LONDON – Struggling Japanese chip company Renesas Electronics Corp. now looks set to be saved by a Japanese buyout led by a government investment fund.
The fund called the Innovation Network Corp. of Japan (INCJ) plans to invest 150 billion yen (about $1.9 billion) in Renesas in return for a two-thirds stake in the company. A group of about 10 companies will invest a further 50 billion yen in total, according to reports attributed to Nikkei and the Daily Yomiuri.
INCJ is expected to appoint senior manager from outside the company and to sell off the System LSI business unit for integration with similar units at Fujitsu and Panasonic, according to a Daily Yomiuri report.
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Many other changes, closures and lay-offs are expected but the deal appears to have averted a potential takeover of Renesas by private equity firm Kohlberg Kravis Roberts. In late August, Kohlberg Kravis Roberts proposed investing about 100 billion yen (about $1.25 billion) in Renesas.
Renesas is forecasting a net loss of about 150 billion yen (about $1.9 billion) on sales revenue of about 880 billion yen (about $11.3 billion) for the fiscal year to March 31, 2013. At the beginning of October Renesas announced it had secured loan deals that would allow the company to follow through on a planned reorganization that would involve substantial lay-offs and retreats from manufacturing and certain markets. This could involve the loss of 12,000 jobs or about 30 percent of its workforce and the sale or closure of as many as half its domestic manufacturing sites.
3G / 4G baseband markets are hot. I though renesas has a real shot at being #2 to Qualcomm. Anyone have any insight why it is so hard to compete Qualcomm
The proposals to save a big name in the industry by the Japanese government seems to be great. Now leaders from ten various companies are joining and they will definitely able to steer Rensas in the appropriate path to provide a good service to their customers and to the investors and in turn to the Rensas family of people.
Two reasons; wireless IP and QCOM excellence in engineering. The ability QCOM has to introduce new chipset in an annual basis is comparable to a great Tour de France team keeping a fast pace that few if any team can match. The investment required to keep pace with QCOM also requires to have significant market share (30%?). A very difficult task indeed.
Japan need to save itself!
To save Renesas, the system LSI is to break out to join another 2 lossing entities - Fujitsu and Panasonic. So years down the road, someone will has to save this poor chap that was abandoned by their parents again (just like Renesas which was broken out by the NEC, Hitachi & Mitsubishi).
anyway I will like to what will be the strategy of a pure MCU company in this competitive market.
Perhaps, in near future, every Japan semiconductor will finally be integrated by INCJ to form a single entity?
I am not sure if the remaining Renesas can survive in ten years. I predict that the saved Renesas will decline in the worldwide semiconductor chart at least by 1 position every year, starting from CY2013. This is pathetic, throwing good money at bad management and ethics.
I take it that NO one in Japan is bold enough to say "Let Renesas go bankrupt!" and then run for elections!
That pun aside, there may be a Obama-esque approach to saving Renesas, perhaps time will tell.