In my opinion, acquisition of Panasonic-Fujitsu JV by NTT or Renesas acquisition by Toyota/Denso , for the reason of keeping supply chain alive, doesnt make any sense at all. They should find alternate suppliers. I mean for the same reason, Panasonic and Fujitsu could have kept their semi divisions instead of divesting!
eewiz, I know what you are saying.
But here’s the reality.
The mergers and acquisitions among Japanese chip companies in recent years have been engineered by Japanese bureaucrats and executives. They have been successfully pressured by *BIG* and powerful Japanese customers to restructure the Japanese semiconductor industry, in the name of saving Japan’s national interest (read: their industries – such as auto industry or telecommunication industry – in Japan).
But in truth, what they are looking for is a way to beat down the prices of chips supplied by the Japanese chip vendors.
All I am saying is that if that’s their goal, let them pay for a JV and own it. Have them run it as their own chip division.
Too many cooks – including bureaucrats, banks and customers – in a kitchen (at a JV) are ruining Japanese chip companies already merged.
No, your idea doesn't make sense! If NTT Docomo and Toyota become vertically integrated, given the history and the strong bureaucracy in the modern Japanese culture, the semiconductor divisions are going to become increasingly bloated. Instead of too many cooks, you are going to see many lazy cooks and workers! With the rich parents, the sons & daughters likely do not drive hard from inside!
The main reason why the Japanese semiconductors are where they are now is: they have been too comfy in their own environments for too long! Japan was used to be strong, if not the strongest in semiconductors, CE, computing, mobile communications many many years ago. With many of the Japan-OEM/ODM products being relegated to also-run, these Japanese semiconductor companies no longer have a secured profit base to work up. Worst still, these Japanese semiconductor companies never know how to compete in the bloody world market. A comfy home is going to accelerate their eventual demise or irrelevance.
Individually they seem too weak to challenge big players in the global market. Suffering typical theme across Japan; that it has the technology but cannot provide it as cheap. Similar situation to Great Britain in the 20th Century, whereby Japan copied it's inventions and reproduced it cheaper.
Fascinating article Junko, thanks. Extraordinary how the ebb and flow of fortunes in this business has gone - who could have predicted this at the height of the Japan success in the 80s/90s? Is it too simplistic to ask whether education and the importance of innovation is at the heart of this? The Japanese were so good at improving what already existed but seem to struggle to take it further. Discuss...!
There is another angle here. It's less about giving the semi operation a chance to "thrive" on its own. It's about saving the parent company! The difference in Japan is that none of the execs wants to be known as the person who killed semiconductors. It happens in two steps: spin out the operations, then in a couple of years it survives on its own or goes softly into the night - like elpida. Hitachi is far healthier without elpida and renesas.
I agree that the most interesting thing is that Renesas is not involved. It could mean that they have found a buyer for Renesas Mobile who will also take the surplus SOC designers as well. Apple is in sore need of baseband technology to embed on their APs. Its either renesas mobile or st-ericcson
The biggest obstacle for a company to stay vertically integrated is separating out the various groups into separate profit/loss groups. For simple minded (i.e. short term) investors, this allows them to make short term decisions that are almost always tactical rather than strategic. A protectionist policy (whether it's government or a large company) will increase the liklihood of remaining vertically integrated.. The Japanese govt. is less likely to be focussing on the short term.
Everything comes in a big circle, it wants to be an IDM - NTTDocomo again. I am wondering how big NTT docomo's market outside Japan? Japan need to face the reality - world is not buying Japanese electronics for various reasons. NTT docomo will not make money if they need to support empty fabs and so much personnel. Just drag down another company if you can't face the reality.
I thought Handle Jones put his finger on a core issue this week at the Common Platform event in Silicon Valley when he said:
Japan is hampered by its slow decision-making process. “They have not adapted to a very fast moving world,” he said.
I don't think that's the primary reason. 30 years ago, easy for Japanese to dissect a German camera or British TV and reproduce and improve on design for cheaper manufacturing. Not so easy these days with micro-scale integrated products. Can't dissect a Samsung TV or Apple Iphone so easily.
Japanese electronics industry is too wedded to manufacturing. Japan focused on the science of manufacturing and were very successful. Unfortunately, there are diminishing returns to this strategy, especially when standards of living improve and costs rise. When it became clear that creative distruction was necessary for Japanese industry to survive, the Japanese business culture could not allow that to happen.
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