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Hitachi, Mitsubishi to merge semiconductor businesses

Posted: 20 Mar 2002 ?? ?Print Version ?Bookmark and Share

Keywords:non-memory semiconductor? microcontrollers? logic ICs? analog circuits? discrete device?

Aiming to create a leading system-on-chip company, Hitachi Ltd, and Mitsubishi Electric Corp. said Monday (March 18) that they have agreed to integrate their non-memory semiconductor businesses to create a $6 billion company that includes their R&D, design, manufacturing and marketing operations.

In 2003, the two companies will establish a joint venture that combines the respective LSI operations under a common brand, which was not identified. The independent company will handle the current companies' microcontrollers, logic ICs, analog circuits and discrete devices.

"Both Hitachi and Mitsubishi have leading positions in the microcontroller market in the world; after the integration, the joint venture will have the top position," said Hitachi president Etsuhiko Shoyama. "We are going to reinforce this strength."

The companies said their combined operations would own 27 percent of the world microcontroller market, surpassing market leader Motorola Inc.

"Using microcontrollers as the flagship, the joint venture will be the best solution provider and can take the lead in severe mega-competition," said Mitsubishi president Ichiro Taniguchi.

The joint venture will have sales in fiscal year 2001 of $6 billion, drawing from over 80 percent of Hitachi's and 60 percent of Mitsubishi's semiconductor operations. That would make the combined company the third largest in the world, after Intel Corp. and Toshiba Corp., the companies said.

Hitachi's sales of semiconductors that will become part of the joint venture were about $4.6 billion in fiscal 2002, or 73 percent of the company's total semiconductor sales, and are expected to account for $3.3 billion or 83 percent of semiconductor sales for the current fiscal year, which concludes at the end of this month. Mitsubishi Electric's sales of products that will move to the joint venture were $2.5 billion or 48 percent of its semiconductor sales in fiscal 2000, and are expected to at $2 billion or 60 percent of of the total for the current fiscal year.

Both companies expect their system-on-chip LSI operations will be in the red this fiscal year. But in one year, after the integration, "we are going to turn it into the black," said Satoru Ito, president and chief executive officer of Hitachi Semiconductor & Integrated Circuits.

Hitachi said it does not believe this alliance will affect its relationship with STMicroelectronics in the system-on-chip area, and Mitsubishi Electric said the deal will not affect its SoC relationship with the Matsushita group.

The relationship parallels one Hitachi entered in 1999, when it formed a DRAM joint venture with NEC Corp. That joint venture, Elpida Memory Inc., has been criticized for its slow decision-making. But Hitachi president Shoyama denied such problems and their possible implication for the SoC joint venture. "We are confident that Elpida is going well," he said. "There is no problem in decision making."

"Elpida aims at emphasizing value-added products such as high-speed and large-capacity parts," Ito said. "Its strategy is to take the lead in technology and not to focus on high-volume production, which may give people an impression that it has some problem."

?Yoshiko Hara

EE Times

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