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Japan's biggest PC maker and second largest semiconductor producer said it expected to lose YEN300 billion (EUR2.62 billion) in the full year to March. Meanwhile for the October to December quarter the company said net loss amounted to YEN155 billion (EUR1.35 billion), compared to a profit of YEN8.3 billion last year. Revenues in the quarter came to YEN1.13 trillion though these too were down 9.5 percent from the year ago quarter.
The job cuts, totalling 14,000 including 4,000 that were already announced, will primarily hit its domestic workforce with 8,000 workers to be made redundant in Japan. However some of the cuts will hit closer to Ireland with 1,600 previously announced losses in the UK, most of which are coming from the closure of NEC's chip plant in West Lothian, Scotland. That factory manufactured system chips, DRAM (dynamic random access memory) and other semiconductors, for mobile phones, a sector of the market that had experienced major difficulty throughout 2001 as prices for such products plummeted.
"We have to acknowledge we were a bit slow in responding to rapid changes in the market," Nippon Electric Company (NEC) president Koji Nishigaki said on Thursday in Japan. "But we still have a lot of technology that is at the cutting edge globally."
Other recent cost cutting moves for the company have included plans to reduce capacity or close plants in California and Japan and the firm has also sold several Japanese plants to electronic manufacturing services firms such as Celestica. Also, NEC said on Thursday that NEC Electron Devices, one of the in-house companies of NEC, would be moved to Tokin Corporation, including the transfer of 5,000 jobs. Tokin will give NEC 49.5 million shares for the unit, giving NEC a 66 percent holding in the company.
In Ireland NEC employs around 300 at a chip testing and assembly plant in Meath. A spokesperson for the company said that none of the cuts are expected to have any impact on Ireland.
NEC said that the fall in DRAM prices has had a severe impact on its balance sheet and price competition in the small liquid-crystal display market intensified. PC sales had also slowed remarkably, the company said. At its electronics devices unit, sales fell 33.4 percent in the third quarter from last year and semiconductor sales dropped 34 percent. Display sales fell 21 percent and those of electronic components and others dropped 38 percent.
Japan's biggest electronics and semiconductor makers are all suffering currently as the weak Japanese economy, and the struggling global economy, continues to impact sales. Earlier this week Hitachi, Japan's biggest electronics manufacturer raised its workforce reduction target for the year by 4,000 jobs to more than 20,000. Moreover, earlier in January Fujitsu said it would cut another 1,000 jobs bringing its total cuts in the last 12 months to 22,000.
Including NEC's latest announcements, Japan's five biggest semiconductor makers are now expecting YEN1.17 trillion in combined net losses for the year to March.
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