LONDON The completion of a reorganization process that started a couple of years ago has put NEC Electronics in a position to exploit improved efficiencies and take advantage of any market opportunities, according to Toshio Nakajima, president, NEC Electronics Corp. (Kawasaki, Japan).
In an interview with EE Times Europe , Nakajima said the restructuring process will be completed by the end of the year when an R&D manufacturing line at Sagamihara is fully integrated within production manufacturing lines elsewhere in Japan.
“Customers like products to be qualified on the volume production line so as to save time in their development schedule. We will produce samples on the production equipment. We are also combining the R&D line and production line in one location,” said Nakajima “There is also a financial advantage as there is a cost to equipping prototype lines and keeping them up to date. We have to be able to manage the mix of R&D parts and production parts and this will be more difficult in more busy times. The aim is to allocate time for R&D parts.”
Early results of the restructuring saw cuts in production costs and a focus on a product portfolio that addresses the industrial, automotive and consumer electronics markets. “Efforts have also gone in to create new value and reinforce strengths through collaboration between our development and manufacturing opeations,” said Nakajima. At present SoCs – ASICs and ASSPs – account for 40 percent of sales, discrete ICs 32 percent and MCUs 28 percent.
The improved efficiency is showing though in the business as an operating loss in financial year 2006 was turned into a small profit in 2007 that increased in 2008. By 2009 the company expects to have a 5 percent operating profit margin coming from sales expansion on focused products.
NEC Electronics was separated from parent company NEC Corp. in November 2002 and established as an independent unit dedicated to semiconductors. NEC Corp still retains a majority holding in the semiconductor company. Sales to NEC Corp. companies are in “single digit” figures and are declining as a percentage of sales, according to Nakajima. “This is partly as a result of NEC Corp. becoming more of a systems supplier.”
The semiconductor company has retained one important link to the NEC Group. “We share the costs of the corporate R&D center,” said Nakajima. “The semiconductor business is no longer just silicon but includes software and systems. For example for our car navigation application, we need human face recognition and other complicated system technologies. NEC is one of the best companies for research in these areas so it makes sense to work with them. Software skills are very important as customers expect us to supply a total system.”The company is also working with a number of third parties covering both technology and product development.
In September NEC Electronics entered into a multi-year joint development agreement with IBM Corp. under which they will cooperate on the development of next-generation semiconductor process technologies.
The companies will participate in a joint development project for a 32-nm CMOS process and in advanced research for leading-edge semiconductor technologies of the future. NEC Electronics was the eighth major semiconductor manufacturer represented in the IBM joint development alliance aimed to further advance performance and power improvements for next generation silicon technologies.”We are doing 40-nm technology by ourselves and have established a manufacturing structure. The develop-ment of 32-nm and 28-nm technology requires huge investments not only in terms of money but in terms of the base technology,” said Nakajima.
NEC Electronics is co-developing the 45-nm and 32-nm CMOS process technology nodes with Toshiba Corp., one of the IBM partners, and is now extending that scope of collaboration to include the 32-nm and finer nodes with IBM and its alliance partners.”We signed with Toshiba for joint development of technology some time ago but we have not made any decision about setting up joint manufacturing. There are no discussions on manufacturing yet,” stressed Nakajima (pictured above). “The development agreement with IBM is a natural extension to our arrangement with Toshiba.”
Another recent collaboration has seen NEC sign a deal with Elmos Semiconductor AG (Dortmund, Germany) that focuses on joint development and manufacturing of a range of products targeting the automotive and industrial markets. “We needed to be able to provide a complete solution for the automotive market that combined analog and microcontroller,” said Nakajima. “We don't simply buy product from Elmos; we work together to produce the best combination.” The co-operation also includes worldwide marketing and selling activities of both organizations.
Discussions are also taking place with Elpida Memory Inc., the joint venture between NEC Corp. and Hitachi Ltd. “Elpida is a specialist and we want to utilize their memory fab capability for display drivers. These are low cost high volume products.” The firms have agreed in principle to form a joint venture company in the field of display driver ICs but “how this deal develops is still under discussion,” stressed Nakajima. The joint venture company will develop process technology to accelerate die size shrinkage by applying Elpida's DRAM process to NEC Electronics' advanced driver IC development technology.
Nakajima said NEC will continue to look for opportunities for cooperation with third parties. “We will use partners to meet customer requirements. The strongest demand at present is coming from the automotive sector for us to combine own expertise with others.”
This spirit of co-operation could also spill over into manufacturing. “We are committed to the IDM model with in-house production but we like to use foundries to increase volume.” said Nakajima. “Automotive customers expect long term support of high quality product so we like to supply them from our fabs. For the consumer sector, we can use partners to handle variations in demand.” He declined to name any companies that NEC is working with.
NEC Electronics' lineup of CPU cores for system chips or SoC development offers a range of options, including the group's original V850E core, standard ARM cores used as embedded CPUs in mobile equipment, and MIPS cores for high-end applications. “We are working on multicore products and produced samples two years ago,” said Nakajima.” We are developing a number of multicore products for IT and consumer applications.”
For microcontrollers NEC uses its own design – the V850 – but for microprocessors it uses ARM cores. “Future generations will follow this route and our product plan includes using ARM's Cortex for microprocessors but not for MCUs. I will not exclude the possibility of multicore products based on the V850 architecture,” said Nakajima. “We are jointly developing multicore technology with ARM including use of the Cortex technology.”
With the current upheaval in the wireless communications semiconductor sector NEC is taking a conservative approach. “We have completed development and have products for wireless baseband products for 3G and wideband CDMA,” said Nakajima. “For the next generation 4G/LTE we are working with system companies for products but we have not decided whether we will develop our own products. We are concentrating on peripheral chips at the moment.
“There are so many options on how to handle this business. We are ready to support handset manufacturers if they have already defined their system. At present we do not have the technology to support the basestation development,” concluded Nakajima.
NEC Electronics, like many of its competitors, is making efforts to conserve global resources. It aims to do this by producing eco-friendly, energy-efficient products and by lowering energy costs. It has a corporate goal to minimize the environmental impact of its products throughout their entire life cycles.
Its manufacturing plants globally have seen CO2 emissions reduced by 60.2 percent and cut PFC emission by 143 percent since 1995. Use of volatile organic compounds has also seen a reduction by 87 percent in the same period.
The company has increased the rate of industrial waste reuse to 99.8 percent. At the Kyushu fab in Japan, waste sulphuric acid is sent to chemical manufacturers, waste hydrofluoric acid is sent to steel producers, while waste phosphoric acid is sent for fertilizer manufacturing.
At its fab in Roseville, California waste calcium fluoride sludge is sent to concrete manufacturers, waste sulphuric acid is supplied to chemical manufacturers. Outdated manufacturing equipment is donated to universities.
The Roseville plant also processes four wastewater streams (2.3 million liters/day) at an on-site treatment plant, with the sludge reused by a concrete manufacturer.
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