NEC sees orders rise on growing chip demand

BANGALORE, INDIA: Riding on demand for chips used in cars and liquid-crystal displays worldwide, NEC Electronics Corp foresees a surge in orders for its semiconductors. The company believes that orders might jump several per cent during the next quarter.

The current quarter has seen orders shoot up by 50 per cent compared to the previous three-month period.

The company had been reeling under losses for the past five years owing to sales of chips used in mobile phones, cars and flat-screen televisions falling deep. The company had to snip labor and research costs by 90 billion yen, which translates to around $936 million, for the year ending March 2010 in its bid to break even at operating level this fiscal, said a report.

Now that demand slowly moving northward, the company looks at a rosy future as it believes that the sales will improve.

It has been reported that with demand on the uptrend, NEC is sprucing up output to meet the recovery in demand.

According to company top brass, the factory-utilization ratio will probably rise to 60 per cent next quarter, from about 50 percent in the current period and 43 percent last quarter. Factory-utilization ratio is defined as a measure of how close the plants are to operating at full capacity.

Meanwhile, a media report said that Elpida Memory Inc will start making semiconductors for use in liquid crystal display televisions for NEC Electronics in October. The outsourcing deal will allow Elpida, to diversify its operations, reducing its reliance on the volatile DRAM chip market, the Nikkei business daily reported.