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NEC spins off semiconductor operations

Posted: 05 Nov 2002 ?? ?Print Version ?Bookmark and Share

Keywords:nec? semiconductor? elpida memory? dram? lsi?

NEC Corp. has spun off its semiconductor operation as NEC Electronics Corp., a wholly-owned subsidiary with annual sales of about $5.7 billion, effective on the 1st of November 2002.

NEC Electronics will take over all of NEC's semiconductor operation, including R&D, production and marketing. The company's commodity DRAM operations were transferred to Elpida Memory Inc., a joint venture formed with Hitachi Ltd. in 1999.

Kaoru Tosaka will head the new organization. He was previously president of NEC Electron Devices, NEC's semiconductor operation prior to the spinout. NEC Electronics employs 24,000 workers, including 5,200 oversees employees.

NEC Electronics has set a sales target of 1,000 billion yen (about $8.1 billion) and an operating profit target of at least 10 percent.

"NECEL can swiftly establish volume production of the front-edge design LSIs by taking advantage of its vertically integrated structure that has both design and production capability. That is the core competence of NECEL," said Tosaka.

Operating as a spin-off will have a "big impact," Tosaka said. "If we go in the red, we cannot survive. That is a big difference from an in-house company. All members of NECEL, not only management but also employees, should thoroughly realize it." NEC Electronics aims to have its shares listed on an exchange as soon as possible to raise funds.

The spin-off involves no big changes in the company's business strategy. For the fiscal year ending in March 2003, the company plans to invest about $352 million, the same level planned by NEC Corp. at the beginning of the fiscal year. "We will focus on improvement of 0.135m process of 8-inch wafer lines for this fiscal year," said Tosaka.

The company introduced 'kanban' methods to its semiconductor production facilities in April, and Tosaka said they appear to have improved output. "With this method, I expect that existing lines can increase production substantially. Thus I do not think we need $1 billion-level investment in the next fiscal year," he said.

- Yoshiko Hara

EE Times

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