TOKYO Half a decade after its namesake hurled NEC Corp. out of the U.S. vector supercomputer market, Cray Inc. is now to become an OEM distributor for its former nemesis.
In an agreement announced yesterday in Tokyo, Cray will enter into an exclusive distributorship with NEC for sales, installation and support of the NEC SX-5 supercomputer, reselling the brand as one of its own product lines exclusively in the United States, Canada and Mexico.
After confirming that it is permissible under applicable antitrust laws and regulations, Cray will also sell NEC's high-performance supercomputers in Europe and other areas, receiving $25 million in investment in return. But not before Cray does some fence-mending.
Cray kept both sides in court and the NX series out of the United States with antidumping allegations, an irony not lost on NEC.
What brewed into a major trade dispute that embroiled the U.S. and Japanese governments, the U.S. Supreme court, the International Trade Commission and the Court of International Trade began back in 1996, when Cray Research Inc. lost to NEC in a bid to sell a supercomputer to the National Center for Atmospheric Research (NCAR; Boulder, Colo.).
A successful antidumping suit launched by Cray Research resulted in the International Trade Commission imposing 454 percent duties on NEC and Fujitsu Corp. vector supercomputers. While the Court of International Trade in New York overturned this in 1998, the two sides found themselves at loggerheads until as late as this month, when NEC lost a petition at the U.S. Supreme Court, which had upheld the duties.
"It's strange. Yesterday's enemy is today's friend. Basically Cray will sell SX-5s after it submits a petition to revoke its antidumping petition," said an NEC official who declined to be named.
NEC had always suspected Cray of using the dumping charges to bolster the company's steadily declining sales of vector supercomputers in the face of decreased military and government procurement. With its markets fading, Cray was taken over by Silicon Graphics Inc. (SGI), who in turn sold Cray to Tera Computer Co., which became Cray Inc., in 2000.
Meanwhile, the company has become a shell of the pioneering venture founded by Seymour Cray in 1972, with sales of only $85 million in the nine months to September 30, 2000. But Cray Inc. still has plenty of sales and distributions and contacts among potential government, military and university research departments to make the deal valuable, said the NEC official.
"Basically, Cray doesn't have much to sell anymore. But what we liked were its exclusive sales channels and customer base," the NEC official said.
NEC hopes the deal will now boost sales of the NX-5, the company's top vector model, with peak vector processing speed rated at 5 teraflops. While the NX-4, the computer that originally beat out Cray for the original NCAR contract, went on to sell 142 systems, only 78 of the SX-5s have been sold so far, an NEC spokesman said.