July 25, 2002 – Tokyo, Japan – The semiconductor business that NEC Corp. will spin off in November will focus on system chips and will be led by Kaoru Tosaka, currently head of NEC’s chip business, the company said.

The new firm, which will initially be 100% owned by NEC, aims to eventually go public, reported the Nihon Keizai Shimbun. It will handle system chips and discrete semiconductors. It will turn NEC Compound Semiconductor Devices Ltd. and other firms into group companies, with a system chip factory in Tsuruoka, Yamagata Prefecture, and a microcomputer plant in Kumamoto coming under its umbrella.

Tosaka became head of NEC’s electron device division in April and has since tried to rebuild the semiconductor business, which incurred a loss of about 100 billion yen in FY01.

About 25,000 employees, including overseas staff, will be transferred to the new company. The firm will increase marketing staff by retraining and reassigning some engineers, enabling the business to design high-performance systems chips in a short time to meet customer demand.

The firm will likely need to implement further restructuring because excess employees are expected from the manufacturing sector as a result of a shift from the previous pursuit of increased scale.