NEC, Elmos team up on chips

A photographer takes a picture at the NEC semiconductor plant in a file photo.

TOKYO (Reuters) - Japan's NEC Electronics Corp (6723.T) and Germany's Elmos Semiconductor AG (ELGG.DE) said they would jointly develop semiconductor products to better compete in the automotive and industrial markets.

NEC Electronics shares jumped more than 4 percent on the news, which came a week after the company announced it would team up with IBM (IBM.N) and others on next-generation microchips to shrink size and boost performance at lower costs. <ID:nT340140>

The two companies aimed to offer packaged products combining NEC Electronics' strength in microcontrollers with Elmos' expertise in analog chip technologies to produce smaller and more efficient semiconductors, a spokesman for the Japanese firm said.

Their clients include auto parts makers Robert Bosch ROBG.UL and Denso (6902.T).

The spokesman said the tie-up with Elmos was aimed at boosting their competitiveness but costs could come down as a result of selling more products.

The Nikkei business daily reported NEC Electronics aimed to increase sales of automotive chips in Europe by some 80 percent to 80 billion yen ($760 million) in the year to March 2011. The spokesman said the company had not released an official target.

Its global sales of automotive chips were at 150 billion yen last business year.

Shares in NEC Electronics, owned 65 percent by NEC Corp (6701.T), rose 4.6 percent to 2,295 yen, outperforming a 1.1 percent rise in the Nikkei average .N225.

($1=105.32 Yen)

(Reporting by Sachi Izumi; Editing by Edwina Gibbs and Rodney Joyce)