|The enhanced capability and versatility of such products as PCs, communications equipment, and personal digital assistants (PDAs) are greatly expanding the range of applications for electron devices. NEC is striving to satisfy market needs by delivering cutting-edge semiconductors in which the "system on a chip" strategy is applied. Specifically, this entails the following: pursuing technological advancement; approaching operations with a well-balanced product mix; and promoting globalization through localized product development, manufacturing, and sales strategies. In the field of flat panel displays, NEC is focusing on TFT color LCDs and color PDPs as areas with great market potential.
In fiscal 1997, sales of electron devices decreased 7 percent, to Y963.2 billion ($7,768 million), accounting for 20 percent of net sales. Despite overall increased demand for semiconductors, plunging prices of memory devices led to lower sales. However, we recorded healthy sales of ASICs and microcomputers, primarily for use in communications equipment and 64-bit video game units. Propelled by strong demand for TFT color LCDs, sales of electronic components grew.
During the period under review, NEC worked to strengthen its manufacturing capacity both in Japan and overseas. In addition, NEC broke ground for a domestic R&D facility dedicated to advanced semiconductor R&D into the 21st century. At this site, NEC will endeavor to apply the world's finest processing technology, ranging from a 0.15-micron to a 0.07-micron line width.
In fiscal 1997, NEC responded to increased demand for TFT color LCDs for use in notebook PCs by stepping up production capacity. NEC also began the construction of a new production line employing larger-panel glass at NEC Akita, Ltd. In the area of color PDPs, NEC commenced operations of a production line at its existing plant. NEC also started the construction of a new plant at NEC Kagoshima, Ltd.
In January 1997, our semiconductor group was honored with the first Japan Quality Award. The semiconductor group was recognized for extremely high-quality management that focuses on customer value.
Although strong demand for dynamic random access memories (DRAMs) for use in PCs and communications equipment continued, price erosion from the oversupply of 16Mbit DRAMs adversely affected NEC's memory sales. In response, NEC concentrated production on such high-value-added products as high-speed synchronous and Rambus(TM) DRAMs, mitigating the adverse impact on NEC's semiconductor business.
In April 1996, NEC began shipping samples of the world's first 256Mbit synchronous DRAMs, and in February 1997 NEC unveiled the world's first prototype 4Gbit DRAM.
In fiscal 1997, NEC developed the world's first 4Gbit DRAM. This device, four generations ahead of today's 16Mbit DRAM, is suitable for use in multimedia applications.
Based on architecture developed by MIPS Technologies, Inc., of the United States, NEC developed the VR4101 64-bit reduced instruction set computer (RISC) microprocessor, which is compatible with Microsoft Corporation's Windows(R) CE platform. This is the world's first 64-bit microprocessor with on-chip peripheral functions for the PDA. With low power consumption, the VR4101 enables the high-performance processing of such essential PDA functions as handwriting recognition and data compression/decompression.
To realize increased miniaturization and lower power consumption in high-performance PCs and multimedia equipment, the market is demanding system on a chip ASICs that incorporate memory and multiple other functions into a single chip. In fiscal 1997, NEC reinforced its number one position in the world in ASICs by fortifying its design activities both in Japan and overseas and introducing cutting-edge products.
In March 1997, NEC developed the world's most highly integrated system on a chip ASICs, which employ 0.25-micron processing technology. NEC offers its customers solutions with these strategic ASICs that incorporate our technological expertise in memories, microprocessors, and analog devices.
The efficient digital compression of video data is becoming increasingly vital to a growing variety of multimedia products. In fiscal 1997, NEC was the first to incorporate onto a single chip the multiple functions necessary for MPEG2 (Moving Picture Experts Group Phase 2) encoder LSIs for the digital compression of video, used in such products as DVDs and next-generation digital cameras. This encoder LSI will promote a leap forward in video processing capability for multimedia equipment.
In fiscal 1997, NEC introduced its original high-performance V831 RISC microprocessor. It is tuned for use with Internet- and intranet-related equipment, car navigation systems, and digital still cameras.
In fiscal 1997, brisk demand for notebook PCs brought about surging sales of TFT color LCDs both in Japan and overseas. The soaring number of cellular phone subscribers in Japan also resulted in higher domestic sales of NEC's tantalum chip capacitors.
NEC is ahead in meeting customer needs in the area of flat panel displays. With the expanding capabilities of notebook PCs, demand for larger and higher-resolution TFT color LCDs is rapidly increasing. In July 1996, NEC introduced a 13.3-inch color LCD with 1,024 x 768 pixel resolution. In addition, NEC added a 14.1-inch display in April 1997. Thin, lightweight, and energy-efficient, these products incorporate a narrow-frame design, which maximizes the limited available space for a notebook PC screen. In the field of color PDPs, NEC launched modules in both 33-inch and 42-inch sizes.
Key target markets for larger color LCDs include those of desktop PCs and workstations. In April 1996, NEC launched a 20.1-inch color LCD. This display provides high- resolution with the clarity of cathode-ray tubes (CRTs) and is capable of displaying analog full-color images with an ultrawide viewing angle of 160 degrees.