IC supplier plugs into nation
By Zhang Di (China Daily)
Updated: 2006-03-07 06:14

Japan's NEC Electronics Corp (NECEL), which supplies semiconductor material used to make integrated circuits (IC) for electronic devices, plans to triple its annual sales by 2011 in China, which last year grew into the world's largest IC market.

Integrated circuits (IC) are used for a variety of electronic products, such as audio and video devices, cars and microprocessors.

NECEL president Toshio Nakajima expects the firm's revenues in China to hit 100 billion yen (US$863 million) in five years.

"It is our top priority to expand our business in China as it has become the fastest-growing semiconductor market in the world," he said.

According to research firm IC Insights Inc, China's semiconductor market grew by 32 per cent to US$40.8 billion in 2005, ranking it No 1 in the IC market for the first time.

Currently annual IC sales in China are 35 billion yen (US$302 million).

NECEL last year revamped its China operations by launching NECEL China and secured a licence from the Chinese Government to import and sell semiconductor products.

NECEL China's predecessor is Beijing NEC, a venture wholly owned by NECEL. It operated mainly as an IC design house, said Fumiaki Urase, president of NECEL China.

The license awarded by the government is expected to help NECEL woo more local customers.

The firm has already secured contracts to supply micro controller units (MCU), electronic components, to several major Chinese household appliance manufacturers.

"NECEL China was awarded the best MCU supplier title by Midea and Gree in 2005," said Fumiaki.

Midea and Gree are the two leading household appliance suppliers in China.

NECEL will also move more research and development activities from Japan to China to better serve local customers, he said.

NECEL China has an engineering team of more than 50 people and a solutions team of more than 100 people.

Analysts believe the launch of NECEL China will help NECEL stake out a bigger share of the Chinese market.

"Despite a strong presence in the global market, NEC Electronics' performance in the Chinese markets was far from impressive in the past," said Liu Xing, an analyst with CCID Consulting, a Hong Kong-listed technology consultancy.

NEC is not ranked among the top ten MCU product vendors in China, according to statistics by CCID Consulting.

But globally the firm was ranked No 2 in the 32-bit MCU with a 18 per cent market share in 2004, and is expected to rise to No 1 with 20 per cent this year.

Liu said the newly established company will help NECEL increase sales and research and development capabilities in China.

In 1991, NECEL launched Shougang NEC Electronics Co Ltd, which integrates research, development, manufacturing and sales. In 1998, NEC and Beijing Huahong launched a joint venture - Beijing Huahong NEC IC Design Co Ltd, in which NECEL acquired a 100 per cent stake in November 2003 and renamed it Beijing NEC.

(China Daily 03/07/2006 page10)