Sat, May 13, 2006 - Page 12 News List

NEC to boost procurement from Taiwan

By Jason Tan  /  STAFF REPORTER

NEC Corp, Japan's largest maker of personal computers and the country's third-largest maker of mobile phones, is set to increase procurement from Taiwanese suppliers this year, a top company executive said yesterday.

"Judging by the operations of our company here, I believe our procurement from Taiwanese partners will show no signs of declining this year," NEC senior executive vice president Toshiro Kawamura told reporters in Taipei yesterday.

NEC last year spent around US$3 billion to purchase electronics components and products from Taiwanese suppliers, accounting for 12 percent of its global procurement of US$25 billion, he said.

The company's purchases from Taiwan stood at US$2.66 billion in 2004.

"Taiwan and Japan share close relations, and we would like to increase our trading amount here," Kawamura said.

He declined to discuss figures for this year.

NEC is the second-largest Japanese vendor that buys from Taiwanese suppliers. Sony Corp is the largest.

NEC, which mainly sources laptops, handsets, servers, memory chips and other electronic components from Taiwan, is working closely with Quanta Computer Inc (廣達電腦), First International Computer Inc (大眾電腦) and Arima Computer (華宇).

Kawamura dismissed speculation that NEC had plans to set up a second research and development (R&D) center in Taiwan to focus on software solutions.

"Taiwan's core strength lies in hardware, and we will continue to strengthen software development at the existing center," he said.

The R&D center was set up in August 2004, with an investment of NT$2 billion (US$63.59 million) over three years. It mainly develops hardware products, including computers and servers.

Kawamura was in Taipei to attend the "NEC Taiwan Solution Fair 2006," a seminar and exhibition on the company's latest hardware and software solutions.

He met representatives of Compal Electronics Inc (仁寶電腦), Lite-On Technology Corp (光寶科技) and Accton Technology Corp (智邦科技) at a luncheon yesterday organized by the Ministry of Economic Affairs, NEC said.

On Thursday, Tokyo-based NEC said that its net income for the year ended March 31 had dropped 84 percent to ?12.1 billion (US$3.4 billion) on losses at the company's chip and cellphone businesses.

The company hopes to increase the profitability of its business solutions division, aiming to boost the division's revenue contribution from the current level of 40 percent to 60 percent in the future, Kawamura said.

Hardware products now account for 60 percent of the company's total sales, although about 80 percent of profitability was derived from its business-solutions offerings, he said.

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