Technology

Nec Electronics: 2007 Was a Good Year for Business

The company is considering outsourcing to keep low costs

By Bogdan Botezatu, Hardware Editor

19th of December 2007, 16:18 GMT

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Japanese chip manufacturer NEC Electronics is reported to have exceeded its operational profit expectations for this year. Company officials confirmed that the production of microcontrollers has greatly contributed to their final revenue.

The semiconductor industry is sitting on quicksand, with prices sinking and rising on a daily basis, which makes it even harder to predict what the final income will look like. NEC's chip manufacturing unit estimated that the quarterly sales would fall slightly in October-December and were likely to remain flat in the first quarter of 2008. The company produces chips especially for the automotive industry, such as Toyota Motor Corp's Lexus luxury car.

"A full-year operating profit is within reach, and an operating profit for October-March is also possible, with a little effort", said Nakajima in an interview.

The profit increase in the final quarter of this year has been triggered by the year-end shopping season that boosted NEC Electronic's customer sales. NEC also hopes that next year will bring extra revenue from the increased demand in liquid crystal display drivers and its business overseas. In order to expand its LCD business at a low capital spending, the company is considering outsourcing parts of its production.

"We have an opportunity to grab more business", Nakajima said. "The key is to do that without committing additional investment."

According to Nakajima, NEC Electronics has no plans in joining the IBM-led alliance for developing system chips using 32-nanometer circuitry. Research on the 32-nanometer node is an expensive business and the companies have teamed up in order to split the $3 billion development costs. NEC refused taking part in this joint effort in order to lower their spendings for this year.

However, NEC entered a partnership with Toshiba for developing and manufacturing other types of semiconductors for smaller and more powerful chips.

TAGS:

Nec | Toshiba | Semiconductor | Stock Exchange | profit

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