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NEC's Technology Innovation Strategy

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NEC's Technology Innovation Strategy Lectures & Speeches NEC Information Lecture, Vision Track: C&C User Forum 2005 NEC's Technology Innovation Strategy * This article has been compiled by the NEC Technical Journal Editorial Office. It is based on the panel discussion between Ms. Atsuko Fukushima, a newscaster/essayist, and Mr. Kazuhiko Kobayashi, Executive Vice President of the NEC Corporation, on the occasion of the User Forum & iEXPO2005 held on December 9, 2005 KOBAYASHI Kazuhiko Executive Vice President and Member of the Board, NEC Corporation 1. Present Status of the Japanese What attracts attention in this context is Korea. Although the Science & Technology (S&T) wage in Korea is not so different from Japan and more than and High-Tech Industries 10 times higher than in China, the country has achieved the impressive growth of 2.3 times. We will discuss the causes of (1) The Recession in the Japanese Manufacturing Indus- this growth in the following. tries in the 1990ʼs The Japanese high-tech industries experienced their peak pe- (2) The Growth and Strength of Samsung Electronics riod in the 1980ʼs and particularly in 1986, when a total of 6 The high-growth business that represents Korea is Samsung Japanese firms were counted among the worldʼs top 5 sellers Electronics. This firm presently holds top shares in eight in all of the three fields of semiconductor chips, communica- products including NAND Flash, TV, monitors, CDMA cel- tions and computers. The situation in these industries is now lular phones, SRAM, LCD, VCR and DRAM, and is aiming showing a decline with only 2 Japanese firms counted among at increasing its number of products in the world top shares to the worldʼs 5 top sellers. 20 in 2010. The causes behind this situation lie in the following two The operating income of Samsung Electronic reached 1.3 points: trillion yen in 2004, which is higher than the total operating 1 Re-evaluation of the yen: The Japanese currency has in- income of 0.8 trillion yen of five Japanese manufacturers in- creased in value rapidly since the Plaza Agreement in Sep- cluding Hitachi, Toshiba, Mitsubishi Electric, NEC and Fu- tember 1985, and this has tended to reduce our export com- jitsu. The strength of Samsung Electronics lies in the follow- petitiveness. ing points. 2 China: has now assumed the status of “Workshop of the 1) The company has been targeting capture of the world mar- World”. The wage in Japan is 20 times higher than in China ket for 20 years. (the average annual wage is 15,000 yen in China and 300,000 • A very high education level has led to an accumulation of yen in Japan). human resources. As a result, a hollowing of the Japanese manufacturing in- • The Koreans show a very strong rivalry and competitive- dustry has begun due to successive bankruptcies of local ness with regard to Japan. They have an impressive motiva- businesses and the shifting of production to China by big tion that makes them work very hard. businesses. • The small size of the Korean market compared to Japan When we review the growth of the manufacturing industries (particularly before 1985) has made it absolutely necessary in different countries in the context of the increase in the pro- for them to advance in the world. (The Japanese GDP in 1985 duction indices of the mining and manufacturing industries, was 150 trillion yen, which was about 15 times greater than Chinaʼs input has increased by about 3 times, Koreaʼs by the Korean GDP of 10 trillion yen.) about 2.3 times and the USAʼs by about 1.5 times, but Japa- 2) Large scale advances in plant investments has led to them nese industries have been stagnating over the same period. being able to defeat the competition in the field of mass-pro- The period is now called the Lost Decade. duction. 138 • The Korean government defined science and technology as where, with anyone and by any means.” the national identity and positively supported private busi- nesses such as Samsung. The information communications equipment of the Ubiqui- • Accurate “selection and concentration” judgments and in- tous society is composed of three elements. These are; 1) dedi- vestment strategies of the top managements enabled business cated terminals including cellular terminals, digital home ap- expansion. pliances, PCs, ATM machines and ticket purchase terminals, • Massive investments were focused on target fields as seen all of which are connected to; 2) broadband networks, which with the semiconductor industry. (The semiconductor plant are connected to; 3) groups of servers that process everything investments of Samsung Electronic in 2005 were about 550 as the brain of the Ubiquitous system. billion yen.) Now, let us introduce the servers that from the core of the As described above, the principal reason for the growth of Ubiquitous society. Samsung Electronics is that they have maintained a spirit of challenging global leadership over the last twenty years and that they have implemented major investments in state of the 3. NECʼs Server Strategy art plant facilities. 2. Revival of Japan by Promoting Servers can be classified roughly into the following two types “The S&T Creation Country” (Fig. 1). as the National Policy 1 High-end servers: These are the mission-critical servers used by society in general, private businesses and govern- The Japanese government has also started recently to pro- mental institutions. They need to feature extremely high mote the revival of Japan as an “S&T creation country”. Fortu- technical abilities in order to function effectively. Also, in nately, Japan still retains high technical abilities. It holds the consideration of their high value-added status and high qual- second position after the USA in the world ranking of patent ity, we hope to produce them in Japan and to market them registrations (source: Annual Report on Patent Administration worldwide. 2005). 2 Commodity servers: These are the servers installed in in- The Japanese government is planning to appropriate the bud- dividual departments. As they need to be at competition in get for the Third Science and Technology Fundamental Pro- the areas of mass-production, mass-sales and cost reduction, gram with the intention of fostering new industries. This pro- we are planning to produce them in China, etc. on a massive gram is expected to enhance R&D in the four key fields of life scale and at a low cost using standard parts and components, sciences, information communications, environmental tech- so that we can expand our world share of sales. nologies and nanotechnology. One of the most important commodity servers is the IA serv- Among them, let us review the governmental efforts made in er. Actually, NEC set its most ambitious target in 2005, when the field of information communications, as this field is the it aimed at achieving a tenth successive victory in the ship- most closely related to the business of the NEC Corporation. ment of the Express 5800 Series IA servers in Japan. 1) e-Japan Strategy (Started in 2001) This project was begun by setting the target to introduce (1) Technical Points of High-End Servers broadband network high-speed lines to 30 million households Most of the servers in use incorporate Intel microprocessors, and ultrahigh-speed lines to a further 10 million households. that contribute a server controlled, large-scale integration It has advanced more than was expected and has led to the (LSI) environment, which is variable depending on the man- spread of permanent connection environments to 46.3 mil- ufacturer. As a result, the key component determining the lion households using DSL, 33.1 million households using fate of each product is the server controller LSI. NEC is de- CATV, 35.9 million households using FTTH. veloping original LSI, featuring high performance and ad- 2) u-Japan Strategy (Started in 2005 under the leadership of vanced functions by making full use of its device technology the Ministry of Internal Affairs and Communications) and semiconductor processing technology. These efforts have This project promotes the active use of the most advanced led to a server controller that contains 41 million transistors networking systems aiming at realizing the Ubiquitous soci- in a 16.7mm wide chip, a device that we currently boast of as ety in which communications are possible “anytime, any- the worldʼs Number-One chip. NEC TECHNICAL JOURNAL Vol.1 No.1/2006 139 Lectures & Speeches Lectures & Speeches NEC Information mined to advance and gain global success by their en- deavor and technical ability, which can outclass Mooreʼs Law, just as Samsung Electronic did. From this view- point, the collaboration agreements with UNISYS and Stratus agreed in 2005 are expected to offer a major op- portunity for making such advancement possible. (1) Collaboration with UNISYS Previously, NEC has been developing and producing three types of servers independently. These include mainframes, UNIX servers and PC servers. But such a production system could not achieve the requisite mass-production effects or cost competitiveness due to the high cost and low production volume per model. To solve the above problem, NEC studied the possi- Fig. 1 NEC's server strategy bility of creating a common server for the three types of applications by developing an LSI as described above using Intel processors and thus succeeded in develop- (2) Development of High-Performance, Advanced-Func- ing a common server containing the mainframe. This strategy tion LSI for Servers made it possible to unify the three previous types of servers NEC has been developing high-performance, advanced-func- into one unit. As this development has enabled a simplifica- tion LSI by challenging the conventional wisdom of the tion of the previous development operations that dealt with world.
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