Build technical expertise, realize changes and strive for consistent growth. Contribution to create a better society and environment, with a firm awareness of our social responsibility. Maintain high corporate ethics and strive to become a company worthy of society’s trust. Nurture a lively corporate culture that enables employee self-improvement.

C. Business visions for the new century
Growth and development of the entire Sumitomo Electric
Group: taking full advantage of the Group’s diversified business operation, thereby enhancing the overall capabilities. Self-transformation into a truly global corporation: operates by world-standards in all aspects, including quality, cost, service, organization and decision-making processes. To this end, a 10% ROE (return on equity) for shareholders shall be achieved.

Harmonization with the local community in
conducting business overseas: by respecting local culture, customs, and institutions. Reinforcement of our corporate constitution to succeed in international competition: by strengthening, expanding, and improving overseas business bases and implementing bold measures . Development of new and original businesses and products: with particular emphasis on such industrial growth sectors as information and communications, new materials and new energy.

Stability– cable businesses as the cash

D. Positioning: stability and growth; a key player in the global information revolution
flow for re-invest in new businesses. - the world’s second largest manufacturer of electric wire and cable. - largest domestic market share in Japan. -increasing sales amount (02’ at 600 billion Yen), but declining in percentage to total sales (39%).

Growth– optical fiber both in developing
and developed countries. - No.1 manufacturer in Vapor Phase Axial Deposition (VAD) method in the world. - one of the top three manufacturers for all methods. - developing countries: local production through joint ventures. - developed countries: dispersion shifted fiber (DSF) for trunk lines; dispersion compensating fiber (DCF) for functional fiber and components like amplifier, coupler, isolator, filter, switch, pumping laser,etc.

E. Market-oriented developments
Infrastructures: telecommunications, electric
utilities - main customers; NTT,NEC, etc. - main products; power cable, cable accessories and engineering, optical fiber cable, WDM related products, optical-fiber LAN systems, medical information systems, PC wire, CATV systems, inflatable rubber gates, traffic control systems, etc.

Automobiles:
- main customers: Toyota, Honda, Nissan, Mitsubishi, etc. - main products: disc brakes, synthetic diamond cutting tools, tungsten carbide tools, powder metallurgical parts, ABS related products, wiring harnesses, car navigation systems, steel cord, etc.

Electronics:
- main customers; Matsushita, Sony, NEC, Sanyo, etc. - main products; compound semiconductors, WDM related products, FPC, heat sinks, Celmet, fine ceramics, electronic wires, etc. Others: - main products; bare copper wire, optical-fiber LAN systems, optical-fiber data links, etc.

Illustrated products guide:

F. R/D Activity- engine for growth
R/D expenditure: around 5% of sales. 14 R/D centers serve worldwide activities. 10%, or 1300 employees are dedicated to R/D at
Japanese parent company. New product sales, defined as commercialized in the last five years, account for 20% or over by 2005. Breakdown of R/D (by field); -information/systems 50% -automobiles 20% -new materials 20% -electric wire and cable 10%

 Strategic focused areas;
- optoelectronics; optical-fiber cables and accessories, optical fiber grating compatible with DWDM transmissions enabled by UV irradiation. - new materials; synthetic diamonds, diesel particulate filter (CELMET), piezoceramics, diamond surface acoustic wave filter. - systems; optical LANs, traffic information systems. - energy; redox flow secondary batteries (500kw class) using vanadium ions to regulate fluctuations in electrical power demand, superconducting materials.

New technologies developed recently;
- 10 Gbps module for broadband application in telecommunications. - metallic nanopowder for conductor membranes for circuit and electronic devices. - EPM; a biotechnology for new hairgrowth treatment.

G. Diversification and excellence through technology:
 Core technology leverage and extension;
- wire mfg.>wire drawing>conductivity > insulation>telecom./ electronics. -WIRE DRAWING>> sintered alloy>> POWDER METALLURGY>>brake products, diamond products, P/M products. -CONDUCTOR>>electronic materials, compound semiconductors. -INSULATION>>hybrid products( rubber and plastic products). -TELECOMMUNICATIONS>> traffic control systems, optical fibers. -ELECTRONICS>>automotive electronic systems, information and network systems, optical fiber telecommunication systems, etc.

H. Incision points– where and when to enter?
Automotive business
wire harness> sintered products(1948)> disc brakes(1963)>diamond cutting tools (1985)>ABS(1987)>navigation(1989)…. Compound semiconductor 1970 started manufacturing of GaAs, since it was too late to start Si wafer. Optical fiber> optical fiber systems 1974 optical fiber cable to 1981 optical fiber LAN’s.

I. Conclusions
SEI has inherited the good tradition from its
parent Sumitomo Corp. SEI started with cable and wire manufacture and has gradually evolved to new businesses through technology diffusion and knowledge deployment. This model can be described as: CORE TECH+RESOURCE=PRODUCTS Whereas the products are inline with the environmental changes and social needs.

Products developments with customers; for example,
- 500KV XLPE underground power cable with Tokyo Electric Power Co., Kansai Electric Power Co. etc. - Termination system for high Tc superconducting cable transmission system with Chubu Electric Power Co. - Automotive products with Toyota, Honda, Nissan and Mitsubishi. - Telecommunication products with NTT and NEC. - Electronics products with Sony, NEC and Sanyo.

According to a study by Royal Dutch Shell some years
ago, they reviewed twenty-seven large Corporations, Including Sumitomo, which has operated over one hundred years. The study concluded that they all had the following common features -conservative financial policy. -constantly adjust themselves to cope with changing environments. -highly share-value and belongingness of the employee. -strong learning capability and tolerances for different opinions and behaviors.