Question No. 3: What sort of "system LSIs" will the new company develop?
The new company will develop system LSIs focused on "visual imaging" and "networking" solutions, according to Fujitsu and Panasonic.
More specifically, in a joint press release earlier this year, the two companies listed "areas of focus" that include: 1) High-performance solutions (high-performance servers and core technologies that support cloud infrastructure such as ultra-high-speed networks), 2) visual and imaging solutions (next-generation DTV, applications for image recognition, etc.), and 3) wireless solutions (mobile and extremely low-power wireless connectivity solutions that support ubiquitous networks).
However, at a time when Panasonic -- the parent company -- is trying to get out of the traditional consumer electronics business, such as DTV and mobile, it is unclear how much of digital consumer SoCs will becom a part of the new company's agenda.
Question No. 4: Will the new company also develop automotive SoCs?
The Fujitsu spokesman made it clear that system LSIs for automotive dashboards and displays are definitely a part of the plan. "Fujitsu Semiconductor has a strong ASSP business around automotive," he added.
In contrast, Panasonic will not assign its automotive-related device businesses to the new company.
Panasonic's Automotive and Industrial Systems (AIS) Company will stay with Panasonic. Automotive chip designers working for AIS, won't be transferred to the new company, according to the spokesman. Automotive-related devices such as image sensors, LEDs for vehicles, power semiconductors and high-performance high-voltage devices will remain within Panasonic.
A majority of Panasonic's System LSI group will be transferred to the new company. The group had been specialized on the development of SoCs for consumer products, with 40% of its business in TV, 25% in Blu-ray, 10% for mobile and 10% on tuner ICs.
Question No. 5: What will make the new system LSI company profitable?
In the latest press release, the new company painstakingly stressed that it will have "world-class management resources" and will consolidate "in a profitable manner." The new company will "expand its business globally" and "aim for an IPO within several years."
Good news is that the incoming CEO Yasuo Nishiguchi does not come from either Fujitsu or Panasonic. Formerly CEO of Kyocera Corp., he served most recently as an operating executive at the private equity firm, the prestigious but controversial Carlyle Group. Nishiguchi's responsibility at the Carlyle Group was the focus on Japanese buyout opportunities.
The new company forecasts annual sales to be about 150 billion yen, based on the combined results of Fujitsu Semiconductor and Panasonic's relevant businesses in the latest fiscal year.
The new company won't own any fabs of its own. The new company's fabless model, however, by no means guarantees its profitability. Nor will it assure broader design wins beyond the existing customers held by Fujitsu and Panasonic.
While many chip vendors throughout the world are committed to the growing electronics content inside vehicles, the new company's automotive chip business won't necessarily profit from any consolidations among Japanese chip companies.
After all, Panasonic is pursuing automotive chip business independent of the new Fujitsu-Panasonic company. Reportedly, Fujitsu originally wanted to bring Renesas into the new company, when the idea of the JV was first floated more than two years ago. Renesas, however, has decided to go it alone, while the company plans to maintain its leadership position in the global automotive electronics market.
Next page: What chip business will be left at Fujitsu Semiconductor and Panasonic?