The opening ceremony for the Trans-Siberian Microwave Communications Network, stretching across Russia from Moscow to Khabarovsk, was held in Moscow in March 1996. NEC synchronous digital hierarchy (SDH) microwave transmission systems were set up between Novosibirsk and Khabarovsk. This project has contributed to upgrading Russia's communications infrastructure.
In fiscal 1996, overseas sales increased 20 percent, to 1,210.3 billion yen ($11,311 million), and accounted for 28 percent of net sales. This rise was primarily attributable to strong sales of semiconductors and was also supported by steady performances in the PC and CD-ROM drive markets. Although sales of communications equipment dropped slightly, those of transmission systems, pagers, and PBXs rose. Overseas markets are becoming more important for NEC, and during the period under review NEC continued working to expand overseas production and forge strategic alliances as one of its globalization strategies. In response to vigorous demand for semiconductors, we augmented production capacities at our facilities and strengthened the overseas design and development of ASICs, microcomputers, and application-specific standard products (ASSPs).
In fiscal 1996, NEC enjoyed robust sales of semiconductors, transmission systems, cellular phones, and PCs, reflecting favorable economic growth in Asia.
During the period under review, new common carriers (NCCs) in this region increased their investment. NEC received orders for communications equipment from NCCs in such countries as the Philippines, Malaysia, and Indonesia. From Indonesia, NEC received an order for a PHS-based wireless local loop DCTS.
We received an order from a Malaysian carrier for SDH fiber-optic transmission systems (FOTS's). This project will make a major contribution to the building of multimedia communications networks in Malaysia. In the Philippines, which is aggressively investing in its communications infrastructure, the aggregate volume of orders for the NEAX61 digital switching system surpassed the one million line mark.
The PHS service introduced in Japan in July 1995 has attracted much attention in other Asian countries. During the period under review, NEC received an order for a PHS-based system for Singapore's largest international conference center. This will be the first such commercial-use system to be installed outside Japan. In Hong Kong, we secured an order for an automated fingerprint identification system (AFIS) from the local police force.
Also during fiscal 1996, we established joint venture companies with local partners in China for the manufacture and marketing of PBXs, PCs, and digital microwave communications systems and in Indonesia for the manufacture of such semiconductors as linear ICs and transistors. In addition, we established our first Philippine marketing subsidiary to further promote our business in that country.
In Oceania, the electronics market was healthy against a background of steady economic growth.
Augmenting its top share of the PBX market in Australia, during the fiscal year NEC received an order for a nationwide PBX network that will link more than 50 Royal Australian Air Force facilities. NEC strengthened its presence in multimedia equipment in Australia. As a member of a consortium, NEC Australia Pty. Ltd. was chosen to participate in establishing a multimedia center. NEC hopes to contribute to this project by supplying VOD and other multimedia systems.
The Tianjin Local Telephone Bureau began PHS trials in March 1996. NEC supplied all the equipment, including PBXs, cell stations, and handsets.
Supported by a buoyant U.S. economy, the PC market in North America continued to expand during fiscal 1996, in turn stimulating robust demand for semiconductors. The period under review saw a dramatic rise in sales of semiconductors, centered on DRAMs and ASICs, with sales of PCs also increasing from the previous fiscal year. In communications systems and equipment, we achieved higher sales of transmission systems and PBXs.
In its space systems development business in the United States, NEC enjoyed one of its most successful years ever. NEC was chosen by major U.S. aerospace companies as a supplier of key on-board equipment for satellites, including transponders and earth sensors. Consequently, NEC equipment will serve important functions on many of the world's satellites.
In response to accelerating demand for memories for PCs, in fiscal 1996 NEC increased its production capacity for 16Mbit DRAMs and ASICs at its Roseville Plant in California. In addition, we increased the local production of PCs in the United States.
NEC's Versa notebook PC has been well received in the United States and other countries. In fiscal 1996, NEC launched the high-performance Versa 4000 series, its most versatile multimedia PCs, in overseas markets.
Many countries in Latin America are switching to SDH systems for their backbone communications networks, and there is a growing trend toward building wireless communications networks. In fiscal 1996, NEC supplied Guatemala with a PHS-based wireless local loop DCTS, and in Argentina PECOM-NEC S.A. received orders for a PHS-based wireless local loop DCTS and a large number of digital central office switching systems. In Colombia, we were awarded a contract for a communications network comprising 3,000 kilometers of 2.5Gbit-per-second 4-fiber ring SDH FOTS's. In the event of a fault, this highly reliable system will automatically reroute transmissions. The system represents a major step toward the broadband communications networks of the future. In Brazil, NEC maintained its significant share of the cellular systems market through additional orders for system expansion projects.
NEC supplied a PHS-based wireless local loop DCTS to Argentina in fiscal 1996. Demand for this system is expected to rise.
In fiscal 1996, steady economic growth in Europe led to a healthy increase in NEC's sales in the region, which center on semiconductors. During the period under review, NEC secured a contract for ATM switching systems that will form the core of a multimedia communications system in Finland. To gain a foothold in the European communications infrastructure business, we acquired a stake in SISTEL-Comunicacoes, Automacao e Sistemas, S.A., a Portuguese communications equipment manufacturer. In partnership with that company, NEC is vigorously working to expand its activities in Europe. Thanks to the excellent reputation our SX-4 series of supercomputers enjoys in Europe, we secured orders for SX-4 products from the Netherlands, Switzerland, Denmark, and Germany. Regarding semiconductors, work continued on our advanced diffusion line in Scotland. This line is being built as a major part of our strategy to meet growing European demand for semiconductors.
Under the theme "C&C. Bringing the global village to life," NEC participated in TELECOM95, one of the largest international telecommunications exhibitions, which was held in Geneva, Switzerland. NEC demonstrated practical applications of integrated solutions based on its advanced multimedia network architecture.
At the mobile communications center of its subsidiary in the United Kingdom, NEC developed a digital cellular phone that conforms to the GSM standard. The phone is manufactured in the United Kingdom.
In fiscal 1996, NEC introduced a new MultiSync display monitor. Employing CromaClear, a new type of CRT, the monitor provides images of exceptional clarity.
During fiscal 1996, Middle and Near Eastern economies showed signs of recovery. We received orders for very small aperture terminals (VSATs) from Oman and Egypt, and we anticipate that this will serve as a foothold for sales expansion in this region.
In Africa, despite latent demand for the building of communications infrastructure, investment continued to be held in check by a lack of funding. As a result of vigorous marketing efforts, however, NEC secured a contract for an SDH microwave communications system in Tunisia. In addition, we signed a contract with a South African communications equipment manufacturer to transfer our DRMASS technology. Given the ongoing development of South Africa's communications infrastructure, the need for DRMASS's is likely to grow. In anticipation, NEC is looking to strengthen its presence in this region.
