NEC said the reason for the acquisition is KMD's business matches its "NEC Safer Cities" initiative, which provides IT services and that governments can use for crime prevention, management of public transportation and other public services, according to a statement published on its website.

NEC has been trying to shift to software and services from hardware as it has lost out to Asian rivals in semiconductors, personal computers, and smartphones.

(Reporting by Stanley White; Editing by Muralikumar Anantharaman)