Oct. 28 (Bloomberg) -- NEC Electronics Corp., Japan’s fourth-largest chipmaker, widened its full-year net loss forecast, citing lower demand for semiconductors used in cars, flat-panel televisions and handsets.

The net loss in the 12 months ending March 31 will probably be 55 billion yen ($602 million), wider than the 9 billion yen projected earlier, the company said in a statement today. It said it now expects a 46.5 billion yen operating loss, rather than breakeven and cut its sales outlook 4.2 percent to 460 billion yen.

The company forecasts its fifth straight year of losses as cost savings on production, research and labor are outpaced by declining sales of chips amid a glut. Continued shortfalls at NEC Electronics, 70 percent owned by NEC Corp., led the parent to announce plans in April to merge with Renesas Technology Corp. and create Japan’s biggest semiconductor maker.

“The main reason for lower outlook is in falling utilization of the advanced production line in Yamagata,” in northern Japan, which makes chips used in TVs, game consoles and mobile phones, President Junshi Yamaguchi told reporters in Tokyo. “There is no change in our plan to become profitable on an operating basis next fiscal year ahead of the merger with Renesas.”

NEC Electronics fell 3.9 percent to close at 750 yen on the Tokyo Stock Exchange before the earnings were announced. The stock has lost 10 percent this year, lagging behind the 14 percent gain by the Nikkei 225 Stock Average.

Second-Quarter Results

The second-quarter net loss increased to 17.4 billion yen from a 590 million yen deficit a year earlier, NEC Electronics said. That’s bigger than the median 7.3 billion yen shortfall of three analyst estimates compiled by Bloomberg.

The operating loss, or revenue minus the cost of goods sold and administrative expenses, widened to 15.5 billion yen in the quarter from 500 million yen a year earlier, as sales tumbled 29 percent to 118.5 billion yen from a year earlier, the chipmaker said. The analysts’ median forecast was for a 5.1 billion yen deficit on 117.5 billion yen in revenue.

The company, based in Kawasaki, near Tokyo said it would consolidate semiconductor production, closing a chip plant in Fukuoka, southwestern Japan, by September 2011.

Global sales of semiconductors will probably fall 17 percent to $216.1 billion this year, according to industry researcher ISuppli Corp. Revenue in the industry will rebound 14 percent to $246 billion yen next year, the El Segundo California-based researcher said last month.

Renesas Electronics

NEC Electronics and Renesas, a joint venture between Hitachi Ltd. and Mitsubishi Electric Corp., last month said their parent companies agreed to inject 200 billion yen into what in April 2010 may become the world’s third-largest chipmaker.

NEC will own 33 percent of the new company, called Renesas Electronics Corp., the companies said at the time. Hitachi and Mitsubishi Electric, which hold 55 percent and 45 percent of Renesas, will have 31 percent and 25 percent stakes respectively.

To contact the reporter on this story: Pavel Alpeyev in Tokyo at

palpeyev@bloomberg.net

Last Updated: October 28, 2009 04:16 EDT