News Releases

TOKYO, JAPAN

Jun 23, 1999 00:00 AM

NEC Corporation (NEC) (NASDAQ: NIPNY) and Hitachi, Ltd. (Hitachi) (NYSE: HIT) today announced that the companies have agreed to establish wide-ranging cooperation in their DRAM businesses. The companies are to consider establishing a joint-venture company responsible for DRAM development and design, and unification of their DRAM products under a single brand manufactured using the production resources at both companies.

Preparations are underway with a view to establishing the joint-venture development and design company at the end of this year, while a unification of product brands and other items is expected upon reaching a basic, concrete agreement.

There are an increasing number of large-scale tie-ups between semiconductor companies, particularly between those in the DRAM area. There is a rapid rise in the number of strategic alliances and mergers as the expenses for development of leading-edge technologies and products present a series of issues for companies facing extremely stiff worldwide competition.

Through the joint-venture DRAM development and design company, NEC and Hitachi believe their top-class technology will guarantee them a leading position in the industry, that will provide significant improvements in profitability for the semiconductor businesses at both companies thanks to economies of scale and shared expenses

NEC is making every effort to improve profitability through a business strategy that levers its advanced high density, high-speed memory technologies such as its Virtual Channel Memory architecture that the company is proposing as a new standard to the industry because of its superior performance for graphics-intensive applications.

The memory market, however, is seeing an increasing concentration of North American, European and Asian manufacturers, making it vital to achieve economies of scale and enhanced technological development, while strengthening cost competitiveness, in order to thrive in the DRAM business.

NEC believes that through its alliance with Hitachi and its considerable leading-edge technology, the concentration of resources in the DRAM field will result in world-class technological capabilities and a strengthened presence in global markets backed by enhanced cost competitiveness.

Hitachi's Semiconductor Group has established a slimmer management structure through business restructuring and management innovations. The Group is now working at creating a more responsive management by using strategic alliances and external production resources. Through its alliance with NEC, Hitachi plans to further improve the speed of its response to market needs.

By levering the competitive strengths of both companies, NEC and Hitachi aim to make every effort to be the world's foremost supplier of DRAM devices.