NEC and Cray team up, ending supercomputer feud

Supercomputer maker Cray Inc. and Japanese rival NEC Corp. have buried the hatchet and signed an agreement under which Cray will sell NEC's vector supercomputers in the US and the two companies will ask the federal government to drop massive antidumping duties that have been imposed against those machines since 1997.

NEC also will invest US$25 million in Cray as part of the 10-year deal, which was announced Tuesday. In addition, NEC's North American supercomputer marketing unit will be absorbed by Cray. However, Tokyo-based NEC said in a separate announcement Wednesday that the agreement is contingent on the antidumping duties being revoked.

The duties, amounting to 454 percent of the purchase price on NEC's vector supercomputers, have made it virtually impossible to sell the machines to US users for the past four years. The US government imposed the duties after Cray filed a complaint against NEC, claiming that the Japanese company was pricing its systems below fair market value.

In fact, NEC hasn't sold any vector supercomputers here since the duties took effect. But under the terms of the agreement between the two companies, Cray said it now plans to drop its dumping complaint and start reselling NEC's SX-5 Series machines as its high-end vector offering.

Jim Rottsolk, Cray's chairman and CEO, said in a statement that the NEC systems "will fill an important gap" in the US company's product line. Cray sells a non-vector supercomputer and midrange vector systems, Rottsolk said, "but we currently lack a strong high-end vector offering." The deal with NEC will give Cray a full spectrum of systems again, he added.

A planned successor to Cray's top-of-the-line T90 vector system was cancelled after the company was acquired five years ago by Silicon Graphics Inc., which sold off Cray to Tera Computer Inc. in Seattle last spring. Tera renamed itself as Cray after completing the acquisition.

An NEC spokeswoman Wednesday said the agreement with Cray should benefit both companies. While Cray currently can't fill the demand for powerful vector-based supercomputers in the US, she said, NEC has been having trouble expanding its supercomputer revenue -- especially in North America, where Cray has existing sales channels.

Debra Goldfarb, an analyst at market-research firm IDC said as part of Cray's announcement that the high-end vector supercomputer market "has been hampered in recent years by Cray's involuntary absence, worldwide [but] especially in the US." For some key technical and research applications, she added, "there is no substitute for vector supercomputers."

The deal is expected to be finalized within 90 days, the companies said. Cray will get exclusive rights to distribute the SX-5 systems in North America and will take over the operations of Littleton, Mass.-based HNSX Supercomputers Inc., which currently markets and supports NEC's high-performance systems. The deal also gives Cray non-exclusive rights to market the SX-5 machines in the rest of the world, including Japan.

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