NEC Corp, grappling with a steep drop in mobile phone sales in Japan, said on Monday it could resume overseas sales of cellphones next year, three years after losses forced it to pull out of China and Europe.

NEC, Japan's No.3 phone maker, has not decided where or when it will begin mobile phone sales, but Europe is a possibility, said company spokesman Shinya Hashizume.

Industry-wide mobile phone shipments in Japan fell 29 percent in the year ended in March to 35 million units -- the lowest on record according to research firm MM Research Institute -- as new phones got pricier and carriers locked in customers for longer with new installment plans.

NEC, which retreated from overseas markets hurt by low-cost models made in China, hopes this time to target markets where it can price its phones at around $300, said Hashizume.

We would also need to sell at least 1 million units to make it worthwhile, he said.

NEC's cellphone division became profitable in the year ended March 2008 after it ceased shipments in 2007 to China and Europe, where its feature-packed phones failed to win over price-conscious users.

Sharp Corp expanded into China after NEC and other rivals such as Panasonic Corp pulled out. Sharp plans to launch smartphones in Europe and sell 4 million phones outside Japan this year.

Shares of NEC were down 4.9 percent at 348 yen, underperforming a 2.1 percent slide in Tokyo's electrical machinery index.

(Reporting by Mayumi Negishi; Editing by Elaine Lies)

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