Overview
Kunihiko Iwadare and Takeshiro Maeda established Nippon Electric Limited Partnership on 31 August 1898, by using facilities that it had bought from Miyoshi Electrical Manufacturing Company. Iwadare acted as the representative partner; Maeda handled company sales. Western Electric, which had an interest in the Japanese phone market, was represented by Walter Tenney Carleton.[10] Carleton was also responsible for the renovation of the Miyoshi facilities.[11] It was agreed that the partnership would be reorganized as a joint-stock company when the treaty would allow it. On 17 July 1899, the revised treaty between Japan and the United States went into effect. Nippon Electric Company, Limited was organized the same day as Western Electric Company to become the first Japanese joint-venture with foreign capital.[12] Iwadare was named managing director. Ernest Clement and Carleton were named as directors. Maeda and Mototeru Fujii were assigned to be auditors. Iwadare, Maeda, and Carleton handled the overall management.[13]
The company started with the production, sales, and maintenance of telephones and switches. NEC modernized the production facilities with the construction of the Mita Plant in 1901 at Mita Shikokumachi. It was completed in December 1902.
The Japanese Ministry of Communications adopted a new technology in 1903: the common battery switchboard supplied by NEC. The common battery switchboards powered the subscriber phone, eliminating the need for a permanent magnet generator in each subscriber's phone. The switchboards were initially imported, but were manufactured locally by 1909.[14]
NEC started exporting telephone sets to China in 1904. In 1905, Iwadare visited Western Electric in the U.S. to see its management and production control. On his return to Japan, he discontinued the "oyakata" system of sub-contracting and replaced it with a new system where managers and employees were all direct employees of the company. Inefficiency was also removed from the production process. The company paid higher salaries with incentives for efficiency. New accounting and cost controls were put in place, and time clocks was installed.[15]
Between 1899 and 1907 the number of telephone subscribers in Japan rose from 35,000 to 95,000.[16] NEC entered the China market in 1908 with the implementation of the telegraph treaty between Japan and China. They also entered the Korean market, setting up an office in Seoul in January 1908. During the period from 1907 to 1912 sales rose from 1.6 million yen to 2 million yen. The expansion of the Japanese phone service had been a key part of NEC's success during this period.
The Ministry of Communications delayed a third expansion plan of the phone service in March 1913, despite having 120,000 potential telephone subscribers waiting for phone installations. NEC sales fell sixty percent between 1912 and 1915. During the interim, Iwadare started importing appliances, including electric fans, kitchen appliances, washing machines, and vacuum cleaners. Electric fans had never been seen in Japan before. The imports were intended to prop up company sales. In 1916, the government resumed the delayed telephone-expansion plan, adding 75,000 subscribers and 326,000 kilometers of new toll lines. Thanks to this third expansion plan, NEC expanded at a time when much of the rest of the Japanese industry contracted.[17]
1919–1938
In 1919, NEC started its first association with Sumitomo, engaging Sumitomo Densen Seizosho to manufacture cables. As part of the venture, NEC provided cable manufacturing equipment to Sumitomo Densen. Rights to Western Electric's duplex cable patents were also transferred to Sumitomo Densen.[18]
The Great Kantō earthquake struck Japan in 1923. 140,000 people were killed and 3.4 million were left homeless.[19] Four of NEC's factories were destroyed, killing 105 of NEC's engineers and workers. Thirteen of Tokyo's telephone offices were destroyed by fire. Telephone and telegraph service was interrupted by damage to telephone cables. In response, the Ministry of Communications accelerated major programs to install automatic telephone switching systems and enter radio broadcasting.[20] The first automatic switching systems were the Strowger-type model made by Automatic Telephone Manufacturing Co. (ATM) in the United Kingdom. NEC participated in the installation of the automatic switching systems, ultimately becoming the general sales agent for ATM. NEC developed its own Strowger-type automatic switching system in 1924, the first in Japan. One of the plants almost leveled during the Kanto earthquake, the Mita Plant, was chosen to support expanding production.
1938–1945
World War II was described by the company as being the blackest days of its history.[24] In 1938 the Mita and Tamagawa plants were placed under military control, with direct supervision by military officers. In 1939, Nippon Electric established a research laboratory in the Tamagawa plant. It became the first Japanese company to successfully test microwave multiplex communications.[25] On 22 December 1941, the enemy property control law was passed. NEC shares owned by International Standard Electric Corporation (ISE), an ITT subsidiary, and Western Electric affiliate were seized. Capital and technical relations were abruptly severed. The "Munitions Company Law" was passed in October 1943, placing overall control of NEC plants under military jurisdiction.[26] The Ueno plant was leveled by the military attack in March 1945. Fire bombings in April and May heavily damaged the Tamagawa Plant, reducing its capacity by forty percent. The Okayama Plant was totally destroyed by a bombing attack in June of the same year. At the end of the war, NEC's production had been substantially reduced by damage to its facilities, and by material and personnel shortages.
1945–1980
After the war, production was slowly returned to civilian use. NEC re-opened its major plants by the end of January 1946.[27] NEC began transistor research and development in 1950. It started exporting radio-broadcast equipment to Korea under the first major postwar contract in 1951. NEC received the Deming Prize for excellence in quality control in 1952. Computer research and development began in 1954. NEC produced the first crossbar switching system in Japan. It was installed at Nippon Telegraph and Telephone Public Corporation (currently Nippon Telegraph and Telephone Corporation; NTT) in 1956. NEC began joint research and development with NTT of electronic switching systems the same year. NEC established Taiwan Telecommunication Company as its first postwar overseas joint venture in 1958. They completed the NEAC-1101 and NEAC-1102 computers in the same year. In September 1958, NEC built its first fully transistorized computer, the NEAC-2201, with parts made solely in Japan.[28] One year later, it demonstrated it at the UNESCO AUTOMATH show in Paris. The company began integrated circuit research and development in 1960. In 1963 NEC started trading as American Depositary Receipts, with ten million shares being sold in the United States.[29]
1980–2000
In 1980, NEC created the first digital signal processor, the NEC μPD7720. NEC Semiconductors (UK) Ltd. was established in 1981, producing VLSIs and LSIs. In 1983 NEC stock was listed on the Basel, Geneva, and Zurich, Switzerland exchanges. NEC changed its English company name to NEC Corporation in 1983.
In 1986, NEC delivered its SX-2 supercomputer to the Houston Advanced Research Center, The Woodlands, Texas. In the same year, the NEAX61 digital switching system went into service. In 1987, NEC Technologies (UK) Ltd. was established in the United Kingdom to manufacture VCRs, printers, and computer monitors and mobile telephones for Europe.
NEC USA, Inc. was established in 1989 as a holding company for North American operations.
In 1990, the new head office building, known as the "Super Tower", was completed in Shiba, Tokyo. Additionally, joint-venture agreements were established to manufacture and market digital electronic switching systems and LSIs in China.
In 1993 NEC's asynchronous transfer mode (ATM) switching system, the NEAX61 (Nippon Electronic Automatic Exchange) ATM Service Node, went into service in the United States. NEC Europe, Ltd. was established as a holding company for European operations the same year. The NEC C&C Research Laboratories, NEC Europe, Ltd. were opened in Germany in 1994. NEC (China) Co, Ltd. was established as a holding company for Chinese operations in 1996. In 1997 NEC developed 4Gbit DRAM, and its semiconductor group was honored with one of the first Japan Quality Awards. In 1998, NEC opened the world's most advanced semiconductor R&D facility.
Personal computers
NEC introduced the 8-bit PC-8800 series personal computer in 1981, followed by the 16-bit PC-9800 series in 1982. NEC quickly became the dominant leader of the Japanese PC industry, holding 80% market share.[33]
NEC Information Systems, Inc. started manufacturing computers and related products in the United States in 1984. NEC also released the V-series processor the same year.
Amid increasing competition from Fujitsu, Seiko Epson and IBM Japan, NEC remained the largest Japanese computer manufacturer in the early 1990s, with well over 50% market share. Competition heated up later as rival Fujitsu started to aggressively market its computers, which were industry standard (x86) instead of NEC's indigenous models.
In June 1994, NEC purchased Packard Bell to produce desktop PCs in a common manufacturing plant for the North American market. As a result, NEC Technologies (USA) was merged with Packard Bell to create Packard Bell NEC Inc.
By 1997, NEC's share of the Japanese PC market was reduced to about 35%.[34]
Brazil business
In 1983, NEC Brasil (pt), the Brazilian subsidiary of NEC, was forced to nationalize its corporate stock under orders of the Brazilian military government, whereby shareholder control of NEC Brasil was ceded to the private equity group Brasilinvest of Brazilian investment banker Mário Garnero. Since NEC Brasil's foundation in 1968, it had become the major supplier of telecommunications equipment to the Brazilian government.[35] In 1986, the then Minister of Communications Antônio Carlos Magalhães put NEC Brasil in financial difficulties by suspending all government contract payments to the company, whose main client was the federal government.[35] With the subsidiary in crisis, the NEC Corporation in Japan sold NEC Brasil to Organizações Globo for only onemillion US dollars (US$1,000,000).[35] Shortly thereafter, Magalhães resumed the government contracts and corresponding payments, and NEC Brazil became valued at over 350million US dollars (US$350,000,000).[35] Suspicions regarding the NEC-Globo deal, which included among other things the unilateral breach of contract by Globo founder Roberto Marinho
Video games
In 1987, NEC licensed technology from Hudson Soft to create a video game console called the PC-Engine (later released in 1989 as the TurboGrafx-16 in the North American market). Its prototype 3D spec successor, the Tetsujin was originally set to be released in 1992, but the lack of completed games pushed the launch date about early 1993, which was planned debut in Japan. While the PC-Engine achieved a considerable following, it has been said that NEC held a much stronger influence on the video game industry through its role as a leading semiconductor manufacturer than through any of its direct video game products.[37]
NEC also supplied rival Nintendo with the RISC-based CPU, V810 (same one used in the PC-FX) for the Virtual Boy[38] and VR4300 CPU for the Nintendo 64, released in 1995–1996, and both SNK updated VR4300 CPU (64-bit MIPS III) on Hyper Neo Geo 64,[39]
2000–present
In 2000, NEC formed a joint-venture with Samsung SDI to manufacture OLED displays.[46] NEC Electronics Corporation was separated from NEC in 2002 as a new semiconductor company.[47] NEC Laboratories America, Inc. (NEC Labs) started in November 2002 as a merger of NEC Research Institute (NECI) and NEC USA's Computer and Communications Research Laboratory (CCRL).[48] NEC built the Earth Simulator Computer (ESC), the fastest supercomputer in the world from 2002 to 2004.[49]
In 2003 NEC had a 20.8% market share in the personal computer market in Japan, slightly ahead of Fujitsu.[50]
