Renesas moves to fab-lite strategy
7/30/2010 12:50 PM EDT
SAN JOSE, Calif. -- Japan's Renesas Electronics Corp. has outlined its restructuring efforts in an effort to become profitable.
As expected, the company is cutting 5,000 jobs and 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, it is also becoming part of IBM Corp.'s ''fab club.''
The moves have been anticipated. Renesas Electronics began its business operations April 1, through the integration of NEC Electronics Corp. and Renesas Technology Corp.
As part of the moves, Renesas Electronics will cut approximately 5,000 employees, mostly in the current fiscal year and completed by March 2013. In addition, as part of its plan to expand overseas businesses, the company will raise the number of overseas employees from 29 percent in the current fiscal year to 32 percent by March 2013.
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.
It applied impairment accounting to long-term assets at the Tsuruoka plant to address the change in a plan to recoup the investment.In addition, since there is currently no plan to make a large-scale investment in the 8-inch wafer line at Renesas Electronics America's plant in Roseville, Calif., and with the current scale, Renesas Electronics no longer expects to recoup the initial investment, so the company has applied impairment accounting to long-term assets at the Roseville plant.
As a result, Renesas Electronics expects to record total impairment loss of 33.1 billion yen ($382 million) in the fiscal year ending March 2011. In the quarter, the company had sales of 292.0 billion yen ($3.38 billion) and lost 33.1 billion yen ($383.1 million).