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To: pompsander who wrote (22512)	6/14/1999 3:37:00 PM
From: Don Green	Read Replies (3) \| Respond to of 93625

NEC Sees Return to Profitability This Year for Its Chip Business By JAMES PARADISE Dow Jones Newswires June 14, 1999 TOKYO -- NEC Corp. said Monday it expects its semiconductor business to return to the black this fiscal year, helped by strong demand for logic devices and better profitability from higher value-added products. NEC Posts Loss of $1.29 Billion, Forecasts a Profit for the Year (May 31) NEC Plans to Boost Output of DRAM Chips (May 28) However, Keiichi Shimakura, associate senior vice president for NEC, also said that the company is concerned about another drop in dynamic random access memory prices in recent months. "Now is a very crucial time," he said. "The issue is how to compensate for the price erosion in DRAMs with other semiconductor products, such as logic." Mr. Shimakura didn't say how much money NEC hopes to make from its semiconductor business this fiscal year, nor did he say how much money the company lost in that area in the last fiscal year, which ended March 31. The company said last month that its electron-device division, which includes the semiconductor business, had a group operating loss of 51.91 billion yen, or $440 million, last fiscal year. For this year through March 2000, NEC forecast an electron-device-division operating profit of 35 billion yen. Overall group operating profit will amount to 120 billion yen this fiscal year, after a 98% decline last year to 3.14 billion yen. Mr. Shimakura said that since March, conditions in the semiconductor industry had changed "very dramatically." Demand, he said, has been buoyant for logic products, in part because of strong sales of mobile phones and an increase in demand for consumer-electronic products in general in Asia. "Our wafer lines are almost full," he said. "In some areas, such as for leading-edge products, there are capacity shortages." As one step in its efforts to meet demand, Mr. Shimakura said NEC will move forward the start of mass production of logic products at a new line in Yamagata to around October. NEC had previously planned to open the line early next year. In the DRAM area, NEC plans to boost production of higher-value added products such as 128-megabit synchronous DRAMs and Direct Rambus DRAMs. Output of 128-megabit synchronous DRAMs is planned to double to two million units per month in September this year from one million units in March at a plant in Hiroshima and then to double again to four million units per month in March 2000 as production from the United Kingdom is added. Production of 128-megabit and 144-megabit Direct Rambus DRAMs in Hiroshima, Kyushu and the U.K. is planned to rise to 200,000 units per month in September, from 100,000 units in March, and then to rise to two million units per month in March 2000. NEC's system-on-a-chip production, where logic and memory are together on a single chip, is forecast to rise to 250 billion yen in the current fiscal year, from 200 billion yen last fiscal year, and then to rise to 500 billion yen in the fiscal year ending in March 2002. Mr. Shimakura said that NEC might outsource some of its lower-end chip production but added that the majority of chip products will still come from NEC in the future. "Our target is to provide total solutions to our customers," Mr. Shimakura said. NEC's expectations for improvement in its semiconductor business this fiscal year, despite caution on prices, comes as others in the industry echo other industry projections of an increase in demand. Last week, the Semiconductor Industry Association forecast that global semiconductor sales will grow 12.1% in 1999 to $140.8 billion, in what would be the first increase in four years.