NEC Electronics Realigns Development and Manufacturing Operations

To improve efficiency in semiconductor development and production, and to promote synergy between manufacturing companies and business units, NEC Electronics Corporation today introduced plans to reorganize its manufacturing facilities in Japan. As part of this plan, the company will transfer leading edge development and prototyping functions from its current location in Sagamihara to the site of its most advanced volume production facility in Yamagata, and realign six of its manufacturing facilities to better support its three core business units.
Currently, NEC Electronics conducts cutting edge semiconductor development, prototyping, and manufacturing at its facility in Sagamihara, with a production capacity of 2,000 300-millimeter (mm) wafers per month. The company will transfer these functions to a new location on the premises of NEC Yamagata, Ltd., its most advanced manufacturing subsidiary by March 2009. As a result, the company's leading development and prototyping capabilities will be in the same location as its premier volume production line, enabling a seamless continuation from product development to manufacturing.
The majority of the approximately 700 NEC Electronics Group employees at the 300mm line in Sagamihara will be transferred to Yamagata, the site of the recently announced 32-nanometer (nm) joint development in Yokohama, or NEC Electronics' headquarters in Kawasaki.

In addition, NEC Electronics will strengthen the collaboration between the company's manufacturing companies by aligning them directly with its three business units – System-on-Chip (SoC), Microcomputer (MCU), and Discrete & IC.
NEC Yamagata will acquire the development and prototyping functions mentioned above, enabling a seamless transition from development to manufacturing for the SoC business unit.
NEC Kyushu, NEC Yamaguchi, and NEC Semicon Package Solutions will be integrated into one company, which will serve as the flagship manufacturing facility for the MCU business unit.
NEC Kansai and NEC Fukui will also be integrated, and serve as the main manufacturing facility for power management devices, display drivers, and compound semiconductor devices for the Discrete & IC business unit.

As a result of these mergers, the MCU and Discrete & IC business units will have the benefit of seamless front-end and back-end manufacturing capabilities, which will help improve quality management, reduce costs, bring added value to products, and improve profitability.
The realignment of the six manufacturing companies into a three-pronged model is expected to occur in April 2008. Recognizing that some employees may request early retirement as a result of these reorganizations, NEC Electronics is taking steps to address employee concerns by initiating discussions with relevant labor unions to review appropriate severance compensation plans.
NEC Electronics believes that these reforms will ultimately benefit the company's operations and performance, and will implement these new changes diligently with the aim of improving the company's operations.

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About NEC Electronics Corporation

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 handset, PC peripherals, automotive and digital consumer markets, and platform solutions for a wide range of customer applications. NEC Electronics Corporation has 25 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.