Spotlight NEC: Navigating the Electronic Century

The Dawn of Telecommunications in Japan

NEC’s development of Japan’s first telephone switchboard marked the beginning of a new era in communication. The telephone switchboard was a game-changer. Before its introduction, communication was limited and inefficient. The switchboard transformed this, enabling efficient and direct communication between individuals and businesses.

The introduction of the telephone switchboard also marked a significant transformation in the industry. It led to the establishment of the telecommunication infrastructure in Japan, which in turn spurred the growth of various industries, including business, education, and government. The switchboard became a crucial tool for communication, facilitating the exchange of information and ideas across different sectors of society. For NEC, the development of the telephone switchboard also was a testament to the company’s commitment to innovation and its ability to adapt advanced technologies to meet the needs of society.

Product Portfolio and Unique Strengths Today

NEC provides a range of solutions, including servers, storage products, and software that play a crucial role in many industries. In the network sector, NEC offers network infrastructure and services, including 5G solutions, submarine cable systems, and satellite systems. NEC’s electronic devices, including semiconductors and display devices, are used in consumer electronics to industrial equipment. The company’s biometric identification systems, which include facial recognition and fingerprint identification technologies, are leading the way in public safety and security.

One of NEC’s distinctive strengths is its ability to integrate its diverse technologies to provide comprehensive solutions for its clients. This ability to offer end-to-end solutions sets NEC apart from its competitors and has helped the company establish a strong presence in many industries. NEC is a market leader in biometric identification solutions, public safety solutions, and submarine cable systems. The company’s biometric identification systems, in particular, have been recognized as the world’s most accurate, securing a large share of the global market.

NEC’s chief competitors include other global technology companies, such as IBM, Cisco, and Huawei.

NEC’s Global Footprint

Today, NEC operates in over 50 countries across the globe, with a workforce of more than 100,000 employees. Its global operations span across various regions, including the Americas, Europe, Africa, the Middle East, and Asia. In each of these regions, NEC targets different market segments with its diverse range of products and services.

For instance, in the Americas, NEC offers a wide range of solutions, including public safety solutions, telecommunications systems, and IT solutions. These products cater to various sectors, including government, healthcare, and telecommunications. In Europe, NEC focuses on providing solutions for public safety, digital government, and smart city development.

NEC’s expansion beyond its home market has been driven by its commitment to innovation and its ability to adapt to the changing needs of society. The company has established offices and innovation centers in various countries to support its global operations and drive innovation. These centers play a crucial role in NEC’s research and development activities, contributing to the development of new technologies and solutions.

R&D: The Heartbeat of Innovation

At NEC Corporation, R&D is not just a department; it’s the heartbeat of the company. The company believes that innovation is not just about creating new technologies; it’s about using these technologies to make a positive impact on society. For instance, NEC’s R&D efforts in the field of AI are aimed at creating technologies that can contribute to a safer and more secure society. These efforts have resulted in the development of advanced AI technologies, such as NEC’s facial recognition technology. NEC’s commitment to R&D is also evident in its investment in research laboratories. The company has established research laboratories in Japan, the United States, China, and Europe, where it conducts research in various fields, including AI, the Internet of Things, and biometrics.

Recent Product Breakthroughs: Shaping the Future

In the last five years, NEC Corporation has made several significant breakthroughs that have further solidified its position as a leader in the IT and network technologies sector.

Advanced AI Technologies: NEC has made significant advancements in the field of artificial intelligence (AI). The company’s facial recognition technology, which has been recognized as the world’s most accurate, is a testament to these advancements. NEC has also developed advanced AI technologies for public safety, including video analytics systems that can detect suspicious activities in real time.

Credit: NEC

5G Solutions: NEC has been at the forefront of the 5G revolution. The company has developed a range of 5G solutions, including 5G base stations and 5G core networks. These solutions are designed to support the high-speed, high-capacity, and low-latency requirements of 5G networks.

World’s Fastest Vector Supercomputer: In 2018, NEC, in collaboration with the National Institute of Advanced Industrial Science and Technology (AIST), developed the world’s fastest vector supercomputer. This supercomputer can perform high-speed computations for a wide range of applications, including drug discovery and climate simulation.

Submarine Cable Systems: NEC has made significant breakthroughs in the field of submarine cable systems. The company has developed advanced submarine cable systems that can support high-speed data transmission over long distances. These systems play a crucial role in connecting people and businesses around the world.

Digital Government Solutions: NEC has developed a range of digital government solutions that are designed to improve the efficiency and transparency of government operations. These solutions include e-Government systems, digital identity solutions, and data analytics systems.

AI Initiatives: Harnessing the Power of Intelligence

AI is at the heart of NEC Corporation’s strategy. Initiatives span across various sectors, including policy planning, healthcare, and business operations. One is the development of “Rule Discovery based Inference,” an AI technology that presents specific conditions for improvement by deriving the causes of events and the conditions under which they occur based on past case data. This technology enables support for policy planning in easy-to-understand language.

In addition, NEC has also developed a brand, “NEC the WISE,” to underscore the philosophy behind its AI initiatives. The brand represents NEC’s vision of using AI to create a wiser world, reflecting the company’s belief in the transformative power of AI. The firm also has developed generative AI that is customizable for each customer. This technology is designed to create new value for companies in response to business changes caused by new technologies, demonstrating NEC’s ability to adapt its AI initiatives to the changing needs of its clients.

In the healthcare sector, NEC is using AI to create healthcare and life science businesses. This initiative is part of NEC’s 2025 Mid-term Management Plan, which sets forth the creation of future growth businesses. NEC’s commitment to AI is also reflected in its “NEC Group AI and Human Rights Principles,” which guide its employees to respect privacy and human rights in their business operations related to the social implementation of AI.

Collaborations and Partnerships: The Power of Synergy

NEC’s alliances have played a crucial role in driving innovation, expanding NEC’s reach, and enhancing its product offerings.

Amazon Web Services (AWS): NEC has expanded its collaboration with AWS to develop an end-to-end 5G offering. By combining NEC’s high-performance cloud-native open 5G mobile core, OSS/BSS solutions, local 5G use cases, and AWS cloud and edge solutions, NEC aims to provide its 5G solutions globally.

Microsoft: NEC and Microsoft have a decades-long collaboration that recently expanded through a new multi-year strategic partnership. The companies are leveraging Microsoft Azure, Microsoft 365, NEC’s network and IT expertise, including 5G technologies, and each other’s AI and IoT solutions to enhance business resiliency and growth.

Cisco: NEC and Cisco have entered into a Global System Integrator Agreement to accelerate the deployment of innovative 5G IP transport network solutions worldwide. This partnership combines NEC’s IT and network technologies with Cisco’s expertise in IP networking.

Intermedia: Via NEC’s global strategic partnership with Intermedia, a leading provider of cloud-based Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS), the firms aim to provide advanced IT, communications, and networking solutions.

This Knowledge Leader spotlight was generated using our AI engine with a series of prompts custom-developed by Knowledge Leaders Capital and designed to uncover the innovation strategies of companies we consider to be Knowledge Leaders. We have edited it for content, style, and length.

The following sources are examples of sources that may have been consulted in the preparation of this spotlight.

• NEC Corporation Official Website
• “NEC’s history and major product achievements” – NEC Technical Journal
• “NEC’s market share and competitors” – MarketWatch

As of 6/30/23, Cisco Systems was held and none of the other securities mentioned were held in the Knowledge Leaders Strategy.

Disclosures

The information presented here is for informational purposes only and is not to be construed as an offer to sell, or the solicitation of an offer to buy, securities. Some investments are not suitable for all investors, and there can be no assurance that any investment strategy will be successful. Hyperlinks may be included in this message that provides direct access to other internet resources, including websites. While we believe these links are to reliable sources, Knowledge Leaders Capital (“KLC”) has no control over the accuracy or content of information contained on these sites. Although we make every effort to ensure such links are accurate, up-to-date and relevant, we have no control over pages maintained by external providers. The views expressed by these external providers on their own web pages or on external sites they link to are not necessarily those of Knowledge Leaders Capital.

The information provided on this blog is for illustrative or example purposes only and should not be construed as KLC’s opinion or investment outlook. As of the most recent quarter-end, the named companies may have been held by KLC. For full information including additional policies and full disclosures, please visit our website: KnowledgeLeadersCapital.com.

Any reference to Index performance does not represent the performance of any investment product offered by Knowledge Leaders Capital, LLC. An investor cannot invest directly in an index. The performance of the client account may vary from the Index performance. Index returns shown are not reflective of actual investor performance nor do they reflect fees and expenses applicable to investing.

Companies are selected for “Spotlights” based on high levels of innovation activities in their respective industries and illustrate innovation being employed across all sectors and geographies. Spotlight selection is separate from stock selection by the investment team. Spotlights are not necessarily representative of investment opportunities and can be selected regardless of investment performance or inclusion as a KLC holding.

A message from Advisor Perspectives and VettaFi: To learn more about this and other topics, check out our podcasts.

© Knowledge Leaders Capital

Read more commentaries by Knowledge Leaders Capital