Innovation Management Framework

NEC has created the position of Chief Technology Officer (CTO) to help establish a companywide perspective in its effort to optimize technology development investment across the Company and link its corporate strategy with the planning of collaboration strategies with others. The CTO has overseen the creation of a framework for examining and promoting technology development strategies in cooperation with business units and the Research & Development Division. In addition, NEC is ramping up research and development by deploying technologies outside the Company earlier and engaging external partners.

Our Global Innovation Business Unit brings together research and development functions to create new value demanded by society and customers, business development functions to deliver that value, and intellectual property strategy functions to generate and utilize valuable IP. By integrating capabilities in R&D, engineering, and business development, the unit drives innovative business creation through diverse, unconventional combinations of knowledge. It aims to create new social value through innovation with the ideas of seizing the future together with technology.

The unit also collaborates with other internal units, leveraging core technologies to accelerate commercialization efforts aimed at social value creation.
Additionally, NEC X, Inc., established in Silicon Valley, promotes open innovation by leveraging NEC’s talent and technologies in collaboration with the local ecosystem, aiming to create impactful new businesses. We are also accelerating value creation and new business development through initiatives such as the joint venture BIRD INITIATIVE, Inc., a co-creative R&D project with seven companies from different industries, our Corporate Venture Capital (CVC) function, and business contests.

R&D Bases Tasked with Creating Social Value Globally

With a view to leveraging the merits of a global network of bases for creating leading and unique technologies and formulating social solutions both for developed and emerging countries, we have established R&D bases in Japan, North America, Europe, China, Israel and Singapore. (As of October, 2025)

Innovation Management Policy

Under Mid-term Management Plan 2025, the NEC Group aims to realize growth by integrating its R&D capabilities, which continually generate cutting-edge technology, with business development capabilities. This integration strengthens the link between technology and business, converts technological prowess into customer value, and drives growth through global business focus (including Japan), transformation of our IT business in Japan, and the creation of the next core growth businesses.

Technology Development Strategy

The NEC Group creates the social values of safety, security, fairness, and efficiency to promote a more sustainable world where everyone has the chance to reach their full potential. To realize this vision, we aim to develop technologies that will enhance our existing businesses, which are the core of our social value creation, and create advanced technologies for future businesses that can provide new value to society. Accelerating the commercialization of such technologies underpins the NEC Group’s sustainable growth.

We have newly established the AI Technology Service Business Division to provide an integrated approach to research, product development, and business development related to generative AI, which is rapidly being implemented in society. This aims to significantly reduce the lead time for bringing cutting-edge new technologies to market.

Concentrated Investment in Strong Technology Areas

Our research and development efforts are centered on key technological areas like AI, security, and networks, in which we possess many world-class technologies. In the AI domain, we are enhancing technologies such as secure biometric authentication usable anytime, anywhere, multimodal foundational models that leverage strengths in image recognition to understand external environments in depth, and generative AI technologies that streamline customer operations with industry-leading speed and accuracy. By combining these technologies, we are developing Agentic AI (AI agents) that can operate autonomously in response to complex instructions and demands, contributing to overall optimization across organizations. In the security domain, we are working on automating security operations using AI and developing technologies to enhance the reliability of AI itself. In the network domain, we are pursuing research and development of technologies that ensure high reliability in application quality and real-time performance, working toward the realization of safe, secure, and efficient ICT infrastructure.

Furthermore, as part of our initiative to revolutionize scientific computing through AI, we are taking on the challenge of creating new business opportunities in AI-driven drug discovery with the development of high-speed simulation technologies, which aims to transform the drug development process.

New Business Development Strategy

Since its founding, NEC has pursued sustainable growth by placing innovation at its core and creating social value. In 2013, we established a dedicated division for new business development and have since been working to create multifaceted value starting from social issues.

To accelerate these efforts, in February 2025, we systematized our open innovation functions and activities under the name “NEC Open Innovation”. Positioned as a growth engine, our open innovation strategy on two fronts: the inbound model of incorporating external technologies and ideas, and the outbound model of sharing NEC’s technologies and expertise to others. These approaches are driving the development of new businesses rooted in social issues.

Specifically, we are focusing on co-creation with a wide range of stakeholders, particularly in the fields of sustainability and marketing, to generate innovative businesses that have the potential to become NEC’s core businesses.

Examples of Major Research Achievements Contributing to Increased Corporate Value

Open Innovation

To balance social and corporate value, we are advancing an open innovation strategy known as NEC Open Innovation.
This is a core framework that connects internal and external knowledge, technologies, and talent to continuously generate new businesses that address a range of social issues.

Key Functions of NEC Open Innovation

NEC leverages these comprehensive open innovation capabilities to promote flexible and multifaceted co-creation both in and out of Japan. Backed by broad technological and business domains and a systematic knowledge and support framework, we aim to create new businesses that address pressing social issues.

Intellectual Property Initiatives

Intellectual Property Management and Rule Making/Standardization Division: Strengthening NEC’s Intellectual Property Capabilities

NEC’s Intellectual Property Management and Rule Making/Standardization Division has established a framework to advance its intellectual property strategy by collaborating with IP managers in business units and Group companies, as well as with IP centers located at international sites, to develop and utilize a global IP portfolio. In addition, the division has established a structure to actively engage in rulemaking and provide policy recommendations to strategically utilize standards for expanding business opportunities through IP.

Intellectual Property Strategy

NEC is placing a particular focus on expanding its intellectual property in technology areas which will drive current growth, as well as create the next pillars of growth. IP is regarded as a vital management resource that supports business competitiveness, stability, and promotes co-creation. The company is working to apply IP in sales activities, strengthen its IP licensing activities, and expand and utilize design and trademark rights that support NEC brand.

Through the use of IP, NEC promotes innovation and contributes to enhancing corporate value. NEC is also reinforcing its global governance framework to manage IP risks across the entire NEC Group.

Standardization Strategy

NEC strategically promotes standardization activities that enhance the social acceptance and spread of advanced technologies, thereby expanding business opportunities. In key technology fields such as AI, biometric authentication, information and communications, and quantum computing, NEC takes on key leadership roles in the industry, such as chairing standardization committees and playing a leading role in both Japanese and international standardization efforts. The company is also working to increase and utilize standard-related patents to further strengthen its business.

Examples of Initiatives to Promote Standardization Activities

At the World Telecommunication Standardization Assembly (WTSA-24) held in New Delhi, India in October 2024 held by the International Telecommunication Union (ITU) Telecommunication Standardization Sector (ITU-T), NEC’s Miho Naganuma and Toru Yamada were appointed vice-chairs of the Telecommunication Standardization Advisory Group (TSAG) and Study Group 20 (SG20), respectively, for the 2025-2028 study period. Through these standardization activities, NEC contributes to the development of global standards and the resolution of issues aimed towards creating more open standardization processes.

Policy Declaration Activities Related to Intellectual Property

Several NEC members serve in various government-related IP positions, contributing to the advancement of Japan’s intellectual property policies.

Results and Achievements Related to Intellectual Property Activities

Additionally, NEC transferred one patent to a startup working to advance decarbonization and improve quality of life by analyzing electricity data using AI.

For more information on NEC’s intellectual property activities, please see below.

R&D Expenses and Number of Patents Held

R&D Expenses

Investments in research and development are concentrated in key business areas and also include collaborations with external research institutions. R&D expenses for fiscal year 2025 totaled 99.2 billion yen.

Number of Patents Held

NEC is working to enhance the value of its entire patent portfolio by conducting activities aimed at increasing the ratio of high-quality patents, acquiring new patents, and regularly reviewing and managing the portfolio in order to make certain that the appropriate number of patents in the appropriate jurisdictions are maintained according to the company’s utilization policy.

The NEC Group held approximately 43,000 patents as of fiscal year 2025.

Emphasis on Focus Areas (Proportion in Focus Areas)