TOKYO — Coping with a ''crisis'' amid losses in its business, troubled NEC Electronics Corp. Thursday (Feb. 22) announced a three-year restructuring plan that included the exit from the structured ASIC and single-chip cell phone sectors. The company, which is also terminating 600 engineers, will consolidate its nine front-end manufacturing lines in Japan to four.
In a complex web of announcements, NEC revealed the following plans on the fab front:
- NEC Yamagata will primarily manufacture system-on-a-chip (SOC) products in its 300-mm line and will close its 8-inch line.
- Another fab, NEC Kyushu, will be the flagship facility for flash-based controllers and automotive MCUs on its 8-inch line and will close its 6-inch line.
- NEC Kansai will focus on manufacturing display drivers and power management devices on its 8-inch line. It will close its 6-inch line.
- NEC Yamaguchi will manufacture multi-purpose MCUs, multi-purpose ASICs, and LCD driver ICs while improving manufacturing efficiency on the existing 6-inch line.
According to NEC (Tokyo), the 8-inch line at NEC Yamagata, as well as the 6-inch lines at NEC Kansai and NEC Kyushu, will be closed by fiscal year 2010. The 5-inch lines at NEC Yamagata and NEC Kansai will be closed eventually, according to the firm.
All told, NEC will re-allocate resources equivalent to approximately 1,000 engineering positions. Approximately 400 engineers will be shifted to automotive and digital consumer projects, while additional resources for outsourcing of development (approximately 600 positions) will be cut within one year.
The moves follow a slowdown at the chip maker. NEC Electronics lowered its business forecast for this fiscal year ending March 31. In fact, the company revised the forecast downward twice, including at the end of the mid-term.
NEC's sales are projected to be 690 billion yen ($5.9 billion), down 105 billion yen ($865 million) from the forecast at the beginning of this term. The company attributed the revision to slow sales of LCD drivers and semiconductors for PCs.
Initially the company forecasted a 5 billion yen ($41 million) operating profit with a net loss of 5 billion yen. The latest revision said that the operating loss would expand to 30 billion yen ($247 million) and net loss would be 45 billion yen ($370 million).
''This business result is indeed a management crisis,'' said Toshio Nakajima, president of NEC Electronics.
Under the new policy, NEC Electronics hopes to move into the black next fiscal year. ''The semiconductor market is expected to be in the up phase in the second half of this year, but I have a more severe expectation. In such a situation, if the business continues to be sluggish, I'm afraid that I'll have to take another hard step,'' said Nakajima.
In its new plan, NEC will focus on the digital consumer electronics and automotive sectors. ''We've been focusing our resources on selected core areas, but not enough,'' he said.
Structured ASICs and one-chip solutions for mobile phones are no longer in the game plan. ''Structured ASICs have not grown to a big business yet. It is risky to invest large resources on it. We won't take new orders and will fade out from this area. We'll withdraw completely,'' he said.
The company will complete the development of a one-chip mobile phone solution, dubbed Medity 2. It will terminate the development of the one-chip solution that integrates communications and applications processors, and instead, will focus on 3G baseband processors for high-speed communications.