NEC Corporation

C&C Operations

Communications Systems and Equipment

In fiscal 1995, sales of communications systems and equipment increased 6 percent, to 1,027.1 billion yen ($11,806 million), representing 27 percent of net sales. In Japan, sales growth was attributable to significantly higher sales of mobile communications terminals, such as cellular phones and pagers, and sales of transmission systems to Nippon Telegraph and Telephone Corporation (NTT). Overseas sales also rose, thanks to higher sales of cellular phones, private branch exchanges (PBXs), and microwave communications systems.

During the period under review, NEC stepped up the marketing and development of ATM-based products, which support such multimedia as voice, video, image, and other data. In response to growing demand for ATM-based LANs, we developed a higher-capacity, highly reliable ATM switch. With a complete product lineup, including multiplexers, cross-connectors, switches, and routers, NEC is reinforcing its leading position in the ATM market.

Japan's PHS service, a convenient digital personal communications service scheduled to begin commercial operations in July 1995, represents a considerable business opportunity for NEC. In fiscal 1995, NEC strengthened its development of PHS equipment, including switching systems, cell stations, and handsets.

Developments by Product Line

Digital Switching Systems

Domestic sales of digital switching systems were held to marginal growth, while overseas sales were down. The growing need for advanced information and communications infrastructure supporting high-speed data communications, LAN connectivity, and multimedia applications has prompted many universities, research institutes, and private companies to introduce ATM networks. NEC's desktop-sized ATM switch, introduced in fiscal 1994, has benefited from this trend, with a number of domestic universities installing networks employing the switch during the period under review.

NEC's new ATM switch, featuring information processing rates of up to 10Gbits per second, is ideal for use as an enterprise backbone switch in multimedia communications networks.

Fiber-Optic and Radio Transmission Systems

Reflecting robust demand for leased digital lines among businesses in Japan, sales of transmission systems to NTT increased significantly. In overseas markets, sales of microwave communications systems rose. During the period under review, we began to fill an order received from Russia in fiscal 1994 for a synchronous digital hierarchy (SDH) microwave communications system. Also, sales of fiber-optic submarine cable systems employing optical amplifier technology posted healthy growth. While sales of SDH fiber-optic transmission systems (FOTS's) recorded significant growth, sales of conventional FOTS's decreased.

In fiscal 1995, NEC began supplying highly reliable, leading-edge Synchronous Optical Network (SONET) transmission systems to Sprint Corporation, of the United States.

Space Electronics

Through many years of experience in space systems development, NEC has accumulated a wealth of expertise in systems integration technology. In March 1995, the National Space Development Agency of Japan (NASDA) successfully launched its fifth geostationary meteorological satellite, the GMS-5 Himawari. This leading-edge satellite, supplied by NEC, transmits data not only to Japan but also to other Asia-Pacific nations. NEC has built all the Japanese meteorological satellites launched by NASDA to date.

Mobile Communications Systems

In fiscal 1995, NEC remained a leading supplier of mobile communications systems and terminals.

We developed a new digital base station that is smaller and lighter than previous models, meeting strong demand from domestic cellular operators. Overseas, sales increased due to shipments of cellular systems to Brazil.

Following market deregulation and a fall in subscription charges, the number of subscribers to cellular services in Japan increased sharply, creating robust demand for cellular phones. NEC succeeded in supplying cellular phones to all domestic operators and also enjoyed favorable sales of NEC-brand handsets. In overseas markets, healthy sales of our price-competitive P100 series and the launch of our new P7 series were important factors contributing to sales growth during fiscal 1995.

Domestically, greater demand for pagers for personal use fueled a rapid expansion of the pager market. NEC increased sales dramatically through aggressive product introductions in this area.

We also accelerated the implementation of our multimedia strategy in the field of mobile communications by developing the world's first two-way wireless modem conforming to the PCMCIA (Personal Computer Memory Card International Association) Type 2 standard for mobile communications systems.

Taking advantage of healthy growth in the domestic digital cellular phone market, NEC accelerated shipments of cellular phones to operators and also introduced an NEC-brand handset in March 1995.

Customer Premises Equipment

In fiscal 1995, domestic sales of PBXs were flat, but overseas sales rose due to the active development of vertical market software applications by overseas subsidiaries to meet rising demand. NEC developed a wireless PBX featuring PHS service connectivity for corporate communications networks.

Sales of facsimile equipment increased in Japan, reflecting the expanding consumer market.

In fiscal 1995, domestic sales of broadcasting systems increased significantly. NEC supplied digital broadcasting systems to this major Japanese broadcasting company.

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