Tokyo, Japan–NEC Corp. today announced plans to divest its optical semiconductor, microwave silicon, and compound semiconductor operations to a new company it will form in October 2001. The move is aimed at reinforcing NEC’s position as a global leader in broadband and mobile networking equipment, while maximizing the overall corporate value of the NEC Group.

The new company, with paid-in capital of 12 billion yen (US$103 million), is expected to generate first year sales of 120 billion yen (US$1.03 billion) and will be staffed by approximately 500 people. Preparations for the establishment of the company will begin from April when Japan’s Revised Business Law comes into effect. While NEC will have 100% ownership of the new firm, it intends to take the company to an initial public offering within 2 years.

Research and development for these and other next-generation devices will be located at a Kansai device R&D facility to be based within the NEC Kansai plant in western Japan, and related fundamental device R&D will be established at NEC’s Tsukuba Laboratories in Tsukuba City, Ibaraki Prefecture.

By divesting these operations and focusing optical and microwave semiconductor R&D in a Kansai device R&D facility, NEC expects the new company to achieve a highly integrated research, development and production organization closely attuned to market trends. NEC believes this will treble sales of optical and microwave devices from 100 billion yen (US$874 million) in fiscal year 2000 to 300 billion yen (US$2.5 billion) by 2005, compared to a forecasted doubling of market size to 2 trillion yen (US$18.5 billion) in the same period.