SAN JOSE, Calif. - Loss-ridden Renesas Electronics Corp. has lowered its forecast and announced an early retirement program for its employees in Japan.
While no upper limit or target has been placed on the number of applicants, Japan's Renesas Electronics (Tokyo) anticipates the program will reduce its workforce by approximately 1,200 people. The cost of the program will be charged to the earnings in the fiscal year ending March 31, 2011.
The company expects to record a total special loss of approximately 77.0 billion yen ($942.5 million) in the fiscal year ending March 2011.
Renesas Electronics began on April 1, 2010, after the merger of NEC Electronics Corporation and Renesas Technology Corp. Since then, Renesas Electronics has implemented its “100-day Project” by reviewing all of the former companies' respective management resources.
The company is looking to become profitable after years of losses. For the quarter, Renesas posted sales of 295.4 billion yen ($3.6 billion) and a loss of 8.2 billion yen ($100.3 million).
Renesas Electronics announced its consolidated first half results. Consolidated net sales for the six months ended Sept. 30, 2010 totaled 587.5 billion yen ($7.2 billion). Net loss totaled 41.2 billion yen ($504.2 million).
As for the forecasts for the fiscal year ending March 31, 2011, net sales are expected to be 1.17 trillion yen ($14.3 billion), 20.0 billion yen down from the previous forecast announced on July 29, 2010. Net loss is expected to be 80.0 billion yen ($981.6 million).
As a result, Renesas must cut costs. This week, as part of the plan, Renesas decided to spinoff its mobile chip unit into a new and consolidated subsidiary, Renesas Mobile Corp., effective Dec. 1, 2010.
Renesas dismissed the assertion that the spinoff is aimed to cut costs. ''This is incorrect. We have established Renesas Mobile as part of our growing startegy, not for cost reduction,'' according to an official from Renesas.
Also as part of the plan, Renesas in July said it plans to cut nearly 10 percent of its workforce, or about 4,000 jobs, by year's end. The early retirment program is part of the layoffs.
It is also moving towards a fab-lite strategy. It will use foundries for devices at 28-nm and below. And it will no longer invest in new fabs. In terms of R&D, Renesas is also becoming part of IBM Corp.'s ''fab club.''
Renesas plans to use outside foundries--such as GlobalFoundries Inc. and TSMC--on all of its 28-nm and smaller geometry semiconductor products. In line with this change, the company has positioned the 300-mm wafer lines at Naka plant and Renesas Electronics Yamagata Semiconductor’s Tsuruoka plant as manufacturing facilities for the company’s basic products, especially for systems-on-chips (SoCs) up to 40-nm.
The company will continue its research and development (R&D) of advanced processes by unifying existing development structures. It will continue to work with NEC's R&D partner, IBM Corp., for process technology. It appears that it will no longer work with Renesas' original R&D partner, Panasonic.