NEC Trims China Chip Expansion Proj
TOKYO (Dow Jones)--NEC Corp. (NIPNY or 6701) will scale down an earlier plan
to expand semiconductor production capacity at its joint venture in
Shanghai, China, due to the recent downturn in the global chip industry, a
company spokesman said Wednesday.
However, the move has already been factored into the Japanese electronics
giant's capital investment plan, announced late April, for the current
fiscal year ending March 2002, the spokesman said.
NEC's move to revise their capital spending plans underscores the increasing
need for Japanese semiconductor makers to respond quickly to a rapidly
changing marketplace.
NEC projects a 34% decline in its chip-related capital spending on a group
basis to Y144 billion this fiscal year.
In January, NEC said it would invest Y35 billion to expand monthly 8-inch
wafer output at its local joint venture, Shanghai Hua Hong NEC Electronics
Co., from the current 20,000 wafers to 30,000 wafers by the end of this
year.
But now, NEC plans to spend only Y20 billion to increase monthly output by
5,000 wafers, the official said. The expansion is mainly to accommodate
system LSIs (large-scale integrated circuits), used in mobile phone
handsets.
"We will continue to flexibly revise our capital investment plan, depending
on the market situation," he said.
Shanghai Hua Hong NEC Electronics was established by NEC and local entity
Shanghai Hua Hong (Group) as part of a Chinese government project to promote
the semiconductor industry.
Shanghai Hua Hong (Group) holds a 71.4% stake in the joint venture, which is
capitalized at $700 million, while NEC group holds the remainder.
The joint venture now mainly manufactures dynamic random access memories, or
DRAMs. Based on NEC's global chip business strategy, the company will
increasingly shift its focus to advanced semiconductor products from
commodity-grade DRAMs used in personal computers.
At midday, NEC's shares were down 6.6% on the Tokyo Stock Exchange, along
with other major Japanese chip makers, Toshiba Corp. (J.TOS or 6502),
Hitachi Ltd. (HIT or 6501) and Fujitsu Ltd. (J.FUT or 6702).
The sector's drop follows an overnight fall of 3.4% on the tech-heavy U.S.
Nasdaq market, and ratings cuts on 13 Japanese high-tech and semiconductor
issues, including NEC, by Deutsche Securities.
Deutsche Securities said demand growth trends for mobile phones, networking
equipment, Internet, and personal computers have all come to a turning
point, suggesting the risk of big earnings outlook cuts around August to
October.
-By Kanji Ishibashi, Dow Jones Newswires; 813-5255-2929;
kanji.ishibashi@dowjones.com
-0- 30/05/01 03-32G
(END) DOW JONES NEWS 05-29-01
11:32 PM
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