TOKYO – While the merger of Japan’s largest chip companies has yet to materialize, negotiations continue among Renasas, Panasonic and Fujitsu Semiconductor, according to the latest reports here.
Nikkei Shimbun, Japan’s economic journal, reports that the current plan calls for the three chips makes to join forces to create a new company focusing on the system LSI business while Renasas retains its profitable MCU business.
Renasas will reportedly announce a partnership on Monday (May 28) with Taiwan Semiconductor Manufacturing Co. along with expected layoffs.
Before the three companies can strike a deal, three things must happen.
First, ailing Renesas must make drastic cuts. The proposed restructuring must be big enough to have a meaningful impact on its profitability while at the same time convincing the financial community that it has its house in order. A Renesas spokesman confirmed this week that Renesas President Yasushi Akao is scheduled to announce the company's new business strategy during its quarterly financial release in July.
Second, Renesas reportedly needs substantial financing before it can pull off the drastic restructuring. NEC, Hitachi and Mitsubishi, the three major Renesas shareholders, are reportedly being asked to help with financial assistance. Kenichiro Yamanishi, president of Mitsubishi Electric, said earlier this week: “If we receive an official request [for additional financing] from Renesas, we will discuss the matter together with Hitachi and NEC.” Meanwhile, both Hitachi and NEC have each made it clear they have no intention to offering additional financing to Renesas.
Therefore, it appears Renesas – which has promised a major restructuring over the last two years but yet to deliver – again stands at a crossroads, fighting for its survival.