1899Founded as Nippon Electric Company, a joint venture with Western Electric
1932ISE entrusts management to the Sumitomo head office
1943Renamed Sumitomo Communication Industries (wartime)
1945Reverts to Nippon Electric Company
1949Lists on the Tokyo Stock Exchange
NEC was founded in July 1899 as Nippon Electric Company, a joint venture with America’s Western Electric — then the largest telecommunications-equipment maker in the world — built on an earlier partnership and reorganised into a joint-stock company the moment Japan’s revised commercial treaty took effect. It was Japan’s first foreign-capital joint venture manufacturer, and its first business was telephone exchanges and communications gear. Telecoms was a plant industry in which mass-production know-how and a web of patents decided who competed; with little such technology accumulated at home, partnering with Western capital to import it was the rational course.
Ownership travelled with the foreign parent — through Western Electric’s overseas arm to I.W.E., and then, after ITT bought that arm in 1925, to International Standard Electric (ISE). In 1932 ISE entrusted NEC’s management to the Sumitomo head office, the start of the long tie to the Sumitomo group. The war severed the foreign link: in December 1941 ISE’s shares were disposed of as enemy assets, and in 1943 the company was renamed Sumitomo Communication Industries. It reverted to Nippon Electric in 1945, listed on the Tokyo Stock Exchange in 1949, and — unusually — restored the capital tie with ISE in 1951. Koji Kobayashi later recalled that “as much as 90 percent” of the field’s patents were foreign; NEC’s international-network business rested, from the outset, on a continuing relationship with Western capital.
1961Adopts a divisional structure; moves to the TSE First Section
1963Establishes a US subsidiary (now NEC Corporation of America)
1978Koji Kobayashi proposes “C&C” — computers and communications
1982PC-9800 series launches; later a majority of Japan’s PC market
1985World’s top share in DRAM through the 1980s
From the 1960s NEC pushed beyond single-product telecoms. It adopted a divisional structure in 1961, moved to the TSE First Section that October, set up a US subsidiary in 1963 (today’s NEC Corporation of America), completed a central research laboratory in 1975, and expanded steadily into semiconductors and computers through the 1970s — the run-up that turned a communications-equipment maker into a comprehensive electronics firm spanning information processing and telecommunications.
In 1978 chairman Koji Kobayashi proposed “C&C” — the fusion of Computers and Communications — at Intelcom ’78. He was candid about the logic: lacking the resources to top any single field on its own, NEC had to compete through synergy across fields. It worked while every field was rising. The PC-9800 series, launched in October 1982, held a majority of Japan’s domestic PC market into the early 1990s, and in the 1980s NEC took the world’s top share in DRAM. A 1983 trade journal wrote that NEC was “not just a high-tech company” and, borne by the C&C proposal, had knocked the perennial number one, Hitachi, off its perch to lead the industry for three years running.
The diversification that had been an engine of growth was also a dispersal of competitiveness. In the late 1990s Korean and Taiwanese rivals crushed DRAM margins; the spread of DOS/V machines dissolved the PC-9800’s proprietary edge; and NEC’s telecom business, strong at home, was relatively weak abroad against Siemens, Alcatel and Nortel, unable to fight on scale. In February 1999 the press reported a forecast record consolidated loss of $1.3B (¥150bn) and 15,000 job cuts; the roughly two-decade charismatic regime ended, and Koji Nishigaki took over. NEC then began letting go, business by business — an in-house company system in 2000, and in 2002 the spin-off of semiconductors into NEC Electronics, the first surgery to cut a founding trade away from the parent.
The 2008 Lehman shock was decisive. For the year ended March 2009 NEC booked a consolidated net loss of $3.2B (¥297bn) — its largest ever — as the restructuring costs of semiconductors, phones and overseas telecoms piled up at once. Kaoru Yano gave way to Nobuhiro Endo, and the shedding accelerated: in 2010 NEC Electronics merged with Renesas Technology to form Renesas Electronics, exiting the founding semiconductor business; the year ended March 2012 carried a ¥110.3 billion loss that included a goodwill write-down at NEC Corporation of America — the liability of leaning too hard on overseas M&A surfacing again.
The retreat continued: NEC quit smartphones in 2013 and sold the internet service BIGLOBE to a KKR-led fund for about $661.4M (¥70bn) in 2014. Revenue shrank by roughly ¥250 billion as NEC concentrated on domestic IT, where steady public-sector work anchored profit; consolidated operating profit normalised to ¥128.1 billion for the year ended March 2015. It was the leaner half of Kobayashi’s C&C — communications kept, much of the rest let go — but the top line stayed shrunken and a growth axis had yet to appear.
2021Mid-term Management Plan 2025; the shares fall 14% next day
2023BluStellar strategy launches; converts to a nominating-committee company
2025Record operating profit of $1.7B (¥257bn)
2025Announces acquisition of CSG Systems International (~$2.9B)
In 2020 Takashi Niino handed the presidency to Takayuki Morita, long the steward of NEC’s overseas and corporate strategy. In April 2021 the Morita team unveiled its Mid-term Management Plan 2025 — continued restructuring run in parallel with front-loaded investment in DX, AI and security. The market balked: the shares fell 14% the next day, reading it as yet another round of upfront spending from a company that had spent two decades setting plans and then cutting them back. The scepticism had grounds — since 1999 NEC had repeatedly raised a “next growth strategy” only to meet fresh losses or downgrades.
In 2023 NEC launched BluStellar, its answer: a shift from selling individual products outright to a “scenario-offering” model. It consolidated some 10,000 products into about 500, reorganised them into 30 cross-industry scenarios, and sold problem-solving packages by the scenario to lift both unit price and margin — NEC put the margin gap between scenario and non-scenario offerings at 3–5 points. It paired the model with a governance overhaul, converting to a nominating-committee company in June 2023. The design bore fruit: for the year ended March 2025 NEC posted a record operating profit of $1.7B (¥257bn), at an operating margin near 7.5% — the level that in effect answered the market’s 14% verdict of 2021.
Having spent more than ten years divesting, NEC turned to buying. In March 2025 it took NEC Networks & System Integration fully in-house, and in October 2025 it announced the acquisition of the US billing-software firm CSG Systems International for about $2.9 billion — complementary to its Netcracker subsidiary, and a bet to restart overseas M&A, in a different category, after the 2012 goodwill impairment that had once burned it in North America.
At the heart of this decision was the question of how to bind a diversified business together under a single meaning. In none of its fields — telecommunications, semiconductors, computers — did NEC have the strength to aim single-handedly for the top of the world, and so it could not afford to nurture each of them separately. What chairman Koji Kobayashi packed into the three letters “C&C” was the idea of not lining the businesses up as an addition but multiplying them through one technological view — the fusion of computers and communications. The work of this proposal, one could say, lay in making it possible to speak of the way individual products and technologies lift one another — to employees, customers and investors alike — in the same words.
That said, the power of one vision to guide diversification is tested as the times change. The account C&C gave in the 1980s had the force to bind the businesses together while semiconductors, PCs and communications were all growing; but once the profitability of each field diverged from the 1990s on, the same banner also carried a tendency to dull the pruning of the business. Even so, when a company of limited resources faces the world, the task of holding a single logic that runs through its separate businesses still remains, in changed forms, today. C&C appears to have become a reference point that later managements returned to again and again — an attempt by a diversified company to give meaning to its own breadth.
A charismatic regime prolonged, and a turn delayed
At the heart of this decision lies not so much the financial first aid of a record loss and 15,000 job cuts as the fact that a charismatic style of management — running for about twenty years since the 1978 proposal of C&C — was wound up in the unusual form of President Kaneko’s sudden resignation. C&C, which bound semiconductors, computers and communications under a single banner, had been the driving force that pushed NEC to the top of the rankings of engineering graduates’ most-wanted employers. Yet while that centripetal force held the diversification together, the prolonging of the regime also seems to have delayed the judgement to reselect the businesses in step with the reshaping of the world market.
The road NEC travelled after the arrival of the new president, Koji Nishigaki, was one of letting go — one by one, from semiconductors to PCs to mobile phones — of the businesses it had over-extended under C&C. The 1999 disclosure of the loss and the change at the top mark the beginning of that sorting-out, which might be called a “decade of divestment.” The weight of this decision lies in the fact that the charismatic regime was touched not while there was still room to spare in good times, but under the pressure of the largest loss in the company’s history. How much does long-lasting success under a single banner delay the next turn? — NEC’s 1999 appears to leave a question that speaks to Japanese companies today as well.
At the heart of this decision was the question of whether a founding business that had climbed to the top of the world could be cut away from the parent on the grounds of losses. Semiconductors were the source of the technology that had underpinned the C&C diversification, and a home-grown pillar developed as one with communications and computers. Moving the memory business, its prices collapsing, into a joint venture first, and then carving out even the remaining logic operations into an independent company, can be seen as a process of stepping down from the comprehensive-electronics form of holding everything in-house. The weight of this restructuring lies in the fact that NEC put its hand to the founding business not while in good health but under the pressure of one of the largest losses in its history.
While the spin-off showed early fruit in independent accounting and faster management, the semiconductor business it carved out eventually left NEC’s hands and was folded into Renesas. The separation, in exchange for lightness, entailed relinquishing the initiative in a business it had long nurtured. What to keep in-house and what to put outside — the question of selection and concentration still asked today — NEC was made to confront ahead of others, and with its very founding business as the object. That an actual exit from the business followed the spin-off drawn up on the logic of efficiency is where the reach of this decision shows through.
At the heart of this decision is the fact that the semiconductors NEC had built for itself through vertical integration were released on the logic of scale. NEC had made everything in-house — from communications equipment to computers to semiconductors — and in the C&C era of fusing computers and communications, those home-grown semiconductors had underpinned the whole company’s strength. The post-Lehman loss made plain that the cost of maintaining that strength had outrun the company’s stamina. The third-place-in-the-world scale that the merger brought was a rational outcome; yet the fact that a founding business which had once contended alone for the world’s top spot now moved to the side that shares it with another company shows the weight of selection and concentration.
That said, whether letting go was the right answer remains hard to judge, even from the years that followed. The Renesas that NEC left behind was rebuilt with public funds and turned into a highly profitable company, keeping the world’s top position in microcontrollers. Whether NEC could have carried that revival had it held the business itself, or whether the two would have gone down together, cannot be known. Now that the reshaping of Japan’s semiconductor industry is once again spoken of as national policy, this merger — which rebound a founding business on the grounds of scale — appears to leave quietly open the question of who should carry a business, and how much of it should be held in-house.
A company that defended through crisis turning to offence
At the heart of this decision is the question of whether a company that, driven by crisis, gave itself over to defence can — at the end of that defence — turn once more to the offensive. Over ten years NEC let go of the areas around its founding businesses and, by shrinking into domestic IT, stopped the losses. The BluStellar strategy was an attempt to raise up again, from that shrunken body, a business model that sells problem-solving rather than one-off products. The success or failure of the strategy can be seen to hinge on whether the lightness born of defence could be reassembled into resources for offence.
That said, how far the framing of raising social and economic value at once is matched by substance remains hard to see. While the design that binds DX, generative AI and security together bore fruit as record profits, competition in generative AI is fast and global in scale, and the bundled strength will not necessarily last. After twenty years given over to defence, what kind of offence will NEC choose? — the BluStellar strategy and the CSG acquisition that followed connect to a present-day question of what a company that has survived a crisis bets on next. Its answer, still too early to declare, is likely to be reflected by the mid-term plans to come.
Each heading links to the full Japanese analysis — background, decision and outcome, with sources.
This is a condensed English edition. The full, source-by-source history — with the detailed narrative, financial tables, shareholders and executives — is maintained in Japanese: 日本語版（詳細）— NEC full history in Japanese →
NEC Corporation — 有価証券報告書 (annual securities reports) and earnings briefings (決算説明会).
Koji Kobayashi — Vision and Decision, 『構想と決断』 (Diamond, 1989). NDL Search.
Keizai Doyu — 経済同友, June 1966 (Kobayashi on foreign patents and the future of software).
A Study in Strength: NEC — 強さの研究・日本電気, 26 December 1983.
Nikkei Business — 日経ビジネス (Nikkei BP), 18 June 1990.
Nikkei — 日経新聞 (Nikkei Inc.), 20 February 1999 (the record loss and 15,000 job cuts); 日本経済新聞, April 2014.
Nikkei Sangyo Shimbun — 日経産業新聞 (Nikkei Inc.), 3 December 1980; 15 June 1983.
Toyo Keizai Online — 東洋経済オンライン, March 2024. toyokeizai.net.