NEC Corporation

International Activities

In fiscal 1995, overseas sales increased 15 percent, to 1,005.4 billion yen ($11,557 million), and accounted for 27 percent of net sales. Sales growth during the period was attributable to strong worldwide demand for semiconductors, particularly memory devices, as well as the healthy North American PC market. Communications equipment also posted strong results, especially in mobile communications terminals.

In response to the strength of the yen, NEC further promoted its globalization strategy by strengthening overseas production. Specifically, we began full-fledged production in China and Indonesia and stepped up overseas procurement of materials.

Asia and Oceania

In fiscal 1995, this region continued to lead the world in economic growth. As a major supplier of communications equipment in Asia and Oceania, NEC received a steady stream of orders for SDH transmission systems, which are the key to building an information superhighway infrastructure. Singapore, for example, chose NEC to supply its full-scale, SDH FOTS's. Through this project, the first of its kind in Asia, we gained a foothold in the region's growing multimedia market. Indonesia, in its drive to build an advanced communications infrastructure, also awarded NEC a major project encompassing SDH transmission systems, digital radio multiple-access subscriber systems (DRMASS's), digital microwave communications systems, and NEAX61 digital switching systems. In Malaysia, NEC received orders for digital switching systems, satellite ground station systems, and fiber-optic submarine cable systems. We also received a major order for digital switching systems and SDH transmission systems from the Philippines. In industrial electronic systems, we received an order for automated mail processing systems from Thailand. Throughout the region, semiconductor sales grew sharply, thanks to soaring demand for memory devices.

During the period under review, NEC further increased production in Asia. In China, through joint ventures, we began producing cellular phones and pagers and inaugurated an integrated semiconductor production line. We also commenced production of our NEAX61 digital switching systems in Indonesia.

In Oceania, NEC's sales rose as regional economies expanded, with favorable growth in notebook PCs and cellular phones. During fiscal 1995, NEC supplied Australia's Optus Communications with earth station systems, network management systems, and vehicle-mounted terminals. Using our communications equipment, Optus inaugurated the world's first satellite-based nationwide mobile communications service.

As part of our efforts to promote globalization strategies, we began operation of a diffusion line at Shougang NEC Electronics Co., Ltd., NEC's joint venture for semiconductors in Beijing, China.

In 1994, NEC Australia Pty. Ltd. celebrated the 25th anniversary of its establishment and won the prestigious Australian Quality Award.

North America

Supported by a strong U.S. economy, sales of communications equipment, computers, and electron devices rose in North America, with our notebook PCs, high-speed CD-ROM drives, and MultiSync display monitors selling particularly well. The surging PC market created extremely strong demand for 4Mbit DRAMs and a clearly emerging market for 16Mbit DRAMs during fiscal 1995. In response, we continued producing 4Mbit DRAMs at our plant in Roseville, California, and boosted our 16Mbit DRAM production capacity. In communications equipment, as the North American information superhighway continued to take shape, NEC supplied leading-edge SONET transmission systems to Sprint Corporation. The software development expertise of our U.S. operations contributed to growth in sales of PBXs, especially in the hotel and hospital markets. As cellular operators rapidly added subscribers, we recorded sharply higher sales of cellular phones in the United States, with unit sales of our price-competitive P100 series topping the one-million-a-year mark.

Despite intense competition in the internetworking products market, NEC's dial-up router, Dr. BonD, which was developed in the United States in fiscal 1994, has been well received in both the United States and Japan.

In November 1994, Sprint Corporation took an ax to its new "self-healing" network to demonstrate how communications service is unaffected if a fiber is cut. The network includes NEC's ITS-2400V, SONET FOTS.

Latin America

During the period under review, NEC faced intense competition in Latin America as countries in the region continued to privatize their communications industries and invest in their communications infrastructures. NEC received orders for SDH transmission systems from Mexico, Brazil, Argentina, Guatemala, Chile, and other countries working to convert their communications networks to SDH. We were also awarded a contract for a cellular system in Brazil, where we are the leading supplier of such systems, and received an order for a digital microwave communications system from Colombia. In Mexico, we commenced local production of DRMASS's, which are in high demand because of the need to improve rural communications networks.

We delivered a substantial number of NEXTAR fourth-generation very small aperture terminals (VSATs) to STARTEL, of Argentina, maintaining our leading position in the VSAT market.


Economic recovery in Europe has been accompanied by a surge of investment in information processing and communications equipment. In Europe, as in other parts of the world, the strong semiconductor market contributed to NEC's sales growth during fiscal 1995. In view of increasing worldwide demand, NEC began construction of an advanced semiconductor production line in Scotland. Sales of cellular phones and pagers also rose during the period. Under a contract won in the previous fiscal year, we began supplying equipment for an SDH microwave communications system to Russia. This system, one of the farthest reaching of its kind in the world, will become the backbone of Russia's nationwide communications network.

Europe is also working to construct an information superhighway. Because of its strengths in multimedia technologies, NEC was selected to participate in French superhighway project trials along with Compagnie des Machines Bull and France Telecom, becoming the first Japanese company to play a role in the development of Europe's information superhighway.

Situated near Bonn, Germany, C&C Research Laboratories, NEC Europe Ltd. has begun research on parallel processing and multimedia communications technologies.

In France, NEC introduced the world's first commercial pager to comply with the European Radio Messaging System (ERMES) standard for high-speed paging systems.

NEC's leading-edge SDH microwave communications system is enhancing Russia's international communications infrastructure, which extends from Europe to Moscow and the Far East.

Middle and Near East and Africa

Despite substantial latent demand for communications infrastructures in the Middle and Near East, such factors as low oil prices continued to restrain investment, and markets were generally stagnant. In Africa, economic recession and unstable political conditions continued to adversely affect a number of countries.

During fiscal 1995, NEC's marketing efforts in the region succeeded in winning contracts in Tanzania for national digital communications projects that include switching systems and microwave communications systems. Also, NEC extended its activities into two additional countries, receiving orders from Swaziland and Eritrea for the first time. Further, we established a liaison office in Johannesburg to promote our sales in South Africa as it reestablishes international commercial relationships.

During fiscal 1995, we continued to post strong gains in sales of our award-winning Versa series of notebook PCs in overseas markets. To strengthen this lineup, we introduced a high-performance Pentium-based model.

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