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Renesas sells fab to TSMC, slashes 30% of workforce

Posted: 28 May 2012 ?? ?Print Version ?Bookmark and Share

Keywords:MCU? job cuts? system-chip fab?

Renesas Electronics Corp. is planning to eliminate up to 14,000 jobs, while selling the company's leading system-chip fab in Yamagata to Taiwan Semiconductor Manufacturing Co., according to a report in Nikkei, Japan's economic newspaper.

Japan's embattled microcontroller giant appears finally getting around to a long urged, "must-get-done" drastic restructuring. The layoff of 14,000 represents 30 percent of the company's workforce.

Renesas' negotiations with TSMC are still on-going, however. If successful, roughly 1,400 employees at Renesas' fab in Yamagata will be transferred to TSMC, according to the Japanese newspaper.

The fab in Yamagata has been making chips for flat-panel TVs, cameras and other digital products. A sharp decline in the domestic TV market coupled with an ailing Japanese consumer electronics manufacturing sectorReneas' major marketare the main culprits for a drastic drop in production at the Renesas fab in Yamagata, not to mention a major dip in earnings.

Further, Renesas is planning to transfer more than 1,000 workers, including developers of chips for smartphones, to a new company, to be created through the integration of system chip operations with Fujitsu Ltd. and Panasonic Corp. Again, merger talk among the three Japanese semiconductor companies is still a work in progress. A final agreement might not emerge until the end of June, Nikkei said.

Other cuts Renesas is contemplating include the closure of an LCD TV chip plant in Fukui Prefecture and other operational bases. The Japanese company will seek additional job cuts by offering early retirement packages.

A Renesas restructuring plan recently presented to its lenders involves many moving parts and unfinished negotiations. They include: 1) talks with TSMC for the sale of the Yamagata fab; 2) finalizing a deal with Panasonic and Fujitsu Semiconductor to form a new company focusing on the system LSI business; 3) securing financing to cover the cost of job cuts and fab closures.

To cover the super-sized restructuring, Nikkei reported, Renesas is considering issuing more than 100 billion yen in new shares. The company plans to ask its three major shareholdersHitachi, Mistubishi Electric and NECto take on some of the new shares. Whether the big three will agree to foot the bill is the big unknown. Aside from those three, who hold a combined 90 percent stake in Renesas on a voting-rights basis, new shares will likely be offered to foreign investment funds as well.

Renesas saw sales in its system chip business plunge 36 percent to $2.45 billion (?201.2 billion) in the year ended in March. Group sales for the year dropped 22 percent to $10.79 billion (?883.1 billion yen), handing the company a net loss of $0.76 billion (?62.6 billion yen).

Renasas is scheduled to announce today (May 28), a partnership with TSMC?"regarding the two companies' collaboration on MCU," a Renesas spokeswoman revealed.

- Junko Yoshida
??EE Times

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