A proposal to merge the system chip businesses of Renesas Electronics Corp., Fujitsu Ltd. and Panasonic Corp.—first reported by Japan's Nikkei news service Tuesday (Feb. 7)—would further the consolidation of the Japanese semiconductor industry that has played out over the past dozen years and re-shape the landscape of the country's chip industry.
According to data provided by market research firm IC Insights Inc., Renesas, Fujitsu and Panasonic had combined chip sales of about $18.9 billion in 2011, or about 6.3 percent of all global semiconductor revenue, which would have ranked the combined entity No. 3 in the world in chip sales behind Intel Corp. and Samsung Electronics Co. Ltd.
But such an analysis is oversimplified. According to the Nikkei report, the merger would only involve system chips, leaving, for example, Renesas' large microcontroller business in the company's control. Through the first three quarter of Renesas' current fiscal year, which closes at the end of March, microcontroller sales represented about 42 percent of the company's overall chip sales.
System-on-chip (SoCs) devices represented about 26 percent of Renesas' overall semiconductor sales through the first three quarters of the company's fiscal year. According to Renesas' quarterly results presentations, SoC sales represented about 27 percent of the company's total semiconductor sales in calendar year 2011, or roughly $3.03 billion, compared with roughly $11.2 billion in chip sales overall.
Fujitsu and Panasonic don't break out their semiconductor sales to the same level of detail that Renesas does, but both also have products in addition to SoCs. Fujitsu, for example, also has a strong microcontroller business, as well as memory chips, ASSPs and other devices that presumably would not be part of the proposed JV. Panasonic also offers chips like power supplies including switching and DC-DC converters, also which presumably would not be in the mix.
Removing the roughly $8 billion Renesas generated in calendar 2011 from microcontrollers and analog and power ICs leaves the combined JV with, at most, slightly less than $11 billion in 2011 revenue, which would have ranked the firm No. 6 among chip firms in sales last year, according to IC Insights data, ironically displacing Renesas.