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NEC seeking strategic ties in cellphones, chips

On Tuesday, NEC Corp announced that it would come out with a concrete plan regarding its cell phone business within 6 months and also, in the next 18 months, will decide on potential joint production of microchips.

NEC, which is the third largest electronic company in Japan, has been taking a hit in its mobile phone and semiconductor business and is hard pressed to turn it around. The company saw a decline of 78% in operating profit for the first half, ending September 30. In order to turn around its cell phone business, NEC is looking at many viable options, such as tie-ups in development and marketing and an all-out integration of operations with other mobile phone makers.

Speaking on the occasion, an NEC spokesman said, “We are targeting a six-month time frame for setting our direction.” For the year ending March 2006, the company is expecting to post an operating loss of $257.7 million from its cell phone business, which has been hit hard by sluggish demands in the domestic market and fierce competition in the overseas market.

In the coming 18 months, NEC is also planning to finalize agreements with its partners on joint production of advanced chipsets. In November, NEC Electronics Corp., announced that it would co-develop cutting-edge system chips with Toshiba Corp. Further, the spokesman for NEC’s chip making unit stated that it was in talks with Toshiba, which is already working with Sony Corp. to develop such microchips, on a possible collaboration in manufacturing, without mentioning any specific time frame.

About Ritwik Sinha

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