Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Alliance Semiconductor -- Ignore unavailable to you. Want to Upgrade?

To: Ram Seetharaman who wrote (4962)	6/4/1999 10:15:00 AM
From: DJBEINO	Respond to of 9582

INTERVIEW-NEC may end big-spending ways in chips By Yuko Inoue TOKYO, June 4 (Reuters) - NEC Corp, Japan's biggest semiconductor maker, hinted on Friday at a retreat from its aggressive investment stance on computer memory chips, after limping to its worst-ever earnings in the last business year. NEC President Koji Nishigaki, who took the helm of the giant electronics maker in April to guide it through a critical restructuring, said in an interview the company would avoid making any big-ticket investments in DRAM (dynamic random-access memory) chip production in the future. ''We are looking for alternative approaches to remain competitive in the DRAM business without making huge, one-shot investments,'' Nishigaki said. NEC plans instead to increase DRAM output at contract manufacturers in Taiwan, while making small, incremental investments in existing facilities and raising the ratio of custom-made chips to reduce investment risks, Nishigaki said. The money-guzzling DRAM business requires investment of nearly 200 billion yen ($1.64 billion) a year to stay competitive. NEC's investment stance has been closely watched, particularly after a freefall in DRAM chip prices last year shattered earnings at Japan's electronics makers. NEC's cautious investment stance contrasts sharply with its South Korean rival Samsung Electronics Co , which has earmarked 3.7 trillion won ($3.12 billion) this year for DRAM facilities. Nishigaki, who has devoted most of his 38-year career to NEC's computer division, said that in order to bolster profitability NEC needed to cut costs and shift its emphasis more to the service and software businesses from a mere manufacturing of chips, telecom equipment and computers. ''The days when electronics makers reaped huge profits from memory chips are over,'' he added. NEC, despite its strength in three growth businesses -- chips, telecommunications and computers -- posted a group net loss of 157.95 billion yen in the year ended on March 31. Nishigaki, whose reputation for forcefulness dates back to his days as a college athlete, pledged to come up with a new business structure for NEC by the end of September. ''One possibility is to separate our core businesses into different business units, allowing each unit to utilise a more rigorous decision-making process for investment planning,'' he said. NEC, after injecting nearly 200 billion yen into its faltering U.S. personal computer making unit Packard-Bell NEC, was forced to post a special loss of about 75 billion yen to pay for restructuring in the last business year. Many analysts still wonder whether PB-NEC, a manufacturer of low-end PCs for the home market, will ever form an integral part of NEC's computer strategy, which is targeting the U.S. corporate PC market. Nishigaki said he would consider further measures if PB-NEC did not yield a profit this year. NEC's woes last year were compounded by a Defence Agency procurement scandal that prompted many local governments to exclude the company and its affiliates from tenders, shattering earnings in NTT's last business stronghold: the telecom sector. NEC earlier this year announced it would make cuts of 15,000 jobs over a three-year period. Analysts expect NEC to shed 3,000 workers at home through early retirement schemes or the sale of one or more of its divisions. Nishigaki said NEC expects to reap substantial profits from the switching equipment sector beginning in 2001, when the current telecoms infrastructure devoted to voice communications will shift on a global scale to one emphasising the Internet. ($1=122 yen, $1=1,186 won) biz.yahoo.com