Chips crisis continues as NEC takes tumble

NEC announced on Friday that its results would show heavy losses for the first half of the financial year. Reflecting the knock-on effects of a widening economic slowdown in Asia, NEC has said that it will post a group loss of around $151m for the period from 1 April until the end of September this year.

This compares with profits of $271m for the same period last year and is NEC's first loss in five years.

Massive oversupply and weak PC sales have had a dramatic impact on the semiconductor industry. At a news conference in Japan, NEC's managing director, Shigeo Matsumoto, said: "A delay in the economic recovery at home and in Asia had a profound effect on the company's business."

Jonathan Joseph, a market analyst with Nationsbanc Montgomery Securities (NMS), said: "With the Asian crisis continuing, neither Japanese nor Korean manufacturers are expected to be influential players in the semiconductor market in the coming years."

Industry analysts recently predicted that sales would fall by at least 20 per cent this year before moving towards a recovery next year. Joseph said: "We think the industry is beginning to form a bottom. We see microprocessors leading the recovery, as end-users enter another upgrade cycle caused by the introduction of Window NT 5.0."