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NEC head says earnings are better than expected

NEC Corp, aided by a rebound in sales of semiconductors for products such as flat-panel displays and car engines, had better-than-expected earnings in the fiscal Q1, President Koji Nishigaki said.

Sales of NEC's computers and communications equipment were also better than planned, Nishigaki said in an interview, without providing details. Japan's second-largest chipmaker doesn't publish an earnings forecast for the three months ended June 30.

Losses at Japan's five largest chipmakers reached almost US$12 billion last fiscal year because of the global slowdown in spending on technology-related goods. NEC and rivals such as Toshiba Corp, the world's No. 2 chipmaker, are hoping to fill the gap by producing specially designed chips for products such as video-game consoles, DVD players and mobile phones.

"Selling chips for a specific purpose is the right strategy," said Yoshiya Morimoto, who helps manage US$7.2 billion in Japan equities for Japan Investment Trust Management Co, which holds NEC shares. "The risk is that all Japanese chipmakers become too dependent on sales of products made by Sony Corp, Nintendo Co and Matsushita Electric Industrial Co."

Last month, NEC said it would invest about ?3 billion (US$25 million) to increase its capacity to make semiconductors for liquid-crystal displays, which are becoming more widespread as prices decline. The shift to color screens in mobile phones is also boosting demand for the chips.
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