NEC Electronics, Renesas to Merge

Will create Japan's largest semiconductor maker

NEC Electronics and Renesas Technology announced on April 27 plans for a merger to create Japan's largest semiconductor maker, as they seek a way out of the global economic downturn.

The two firms aim to integrate their operations by April 2010, becoming the world's number three chipmaker behind Intel Corp. and Samsung Electronics Co.

"In order to overcome the current extremely difficult time, we have come to believe it is extremely important that we create a semiconductor company that can flourish in the international market place," said Kaoru Yano, president of NEC Corp, which controls NEC Electronics, the third-biggest Japanese chip firm.

Renesas, the second-biggest Japanese chipmaker after Toshiba, is a joint venture between Hitachi Ltd. and Mitsubishi Electric Corp.

The two firms' combined annual sales amount to more than 1.2 trillion yen (US$12 billion.)

"We believe the international market for microcontroller units still provides opportunities for sustained growth, although not necessarily the double digit growth we once saw," said Renesas president Yasushi Akao. "The integration would bring together our sophisticated technological strength and ability to develop new products. With the renewed ability for development, we can create new demand and expand sales."

The merger was necessary for the survival of the two firms in light of fierce competition amid a slump in demand for computer chips used in electronic gadgets, cars and other products, the companies said.

Presidents of the relevant companies declined to discuss concrete plans for the merger and gave no sales and profit targets while staying tightlipped about possible layoffs and factory closures. "Once we decide how exactly we will integrate, we might see additional restructuring efforts," said Renesas' Akao.

Copyright Agence France-Presse, 2009

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