NEC Electronics Announces Merger of a Subsidiary

NEC Electronics Corporation (TSE: 6723) has decided at a meeting of the board of directors held today, to merge its wholly-owned subsidiary NEC Compound Semiconductor Devices, Ltd., effective April 1, 2006. This merger will be implemented in line with "simple merger" procedures.

1.Reason for Merger
NEC Compound Semiconductor Devices develops, manufactures and sells optical semiconductors and microwave devices. To consolidate and concentrate its management resources into the NEC Electronics Group and improve operating efficiency, NEC Compound Semiconductor Devices will be merged with NEC Electronics.

2.Conditions of Merger

(1) Schedule
	Meeting of the board of directors:		January 25, 2006
	Signing of the contract:		January 25, 2006
	General shareholder's meeting
		NEC Electronics Corporation	Will not be held
		NEC Compound Semiconductor Devices, Ltd.	February 14,2006 (scheduled)
	Date of merger:		April 1, 2006 (scheduled)
	Date of registration:		April 3, 2006 (scheduled)
	Note:	Pursuant to the provisions of Article 413.3.1 of the Commercial Code of Japan, NEC Electronics shall perform the merger with NEC Compound Semiconductor Devices without the approval of the merger agreement by its shareholders.
(2) Merger Method
	NEC Electronics will absorb the subsidiary as the surviving company, dissolving NEC Compound Semiconductor Devices.
(3) Merger Ratio
	As NEC Electronics owns all of the stocks issued for NEC Compound Semiconductor Devices, no new stocks will be issued and paid-in capital will not be increased due to this merger.
(4) Merger Consideratio
	No consideration will be paid in this merger.

3.About NEC Electronics and NEC Compound Semiconductor Devices

4.Financial Results for the Three Most Recent Fiscal Years

(1) NEC Electronics Corporation

Million yen except for share amounts

Year Ended March 31, 2003 Year Ended March 31, 2004 Year Ended March 31, 2005 Net sales 221,362 563,109 562,840 Operating income (loss) 1,479 20,639 (3,960) Ordinary income 3,909 11,684 9,917 Net income 1,784 7,410 7,182 Net income per share 17.85 63.08 57.84 Dividend per share 0 20 20 Shareholder's equity per share 3,367.93 3,565.78 3597.53

(2) NEC Compound Semiconductor Devices

Million yen except for share amounts

Year Ended March 31, 2003 Year Ended March 31, 2004 Year Ended March 31, 2005 Net sales 49,015 49,093 48,504 Operating income (loss) 529 678 1,127 Ordinary income 142 336 988 Net income 62 227 672 Net income per share 313.38 1,139.71 3,364.92 Dividend per share 0 0 0 Shareholder's equity per share 77,052.14 78,144.80 81,515.24

5.Status of NEC Electronics After the Merger

(1) Name:	NEC Electronics Corporation
(2) Primary business:	Research, development, manufacturing, sales and service for semiconductors, excluding general purpose DRAM
(3) Headquarters:	1753 Shimonumabe, Nakahara-ku Kawasaki, Kanagawa, JAPAN
(4) Representative:	Toshio Nakajima, President and CEO
(5) Capital:	85,955,000,000 yen (the paid-in capital will not be increased as a result of this merger)
(6) Total Assets:	699,284,000,000 yen
(7) Date of Settlement:	March 31
(8) Effect on business results:	As NEC Compound Semiconductor Devices, Ltd. is a consolidated subsidiary of NEC Electronics Corporation, the merger has little impact on the business results on NEC Electronics Corporation.

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.