Japanese Movement Suppliers Shift Strategy, What Is the Future for Microbrands?
Over the past year and a half, the global watch manufacturing industry and the microbrand community have faced an unprecedented "movement shortage." From sub-$100 homage watches to independent microbrands selling for several hundred dollars, once-accessible Japanese automatic movements - especially Seiko TMI's NH35 / NH34 (GMT) and Citizen Miyota's high-beat, slim 9015 / 9039 calibers - now face lead times stretching anywhere from six months to over a year. Spot market prices have more than doubled, leaving many watch brands and manufacturing factories struggling to find available stock or facing losses on assembly lines.
This supply crisis isn't caused by a single issue. Instead, it’s the result of corporate strategy shifts, distributor speculation, and changing consumer demand all colliding at once.
1. Internal Production Shifts: Seiko and Citizen Reallocate Capacity
Seiko Group: As part of Seiko's "brand elevation" strategy, global sales for its own finished watches (like the Seiko 5 Sports, Prospex divers, and Presage series) have been booming. The 4R35 and 4R34 calibers in these models are structurally identical to the NH35 and NH34 sold externally via TMI. Supply chain data suggests Seiko TMI previously set aside about 60% to 70% of its NH-series capacity for third-party buyers. But with internal demand skyrocketing, Seiko prioritized its own assembly lines, cutting external allocations by more than half. Simply put, Seiko doesn’t want third-party brands using low-cost NH35s to sell $100 watches that undermine Seiko’s own $400 models.
Citizen (Citizen/Miyota): Citizen has followed a similar path. Core calibers like the Miyota 9 series (9015/9039/9075) are now being funneled directly into Citizen's own lines - such as the Series 8, Promaster mechanicals, and NB series - drastically shrinking supply for outside microbrands.
2. Distributor Hoarding and "Bullwhip Effect" Speculation
When lead times jumped from 45 days to over 180 days, regional distributors and volume buyers began panic-buying, stockpiling inventory, and placing duplicate orders. This quickly triggered a run on the market. Open-market wholesale spot prices for the NH35 surged from the usual $20–$25 up to $80–$100+, completely wiping out profit margins for entry-level mechanical watches.
3. Surge in Microbrand, Homage, and Modding Markets
The past few years have seen an explosion in global microbrands and direct-to-consumer (DTC) watch labels. High-volume giants like Invicta use millions of NH35 units every year. At the same time, newer microbrands and the massive worldwide Seiko Modding community have pushed demand for standard Japanese off-the-shelf movements to record highs. This huge demand, colliding with a sudden drop in supply, completely broke the supply chain.
A Historical Parallel: The Japanese Caliber "ETA Crisis"
Today's situation looks a lot like the famous "ETA Crisis" that hit the Swiss watch industry 20 years ago.
In 2002, Swatch Group chairman Nicolas Hayek announced that ETA would gradually stop supplying raw movements (ébauches, like the ETA 2824, 2892, and 7750) to brands outside the group. The goal was to squeeze third-party competitors who relied solely on assembling watches with off-the-shelf Swiss engines. While this caused years of industry upheaval, it didn't give Swatch a permanent monopoly. Instead, it fueled the massive rise of Sellita (with its SW200 line) and pushed many mid-to-high-end watch brands to develop their own movement capabilities.
Seiko TMI's strategic shift is essentially following that same path. Rather than killing off microbrands, this supply squeeze will break the near-monopoly of Japanese movements in the entry-level and mid-tier segments, setting off a massive reshuffle across the watch supply chain.
What Lies Ahead for the Market
The end of the "cheap, off-the-shelf" Japanese movement era will drive three major trends across the global automatic watch and microbrand market:
1. Japanese Automatic Movements Will Exit the Entry-Level Segment as a "Default Standard"
For watches retailing under $150, using the NH35 is no longer financially viable. Going forward, "Japanese automatic movement" will no longer serve as a default sales pitch in this budget category.
2. Chinese Movements Will Make an "Ecosystem-Level Breakthrough"
Just as Sellita seized the moment during the ETA Crisis, this movement shortage is pushing global microbrands and OEM factories to embrace Chinese calibers. Movements like the HK PT5000, Sea-Gull ST2130, and Dandong SL1632 - offering faster turnaround times, higher beat rates (28,800 bph / 4Hz), and excellent value - are rapidly taking over market share previously held by the NH35, while building out a standardized ecosystem of matching cases and parts.
3. A Clear, Tiered Structure Will Emerge Across Product Lines (Note: Price points below serve as general guidelines and exclude brand premium)
Entry-Level / Budget Tier (<$150): This segment will split into two paths. Brands looking for slim profiles and everyday reliability will shift to sweeping-seconds quartz calibers (like the Seiko VH31). Meanwhile, models sticking to mechanical tradition will turn to cost-effective Chinese automatics (like the Dandong SL1632).
Core Mid-Tier ($150–$350): This tier will be dominated by high-beat Chinese movements (PT5000 / Sea-Gull ST2130 at 28,800 bph), offering a high-value combo of "smooth sweep + sapphire crystal." A small number of cost-tolerant models will keep using the inflated NH35 as a premium selling point.
Mid-to-High Tier (>$350): Brands here will step up to premium engines, creating a market split between Miyota 9000-series calibers (9015/9075) and Swiss movements (Sellita SW200/SW300, Soprod, LJP).