TOKYO--The merger of two ailing semiconductor businesses at Fujitsu and Panasonic, reported but not confirmed last week, will be a nonstarter. It will neither save Japan’s semiconductor industry nor improve Japan’s standing in system-on-chips (SoCs), which outside of Japan is virtually nil.
"Negative one plus negative one makes negative three," Takashi Yunogami, a director of Fine Processing Institute, dryly said in an interview with EE Times here Monday (Feb. 4). Yunogami was critical of Japanese bureaucrats and corporate executives who have been busy in recent years structuring mergers among struggling Japanese companies and calling it “synergy.”
Yunogami, formerly an engineering expert in dry etching at Hitachi, is now author of books on the Japanese semiconductor industry and a lecturer at several universities.
There is mounting evidence to support Yunogami’s argument.
Back in 2000, Japan had five separate chip companies--excluding captives. They were: Toshiba, Hitachi, NEC, Fujitsu and Mitsubishi. Hitachi spun off its semiconductor division, which became Renesas Electronics through subsequent mergers--first with Mitsubishi and then with NEC Electronics. Fujitsu also spun out its chip operation--now Fujitsu Semiconductor. Toshiba is the only company that neither separated its semiconductor business as an independent company nor forged a merger with another Japanese chip company. Twelve years later, Renesas’ revenue is continuing a spectacular downward spiral and Fujitsu’s chip business is beginning to slip. Only Toshiba remains on a growth track.
In any culture, mergers are never easy. But it’s clear that the prolonged process of merging chip operations at Hitachi, Mitsubishi and NEC sucked the life out of Renesas. No "synergy" is evident.
So, if you muttered "Not again," when you heard about the latest speculation about a Fujitsu-Panasonic deal, you are not alone.
This time around, though, the intriguing feature about the report was the absence of Renesas from the current round of rumor. The originally envisioned joint venture was supposed to be a three-way merger among SoC businesses at Fujitsu, Panasonic and Renesas.
As late as last June, Fujitsu President Masami Yamamoto was quoted in the Japanese media saying that Fujitsu still wants a system chip merger with Renesas and Panasonic. Yamamoto said in his interview with the Asahi newspaper that such a merger would only be considered if Renesas carries out an aggressive turnaround plan.
The absence of Renesas in the latest speculation implies two things: 1) Renesas is still far from actually completing its turnaround plan, with no additional bandwidth left to save its already feeble SoC business; 2) Renesas Mobile, Renesas’s mobile SoC subsidiary, sees no advantage in merging with either Fujitsu or Panasonic.
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.
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!
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.
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.
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!
David Patterson, known for his pioneering research that led to RAID, clusters and more, is part of a team at UC Berkeley that recently made its RISC-V processor architecture an open source hardware offering. We talk with Patterson and one of his colleagues behind the effort about the opportunities they see, what new kinds of designs they hope to enable and what it means for today’s commercial processor giants such as Intel, ARM and Imagination Technologies.