NEC Electronics Announces Forecast of First Quarter Financial Results and Revisions to Interim and Full-Year Forecasts

NEC Electronics Corporation (TSE: 6723) today announced a forecast of financial results for the first quarter of the fiscal year ending March 31, 2006 (the three months ended June 30, 2005), as well as revisions of its interim and full-year consolidated financial forecasts disclosed on April 26, 2005.

2. Revision of the forecast for interim consolidated financial results
    (for the six months ending September 30, 2005)

3. Revision of the forecast for full-year consolidated financial results
    (for the twelve months ending March 31, 2006)

4. Background to the revisions
With regard to the semiconductor market, NEC Electronics expects the silicon cycle to hit bottom in July 2005. Analysis of past silicon cycles based on annual growth rates indicate it may take several months to half a year for a strong growth curve indicative of genuine recovery. In addition, while manufacturing of electronic equipment such as DVD recorders and digital cameras continues to grow, their overall growth rate is slowing.

NEC Electronics expects net sales for the first quarter (ended June 30, 2005) will be approximately 13 percent lower compared to the previous quarter. Sales of semiconductors for digital AV equipment were solid, but sales of multi-purpose microcontrollers and system LSIs for mobile phones declined significantly from the fourth quarter. Although measures were taken to reduce costs such as outsourcing, these were not enough to offset the large decrease in sales, and the company expects to post operating losses of 10 billion yen for the first quarter.

Net sales in the second fiscal quarter are expected to increase, but not by a wide enough margin to compensate for the decrease in sales during the first quarter. As such, the company believes it will be difficult to achieve the financial targets set for the first fiscal half, and has revised the interim and full-year financial forecasts accordingly.

The consolidated financial forecasts were calculated at the rates of 105 yen = US$1 and 130 yen = 1 euro.

More details will be available in NEC Electronics' first quarter financial results, to be announced on July 27, 2005.

Cautionary statements:
The statements in the material above with respect to the plans, strategies and forecasts of NEC Electronics Corporation ("NEC Electronics") are forward-looking statements involving risks and uncertainties. We caution you in advance that actual results could differ materially from such forward-looking statements due to several factors.

The consolidated financial statements of NEC Electronics are prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, but the figures for operating income shown above represent net sales minus the cost of sales, research and development, and selling, general and administrative expenses.

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.ee.nec.de). For additional information about NEC Electronics worldwide, visit www.necel.com.