NEC Corp, the third-biggest chipmaker, said it will reduce by almost half spending to expand semiconductor output at its Shanghai, China-based plant this fiscal year because global demand dropped.
Shanghai Hua Hong NEC Electronics Co will invest ?20 billion (US$166 million) this year to increase monthly production of 8- inch wafers to 25,000 units from 20,000, said Shinichi Kaede, an NEC spokesman. That's down from a previously planned investment of ?35 billion, which was intended to raise output to 30,000 units, he said.
Demand for chips is on the decline as consumers buy fewer computers and mobile phones. Global semiconductor sales are expected to fall 14 percent to US$176.8 billion this year, the World Semiconductor Trade Statistics industry group said Monday. The group said that it expects a recovery in the second half, with growth resuming next year.
"We'd like to monitor demand cautiously," said Kaede.
"When demand recovers, we will flexibly decide to increase capital spending, though we don't see that under current circumstances."
NEC's investment in the Chinese chip plant was earlier reported by the Nihon Keizai newspaper, which didn't cite sources.
The company already disclosed the plan when it reported full-year earnings on April 26, Kaede said.
At that time, NEC also announced it will decrease overall chip-related investment by 34 percent to ?144 billion this fiscal year, he said.
In the long run, though, demand in China is poised to grow because of the Chinese government's policy of expanding domestic production of chips and mobile phones, Kaede added.
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