NEC Corp. Thursday announced it is dropping all DRAM output at its Roseville, Calif. and Scotland fabs and separately is ending its own PC LCD panel production to outsource panels from Taiwan.
In the latest major restructuring of lagging businesses, NEC officials said the Roseville and Scotland fabs will shift production to system-on-a-chip and logic devices. DRAMs will be produced at NEC's Hiroshima fab for Elpida Memory, the joint venture with Hitachi Ltd.
Earlier this month, NEC said it was cutting about 700 jobs at the Roseville plant, or about half the site's workforce, in order to shut the test-and-assembly operation there. At the time, NEC said it was shifting away from DRAM production at Roseville, but didn't indicate a complete halt in memory production there.
A spokeswoman was checking to see if the firm's joint venture fab in Shanghai, Hua Hong NEC Electronics Co., would continue to make DRAMs, although that facility already was transitioning to foundry work.
Even in DRAM production that continues for Elpida, NEC officials said the majority of chips will be targeted at higher value-added products, such as workstations, servers, mobile phones and personal electronic devices.
NEC is withdrawing from LCD panel production for notebook PCs and desktop monitors, because of the drastically changed market with vast manufacturing capacity coming on line from Korea and Taiwan.
Indeed, NEC will ousource its LCD panels now from Chi Mei Optoelectronics Corp., Taiwan, for use in its own notebook PCs and for desktop monitors and industrial applications.
NEC will consolidate its remaining small-size LCD panel production for handheld units in its NEC Akita Ltd. subsidiary. That unit will also be responsible for NEC's organic electroluminescence and plasma display panel (PDP) pzndlx.
To further improve profitability of its PC business, NEC will transfer its laser printer business to Fuji Xerox Co. Ltd. NEC will integrate PC development and manufacturing activities of several PC manufacturing subsidiaries into a new company, DMS (design engineering, manufacturing and service).
Officials said the central PC group will improve overall efficiency of supply chain management which formerly was fragmented among at least four different affiliated companies.
Officials said similar parts supply consolidation is being studied for all parts of NEC's organization. The firm also said it hoped to reduce the number of suppliers by one-third in order to cut costs.
The firm also said it will expand NEC Personal Systems Ltd., the affiliate in charge of PC marketing, to also offer product planning and inventory control services for customers.