NEC Electronics Unveils Strategy to Expand Automotive Microcontroller Business

Reorganization of Manufacturing, Development and Quality Control Functions to Deliver Enhanced Support for Global Automotive Customers

KAWASAKI, Japan, February 22, 2006, NEC Electronics Corp. (TSE 6723) today unveiled a new strategy to improve its automotive microcontroller (MCU) business by streamlining manufacturing and enhancing quality control functions. The company aims to become the world’s #1 supplier of automotive MCUs by 2010, and accordingly is taking bold steps to improve its manufacturing efficiency and support to automotive customers worldwide.

New 8-inch wafer line at NEC Electronics America’s Roseville facility
NEC Electronics America’s manufacturing facility in Roseville, California, will be outfitted with equipment for 8-inch wafer fabrication using 0.15-micron process technologies for the production of automotive MCUs. A pilot line will be established by September 2006, and volume production will be steadily ramped up with the goal of surpassing 6,000 wafers per month by 2008.

The Roseville plant currently produces 0.35- and 0.25-micron devices on 6-inch wafers, which are primarily shipped to automotive customers in the Americas and Europe. NEC Electronics also produces automotive MCUs at its facility in Kumamoto, Japan, but to keep pace with the increase in global customer demand for 0.15-micron devices, the company decided to establish the new line in Roseville, which has a long and distinguished history of serving automotive customers worldwide.

Equipment for the new 8-inch line will be transferred from NEC Electronics’ existing production facility in Sagamihara, Japan, to the NEC Electronics America plant in Roseville. The transfer of equipment rather than the purchase of new equipment will provide the benefit of establishing the new line at minimal cost. The 8-inch line at Sagamihara will be discontinued, allowing NEC Electronics to achieve cost reductions through the elimination of some operating costs.

Integration of test and assembly functions in Singapore
To reduce operating costs and improve management efficiency, NEC Electronics will concentrate its test and assembly services for American and European automotive MCU customers at NEC Semiconductors Singapore. Production capacity at the Singapore facility will increase 65 percent, reaching 10 million units per month. The additional capacity will enable the company to respond quickly and more flexibly to fluctuations in customer demand.

NEC Electronics currently operates a test and assembly facility at NEC Semiconductors Ireland as well, but due to high operating costs, the company plans to cease production and discharge the approximately 350 employees by September 2006. The majority of the equipment used in Ireland will be transferred to Singapore.

Focused Development Teams
NEC Electronics is increasing resources at the development centers in the United States and Europe devoted to delivering design support services to automotive customers. In the United States, NEC Electronics America’s Dallas Design Center, which formerly conducted development of ASICs (application-specific integrated circuits), has been restructured to focus on the design and development of automotive MCUs. NEC Electronics Europe will also strengthen its design resources at the European Technology Centre in Duesseldorf, Germany dedicated to the development of automotive MCUs.

Enhanced Quality Assurance
In the field of semiconductors, MCUs for the automotive market have particularly sensitive requirements for high quality control. NEC Electronics has one of the lowest defect rates in the industry, and the company is ardently continuing its pursuit of high reliability and quality control standards worldwide.

In April 2006, a new European Quality Centre will be established at NEC Electronics Europe’s headquarters in Duesseldorf, which will merge the quality assurance activities currently conducted there with quality management efforts at NEC Semiconductors Ireland. The integration of quality management functions in the same location will enable NEC Electronics to provide even more timely and comprehensive solutions to customers in the region.

NEC Electronics continually strives to provide improved services to its customers, and expects that the measures introduced today will enable the company to increase its market share in the rapidly growing field of automotive MCUs. The company’s goal is to achieve a 20 percent market share, or approximately 140 billion yen in sales of automotive MCUs, by 2010.

About NEC Electronics

NEC Electronics Corporation (TSE: 6723) specializes in semiconductor products encompassing advanced technology solutions for the high-end computing and broadband networking markets, system solutions for the mobile handsets, PC peripherals, automotive and digital consumer markets, and multi-market solutions for a wide range of customer applications. NEC Electronics Corporation has 26 subsidiaries worldwide including NEC Electronics America, Inc. (www.am.necel.com) and NEC Electronics (Europe) GmbH (www.eu.necel.com). For additional information about NEC Electronics worldwide, visit www.necel.com.
For more information about the NEC Electronics Group companies mentioned in this press release, please visit the companies’ websites.

NEC Semiconductors Singapore
http://www.ssg.necel.com/

NEC Semiconductors Ireland
http://www.sie.necel.com/



NEC Electronics is a registered trademarks of NEC Electronics Corporation in the United States and/or other countries. All other registered trademarks or trademarks are property of their respective owners.

Information in the press releases, including product prices and specifications is current on the date of the press announcement, but is subject to change without prior notice.

Contact Information

Denise Garibaldi

Public Relations Manager

NEC Electronics America, Inc.

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