NEC profitable, but sales slightly down

While many market indicators show the semiconductor industry returning to health, NEC Electronics saw sales drop for its financial year, even though net income increased, showing strong internal management.

Net sales for the year ending March 31 fell to $6.5bn (711.9bn yen) which was a drop of 1.8 per cent from last year’s $6.6bn (725bn yen). However, net income for the recent year was $255m (28bn yen), an increase of 292 per cent from the previous year.

NEC Electronics blames a “rocky start at the outset of the year due to the war in Iraq and Severe Acute Respiratory Syndrome (SARS)”, but noted the movement toward a global economic recovery helped the company recover somewhat. Demand in the semiconductor market PCs, cutting-edge mobile handsets, digital cameras, DVD recorders, flat-screen televisions, and other digital AV equipment drove growth for the company and assisted in offsetting the steep decline in demand for certain products such as video game consoles.

Demand for semiconductors for applications in the communications segment was up 57 per cent, followed by sales into the automotive/industrial segment, up 13.2 per cent. And while sales of computing and peripheral semiconductors was up 9.8 per cent, semiconductors for consumer electronics was down by 40 per cent. Another significant area of decreased demand was NEC Electronics’ “other” category, which includes colour LCDs.

Consolidated operating income was $513.6m, an increase of $238.6m from the previous year, which the company said reflected productivity improvements and increased operating efficiency, as well as a shift to higher value-added products and material cost reductions.

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