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Panasonic, Fujitsu cut costs under joint venture pretence

Posted: 29 Apr 2014 ?? ?Print Version ?Bookmark and Share

Keywords:Panasonic? Fujitsu? joint venture?

A joint venture designed to promote a healthy competition may well mask two grey chipmakers' purpose to cut costs.

Tom Starnes, a processor industry analyst at Objective Analysis, told us that neither the impending merger nor the possibility of having a new player in the chip business is the most interesting thing about the announcement that Fujitsu Ltd. and Panasonic Corp. would split off portions of their chip-design businesses and unite them in an independent third company.

The most interesting thing, he said, is that the two companies announced the same mergerwith the same goalmore than a year ago. They appear to have made almost no progress on it. They don't expect to make any real progress on the actual merging until the fall, and no one has found a reason to complain about the slow pace of the change.

"Fujitsu and Panasonic have both been on the radar for a long, long, long, long time," Starnes said. "They've both done some good things in the past, but we haven't really seen anything new in the way of microprocessors out of them for... forever. When you put them together, there could be some cost cutting, but it's hard to see any synergy there."

Panasonic and Fujitsu announced last week that, with funding from the Development Bank of Japan Inc., they would form a third company made from the assets of Fujitsu's chip-making subsidiary Fujitsu Semiconductor Ltd. and Panasonic's system-LSI business. The new company will have about 3,000 employees (80 per cent of them from Fujitsu) and products and intellectual property that generate about $1.46 billion of annual revenue.

It will not get any facilities to make the chips it will create. Instead, it will outsource manufacturing and focus on product planning, marketing, development, and growth in global markets, the companies said in a press release.

Fujitsu, Panasonic confirm fabless chip venture
Japanese electronics firms Fujitsu and Panasonic have confirmed that they have agreed in principle to merge their system LSI businesses to create an independent fabless chip company.

The new company will focus on producing semiconductor products for growing markets, including cloud computing, medical devices, the Internet of Things, and big-data analytics. Starnes said every other technology company has announced the same thing during the past two years.

"They have almost nothing to say about products, and that's what you want to hearsomething that lets you know how their product will help each other out or something new they bring to the table that neither one had on its own," Starnes said. "I don't hear any of that here."

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