This may not be a rumor. With NEC Corp loosing US$1.3B, Panasonic loosing more than US$3B, how is Renesas going to get enough operating cash for FY2012 given that Renesas already announced the loss of more than US$500M for H1FY2011? With the WW economy in CY2012 looking flat, with the competitors more hungry than ever, with no hope of making money with the SOC products, can the parent companies keep putting up the cash from the dwindling supply to keep the off-spring alive? What's the likelihood for Renesas to be in the black in FY2012, and FY2013? NEC Corp, Fujitsu Corp, Panasonic Corp are not in the charity business, are they?
The semiconductor division of Toshiba is making money because mostly of the NAND Flash. Because Toshiba TV is not selling well, its version of CELL (SOC implementation) will likely be bleeding. As long as NAND Flash is still contributing to the "overall" black ink, it is in no hurry to give up the SOC or the semiconductor operation. Once NAND Flash start to bleed (likely happen soon), we will see Toshiba yelling for help.
There is an important market background here as well. On the one hand, SoCs are getting more and more expensive as they get more complex and as process technology advances, and on the other hand SoCs need to continuously integrate more and more IP. Companies need enormous scale to make advanced SoC development worthwhile. I have no idea if this rumor is for real, but there will certainly be semiconductor consolidation over the next couple years.
Hi Junko, do you think these moves are more or less (& perhaps) a tacit admission by Japanese Semico's that organic growth is just not their cheese and M&A is the path to survival?
There is still a significant amount of research churned out by Japan-based universities and enterprises in the semiconductor area -take a cursory look at JJAP articles, for example. It is disappointing that these are not being leveraged efficiently in business.
Just to be clear, they are not talking about the merger of these three conglomerates. They are discussing the potential consolidation of only the chip divisions of these companies. (But of course, Renesas of the three is an exception since it is a pure play semi company.)
As to why the chip divisions of Panasonic and Fujitsu are struggling, please read the story here:
But as for why Toshiba keeps its head above the water...I don't necessarily think that Toshiba's semiconductor business is doing particularly better than others.
But when you look at its parent company -- Toshiba Corp., the company is heavily in the infrastructure business, designing and building electronics equipment for heavy electronics; nuclear power plants, etc. So, Toshiba, in that sense, is in a much different situation than Panasonic who has to compete with every new TV company popping up in China in the global consumer electronics market.
Toshiba is an integrated electronics company, not just a chip maker. But the same is true of Fujitsu and Panasonic. Why has Toshiba been more successful? I really don't know. I am curious what people have to say about that myself...
The failure of the established semiconductor industry of Japan to keep up with the rise of lower cost semiconductor industry in Taiwan & Korea ( aided and abetted by profit maximizing US Corp.s who have xferred technology to them ) is the most obvious reason behind the current crises.
But not all Japanese semicos have gone downhill, e,g. Toshiba. So how has Toshiba been able to keep its head above the water ? How are they different from these 3 Japanese semiconductor / electronics conglomerates now considering merger ?
Any comments ?
we think that this is more than "just a rumor." Judging from the responses from those companies involved in the proposed deal, while they are not saying much, nobody is outright denying that it is completely false. Whether things will turn out the way it is currently reported by Nikkei remains to be seen.
But Dylan's story here -- by the numbers -- lays out what is at stake.