SAN JOSE, Calif. - Amid plans to embrace foundries, Japan's Renesas Electronics Corp. plans to cut nearly 10 percent of its workforce, or about 5,000 jobs, by year's end, according to Reuters, which cited Nikkei as its source.
The company will expand its foundry outsourcing efforts. It will outsource more of its production to Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and GlobalFoundries Inc., according to the report.
Renesas seeks to become profitable by 2011.
Completing a merger transaction between the former NEC Electronics Corp. and Renesas Technology Corp., the new combined entity--Renesas Electronics Corp.--commenced business operations on April 1.
Renesas (Tokyo) will be a publically traded company in Japan. When combined, the company had $10.212 billion in sales in 2009, making it the world's third largest chip maker, next to Intel Corp. and Samsung Electronics Co. Ltd.
Still, there is a lot of work to be done at Renesas. The company must integrate the operations of NEC Electronics and the old Renesas. That's no small task. And many of the tough decisions have yet to be made.
IMO Japanese semi industry is on slow decline. IDM model, Aged workforce, Lack of new engineering talent, Inability to outsource/setup subsidiaries in developing countries are the main reasons. Previously when Hitachi & Mitsubishi merged their semi business to form Renesas, it was a 10B$ company. Sales gradually declined over the years to just around 5B. Now with a new round of mergers, If they dont change, I feel history is set to repeat.
I think this was bound to happen sooner or later. Renesas was carrying a load much heavier than it could for the prevailing times. Their micro controller market hasn't also shown much expansion to offset the costs and a foundry is the last think you need when the economy is whimpering.
The cost of running an operation in Asia is so much cheaper than that in the western world - both Europe and America. With the brutal competition from various companies, cost reduction is inevitable. Outsource to Asia seems to be an easy and viable solution. Production will eventually shift to Asia or any other developing world. If American workforces want to stay competitive, they will need to learn new technology and increase throughput by various means, for example, with the help of robotic and computer. The question comes to how American companies can employ enough workforces to keep the unemployment rate low with all those outsourcing happening.
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