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NEC Cuts Spending on Chip Output

August 3, 1998

TOKYO (AP) _ Sluggish sales have forced Japanese semiconductor maker NEC Corp. to cut capital spending on chip production by 16.6 percent to 150 billion yen ($1.03 billion) this year, the company said Monday.

The Tokyo-based NEC will also postpone its scheduled start-of a new domestic chip-manufacturing plant by one year to early 2000, a company spokesman said.

The NEC spokesman, speaking on condition of anonymity, said the company will also shelve plans to rationalize its chip-production lines at domestic plants for the fiscal year, which will end March 31, 1999.

NEC, Japan’s top semiconductor maker, originally planned a total of 180 billion yen ($1.24 billion) in capital spending on chip production.

NEC, which has been the only major semiconductor maker enjoying strong earnings to date, expects revenues to fall in the current fiscal year partly due to a larger-than-expected fall in memory chip prices, the spokesman said.

The spokesman said NEC plans to raise output of 64-megabit chips from the current monthly figure of nearly 8 million to about 10 million by December. NEC had originally planned to boost monthly production to 15 million chips by mid-1999.

But the company said it will sharply slash production of 16-megabit memory chips from 6 million per month to 2 million in December.

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