NEC Electronics is looking for a sharp increase in profitability based on sales of platform ICs, particularly for mobile phones, according to CEO Toshio Nakajima.
The firm, the third largest chip firm in Japan after Toshiba and Renesas, made a loss last year and has an operating margin of around 0.7 per cent. Nakajima is targeting a return to profitability this year, and a ten-fold increase in operating margin to around 8 per cent in 2009. To achieve this, Nakajima aims to increase his market share in mobile phone chips.
Last year, NEC Electronics had an 11 per cent market share in WCDMA baseband chips, behind Texas Instruments’ (TI) 42 per cent market share and Qualcomm’s 26 per cent, according to analyst iSuppli.
Behind the plan is the development of platform ICs such as those envisaged by the recent Adcore-Tech consortium between NEC, NEC Electronics, Matsushita, Panasonic Mobile and TI to create platform chips for mobile communications.
According to Nakajima: “By developing a wide range of platforms with common architectures and interfaces, there is greater efficiency in development as well as the ability to provide customers with complete and easy to use solutions.”
In the financial year to March 2007, NEC Electronics’ sales are expected to rise 9 per cent to Y705bn ($4.6bn) with an operating profit of around Y5bn ($43m) compared with a Y35.7bn loss last year.
Although NEC Electronics is separate from NEC, with its shares independently quoted on the Tokyo stock exchange, NEC holds 70 per cent of the company’s voting rights. NEC Group accounts for 9.5 per cent of NEC Electronics’ sales.