More than a year ago, Renesas Mobile, as it struggled to expand its
business beyond Japan, chose not to stay in the stranglehold of NTT
Docomo, Japan’s cellular network giant. In contrast, the SoC businesses
of Panasonic and Fujitsu remain focused on serving NTT Docomo.
beyond the mobile chips the two companies supply to NTT Docomo, it
remains unclear how Fujitsu and Panasonic find the common cause driving
the two companies’ combined SoC businesses in the future.
Despite the constant drumbeat of what almost looked like a national
industrial policy to ditch the memory business and focus on SoCs,
which has captivated Japan since the late 90's, no Japanese company
has genuinely succeeded in the SoC business in ways that matter to the
Panasonic, for one, developed an effective SoC
platform called "Unifier," designed for a variety of digital consumer
electronics systems. While the platform proved useful for the company’s
internal products, it was never spread to OEMs and ODMs in Asia. In
contrast, Taiwan’s MediaTek has almost single-handedly won the global
digital consumer SoC battle. Meanwhile, Panasonic’s TV and other digital
consumer systems business has started to decline on the global scale.
Semiconductor, on the other hand, designs, manufactures and sells a
variety of chips that include microcontrollers, ASICs, ASSPs, and power
management ICs. Fujitsu is also known for its focus on mobile, imaging,
security, automotive and other high-end applications. Its chips are also
known for high reliability. But the company has never succeeded in
developing an SoC platform widely recognized in the global market.
This brings us full-circle to the original questions: What is the new Fujitsu-Panasonic SoC JV for? How viable will it be?
The short answer is that this particular JV appears to be driven by NTT Docomo, and it’s a nonstarter.
believes that it makes far more sense for the JV to become a chip division
for NTT Docomo. He also believes it’s better for Renesas to just home in on the automotive IC market and become a chip division of Toyota or
Denso. It’s a bold idea, but if the biggest customers are identified,
and they’re the ones agitating for such mergers in order to keep the
supply chain alive, it makes sense. There’s no need to continue the
intrigue or prolong the merger drama. The customers should pay for it.
In my opinion, acquisition of Panasonic-Fujitsu JV by NTT or Renesas acquisition by Toyota/Denso , for the reason of keeping supply chain alive, doesnt make any sense at all. They should find alternate suppliers. I mean for the same reason, Panasonic and Fujitsu could have kept their semi divisions instead of divesting!
eewiz, I know what you are saying.
But here’s the reality.
The mergers and acquisitions among Japanese chip companies in recent years have been engineered by Japanese bureaucrats and executives. They have been successfully pressured by *BIG* and powerful Japanese customers to restructure the Japanese semiconductor industry, in the name of saving Japan’s national interest (read: their industries – such as auto industry or telecommunication industry – in Japan).
But in truth, what they are looking for is a way to beat down the prices of chips supplied by the Japanese chip vendors.
All I am saying is that if that’s their goal, let them pay for a JV and own it. Have them run it as their own chip division.
Too many cooks – including bureaucrats, banks and customers – in a kitchen (at a JV) are ruining Japanese chip companies already merged.
Individually they seem too weak to challenge big players in the global market. Suffering typical theme across Japan; that it has the technology but cannot provide it as cheap. Similar situation to Great Britain in the 20th Century, whereby Japan copied it's inventions and reproduced it cheaper.
No, your idea doesn't make sense! If NTT Docomo and Toyota become vertically integrated, given the history and the strong bureaucracy in the modern Japanese culture, the semiconductor divisions are going to become increasingly bloated. Instead of too many cooks, you are going to see many lazy cooks and workers! With the rich parents, the sons & daughters likely do not drive hard from inside!
The main reason why the Japanese semiconductors are where they are now is: they have been too comfy in their own environments for too long! Japan was used to be strong, if not the strongest in semiconductors, CE, computing, mobile communications many many years ago. With many of the Japan-OEM/ODM products being relegated to also-run, these Japanese semiconductor companies no longer have a secured profit base to work up. Worst still, these Japanese semiconductor companies never know how to compete in the bloody world market. A comfy home is going to accelerate their eventual demise or irrelevance.
Fascinating article Junko, thanks. Extraordinary how the ebb and flow of fortunes in this business has gone - who could have predicted this at the height of the Japan success in the 80s/90s? Is it too simplistic to ask whether education and the importance of innovation is at the heart of this? The Japanese were so good at improving what already existed but seem to struggle to take it further. Discuss...!
There is another angle here. It's less about giving the semi operation a chance to "thrive" on its own. It's about saving the parent company! The difference in Japan is that none of the execs wants to be known as the person who killed semiconductors. It happens in two steps: spin out the operations, then in a couple of years it survives on its own or goes softly into the night - like elpida. Hitachi is far healthier without elpida and renesas.
I agree that the most interesting thing is that Renesas is not involved. It could mean that they have found a buyer for Renesas Mobile who will also take the surplus SOC designers as well. Apple is in sore need of baseband technology to embed on their APs. Its either renesas mobile or st-ericcson