Facing revitalized competition, NEC reorganizes its chip divisions

Compiled from outside sources; Adam Connors, DigiTimes.com [Thursday 4 April 2002]

In a tough new competitive landscape, NEC has announced an internal restructuring of its chip divisions following a recent round of chip business mergers by main local rivals Toshiba, Fujitsu, Hitachi and Mitsubishi Electric. NEC has bucked the merger trend and continues to go it alone, remaining the seventh-largest semiconductor company worldwide.

According to Jack Robertson of EETimes, NEC confirmed on April 2 that NEC Electron Devices, the in-house company of the Japanese conglomerate, is to move away from its previous market-based product lines to instead organize its divisions around chip technologies: system memory, custom logic, network systems, network cores, microcomputers, ULSI (ultra large scale integration) devices and system ULSI. It has also set up a Foundry Business Promotion Unit to explore using excess capacity in its global fabs for foundry work and will expand sales of intellectual property, promoting licensing and royalty agreements of its nearly 70,000 patents, Robertson said.

The restructuring comes as NEC is reeling along with the rest of the semiconductor industry from massive losses in 2001. NEC saw its revenues drop by US$3.4 billion, or 41.5%, in 2001 from a year earlier, while the sector as a whole dropped 31.7% from its 2000 high.

NEC’s biggest competition among Japanese semiconductor firms, countering a 35.7% drop in national semiconductor revenues in 2001, have mostly responded to these challenges through mergers and renewed cooperation. Hitachi and Mitsubishi Electric announced on March 19 a merger of their semiconductor businesses, while Toshiba and Fujitsu are reportedly discussing a merger. All five major firms have also been courted to jointly develop technology for next-generation chips, with government help, in a bid to regain their international competitiveness.

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Toshiba, Fujitsu in talks to form chip partnership to become second-largest; join semiconductor industry co-op (Mar 21)

Hitachi, Mitsubishi Electric to merge chip businesses (Mar 19)