Feeds

NEC to cut spending on basic chip manufacturing

Coping with over-supply

  • alert
  • submit to reddit

NEC has said that it will scale back investment in its semiconductor business by as much as 20 per cent next year because of a decline in chip prices it expects will continue into 2002.

In an interview with Bloomberg, Keiichi Shimakura, NEC's deputy president in charge of semiconductors, said that the firm will cut capital expenditures beginning in April by "outsourcing chip-packaging operations to other companies."

Prices for semiconductors have declined as demand for PCs has failed to live up to expectation resulting in a "chip mountain" and in turn lower semiconductor prices.

NEC will outsource more of its basic production processes and concentrate more on technically advanced operations like etching circuits onto silicon wafers.

Despite the move, NEC, the world's third largest chipmaker, remains committed to developing 0.095 micron chip fabrication technology.

Based on a reduction in capital spending by one fifth, NEC expects to spend approximately ¥174 billion ($1.49 billion) on microprocessors for the year beginning in April. This, according to Bloomberg, compares, to a spend of ¥217 billion ($1.9 billion) this year, mostly to upgrade plants and equipment.

Separately, networking equipment chipmaker Bookham Technology said slower sales of fibre-optic semiconductor components to key clients like Nortel Networks will impact its revenues next year. The news came as Bookham announced widening annual losses of £8.5 million ($12.3 million), up from £4.5 million ($6.54 million) a year earlier. Andrew Rickman is stepping down as the firm's chief executive to become an executive chairman, to be replaced by Bookham's president Giorgio Anania.

According to Bloomberg, Bookham expects a decline in sales of its basic products to be offset by increased sales of chips for use in high-speed next-generation networking kit that uses dense wave division multiplexing, or DWDM. ®

Related Link

Bloomberg NEC interview

Related Story

Another chip survey proclaims $200bn sales in 2000

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.