Nikon and Fuji

Written by Eamon Hickey

[Ed. Note: This post responds to the story, published by Sentaku magazine in Japan and repeated by FujiRumors, that the Japanese government had asked Fuji to step in and help rescue ailing Nikon. I had commented on that in the "Around the Web on a Wednesday" roundup. —Ed.]

I wish I had seen Mike's post on this story yesterday, so I could have chimed in earlier.

First of all, there is an earlier Sentaku article about Nikon, from the April issue, available in English.

It's a weird article in several ways. I didn't know about Sentaku magazine before this story popped up, but I'm getting the sense that it has a kind of gossipy, sharp-tongued, slyly in-the-know point of view, akin to the old Spy or the early years of the New Yorker. It's intentionally not bylined in order to facilitate that breezy, punchy style. The Japan Times syndicates Sentaku, but it does so under the "Opinion" section, not the news section, of its website. Here's the link.

Wending down a lazy rumor
So here's my guess about what's really going on here: Sentaku may well be picking up on some real behind-the-scenes activity, but have misunderstood it, or perhaps explained it sloppily. My suspicion is that whatever may be going on is about Nikon's semiconductor lithography business unit, not about Nikon as a whole. That unit makes the machines that manufacture computer chips—they're very much like enlargers in reverse, except that they cost millions of dollars and use lenses that weigh several tons.

Last November, Nikon publicly stated that they have "looked at" selling that unit off, or finding some other solution to its ongoing problems. Instead, as of November, they had decided to drastically scale it back. This is the source of the "extraordinary loss" that Nikon declared earlier this year.

Sentaku's April article talks about South Korean, Taiwanese, and Chinese semiconductor companies being interested in Nikon. That is not plausible at all for Nikon's camera business—no chip maker would want that business (which is profitable, by the way). But it makes perfect sense for Nikon's semiconductor lithography group. And Nikon has already said they'd like to sell it. See this article for the semiconductor lithography story.

It's also completely plausible that the Japanese Ministry of Trade et. al. might try to prevent Nikon's lithography business from passing into non-Japanese hands. This is the new part of the story that Sentaku is apparently publishing in its June issue (not online yet). The Ministry of Trade actually directed Nikon to start the lithography business back in 1977–78, and it has long been considered a key strategic technology. The U.S. government spent hundreds of millions of dollars in the 1990s trying (and failing) to create an American company that could build the machines (called steppers).

Finally, Sentaku's April issue badly mis-characterizes Nikon's current overall financial situation, I think mostly out of a boring-details-don't-matter writing style. Nikon is not in any financial distress. See the Reuters article I cited above for comments from Nikon and from independent analysts on that topic.

Nikon declared a small overall loss this year due entirely to the lithography restructuring costs. It does have a big future growth problem, as well as a big exposure to future camera market risk. But Nikon does not have a current financial problem. Anybody who can read a balance sheet can verify that.

Final thought on the Nikon-Fuji rumor: to the extent that there is a real story here, whatever it is, the mainline business publications will chase it down, for sure. So we can all keep our eye on Nikkei, Bloomberg, Reuters, Japan Times et. al. for more exacting business journalism on this.

A picture I love
As an aside, and speaking of steppers, here's a picture I love. Steppers were invented in the 1970s, at the tail end of the Massachusetts / upstate New York precision technology era that included the invention of the transistor and involved companies like Xerox, IBM, Kodak, et. al. In many ways we owe the modern world to the work that began there.

The Massachusetts company that invented the stepper was called GCA Mann (formally the David W. Mann division of GCA). The 1960s ancestor of the stepper was a machine called the Photo Repeater, which required unbelievably sharp lenses. GCA Mann found those lenses in Japan—they were called Ultra Micro-Nikkors, and came from a company called Nippon Kogaku, K.K. They were designed by the legendary Zenji Wakimoto, one of the great lens designers of the 20th century, who, probably because he is not German, is relatively unknown in the West.

Anyway, here is David Mann with the last and greatest of the Photo Repeaters. This picture, from a product brochure (via chiphistory.org), is so redolent of a kind of swashbuckling, macho engineering gestalt of the 1960s and '70s that it makes me smile every single time I look at it. (The lens in that contraption is almost certainly an Ultra Micro-Nikkor.)

Eamon

Business analyst, former photo-writer, and long-ago Nikon employee Eamon Hickey is a Contributing Editor of TOP.

©2017 by Eamon Hickey, all rights reserved

Original contents copyright 2017 by Michael C. Johnston and/or the bylined author. All Rights Reserved. Links in this post may be to our affiliates; sales through affiliate links may benefit this site.

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(To see all the comments, click on the "Comments" link below.)
Featured Comments from:

Matt: "This is exactly the type of 'not gear' post that keeps me coming back here day after day. Very educational, and yes, a great photo from the 'swashbuckling' era of engineering. Thanks Eamon."

Bill Tyler: "Actually, although lots of good stuff came from the Massachusetts/upstate New York area, the transistor came from Bell Labs in Murray Hill, New Jersey. The contributions of the pre-AT&T breakup Bell Labs to the modern era were enormous."

Eamon replies: Yes, in my sloppy way I was thinking of Bell Labs as part of that whole corridor, even though it's in New Jersey. I'm a California boy; the northeast is still all kind of one big lump in my mind.

Carl Blesch adds: "I worked in PR at Bell Labs for many years, and was privileged to lead the media relations campaign on our '50th anniversary of the transistor' commemoration in 1997. I saw detailed and thoughtful coverage of the anniversary, much of it in media based outside the USA. But I saw little coverage in Silicon Valley. I remember one thoughtful piece by Keay Davidson of the San Francisco Examiner, who suggested that Silicon Valley people nod toward the East in remembrance of the development that started their industries. I have a feeling his suggestion fell on deaf ears. Silicon Valley is about looking forward and moving forward. What happened in the past has, well, passed. No need to reflect on it."

KeithB: "Given that Canon is still a stepper powerhouse, would the Japanese care about the Avis?" [Keith means the second-place competitor—a famous and long-lived ad campaign for Avis car rental admitted it was in second place (at the time) but claimed "We try harder." —Ed.]

Eamon replies: Actually, Canon is very much not still a semiconductor stepper powerhouse. It withdrew from the leading-edge stepper market several years ago, the first victims of the ASML onslaught. There is now only one chip stepper powerhouse: ASML. With Nikon leaving the market, ASML has swept the field. Flat-panel display (FPD) steppers are a different story, and Nikon is not leaving that business, which it dominates now (but will not dominate as clearly in the coming two years, according to its own forecasts). Along with cameras, FPD steppers are Nikon's only solidly profitable businesses. (It makes many, many other optical devices, from industrial inspection equipment to microscopes to custom telescopes, but has had a hard time making money on most of them in recent years.)

Comments

[David Zivic]

Interesting that you comment on Nippon Kogaku lenses in the 1960s. I have one from that era, a 200mm ƒ/4 with built-in sun shade.

It is built like a tank, focuses tight and smooth. The images rivals and outperforms a lot of new lenses, especially zooms (particularly the Nikon 70-300mm), which I sold. I have it aftermarket milled to AI and use it on a NEX-7 with a Novaflex NEX/NIK converter. I grew up with manual focus so it's not an issue; I even prefer it. The weight assists me to hand-hold. They are readily available for $100 bucks!

[Stephen Scharf]

Eamon's article on these "issues" revolving around Nikon's business is very likely on-point. Not only is the Japanese Ministry of Trade likely interested in this core competency not falling in to the hands of other Asian companies, but other companies as well. As it turns out, Nikon is currently involved in a lawsuit with Zeiss and ASML over photolithography patent infringement. So, at the end of the day, the Sentaku/Fuji/Ministry of Trade "intrigue" may involve photolithography IP due to these lawsuits and counter-lawsuits, and not the camera division, per se.

[brad]

I agree with your points. And Further, the Optical Stepper is becoming obsolete. A newer technology is likely to overtake it soon. From my reading and an exchange with a tech friend in Japan, Nikon felt that the new technology, not being optical, was outi of their area of expertise. So, they decided to make a move.

I'm told by my tech business friend that the camera division of Nikon is very healthy. The Friday Group plays a big part in this... And, Nikon and Fujifilm have partnered in many camera related products. So, it's not out of the question that some deal may be in the works.

I was told long ago that Nikon got into the Stepper business because they wanted to make their own camera ICs. They now have their own sensor foundry. I think that's pretty good for a small camera company.

[Rick Wilcox]

Excellent back story to... [scathing comment about the FujiRumors post edited out —Ed.]

[D. Hufford]

That sounds much more likely than the rumor story.

I have heard of that magazine before, but could not remember where. I do remember having a bit of a negative impression of it for some reason. It does not seem to be a widely read magazine, or an often quoted one. Sometimes those sort of magazines do come up with scoops that regular media misses or hesitates to print, but it seems that's unlikely in this case.

[Daniel]

Might help some of us Luddites if you explain what a Stepper and Repeater is? I thought a repeater enabled you to shoot fast follow up shots at coyotes trying to get away.

[Google is your friend:

https://en.wikipedia.org/wiki/Stepper

"A stepper is a device used in the manufacture of integrated circuits (ICs) that is similar in operation to a slide projector or a photographic enlarger. The term 'stepper' is short for step-and-repeat camera. Steppers are an essential part of the complex process, called photolithography, that creates millions of microscopic circuit elements on the surface of tiny chips of silicon. These chips form the heart of ICs such as computer processors, memory chips, and many other devices." (Wikipedia) --Mike]