NEC to Move Low-Margin Chip Output Overseas
Feb 5, 2004
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Tokyo, Japan-based NEC Electronics Corp. has announced that it will transfer the manufacture of low-margin, commodity-grade chips overseas to countries including China and Malaysia as part of a plan to reorganize its semiconductor assembly factories.

This move will allow the company to focus on producing high-performance, high-margin products at its five remaining factories.

The NEC Corp group firm will sell NEC Yamagata Ltd.'s plant to the Advanced Semiconductor Engineering Inc (ASE) group of Taiwan in May. The ASE group is expected to retain most of the plant's 860 or so workers.

NEC Electronics has signed a 4-year production consignment contract with ASE and plans to exchange technologies with the Taiwanese semiconductor group. In addition, the company plans to close NEC Kansai Ltd's factory in Hikone, Shiga prefecture, at the end of December.

The factory, which employs about 270 workers, produces around 4 million low-margin, commodity-grade semiconductors each month for white goods and power units.

After the closure, the workers will likely be transferred to the wafer processing division of NEC Kansai's head office plant in Otsu, Shiga prefecture.

NEC Electronics will transfer the production of low-margin, commodity-grade semiconductors from Hikone and other domestic plants to China and Malaysia. To this end, the firm will boost the production capacity of its Chinese unit by 150 percent to 200 percent in fiscal 2004 and raise the output capacity of its Malaysian unit.
(Asia Pulse/Nikkei)

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