Three of Japan’s biggest electronics companies Renesas Electronics Corp, Fujitsu Ltd and Panasonic Corp are in talks to merge their chip operations, days after dire results from a sector struggling to compete globally came to surface.
The three firms are considering spinning off their system chip design and development divisions, with production to be transferred to California-based Globalfoundries Inc, which is planning to set up a company in Japan, the sources said.
Panasonic, which earlier said it expected to lose more than $10 billion this year, is set to hook up with Renesas Electronics and Fujitsu as they look for economies of scale in an increasingly difficult marketplace.
The three companies will spin off their system chip design and development divisions to create a new company in an effort to ensure the survival of the Japanese chip industry, the Nikkei business daily and Kyodo news said. The new firm will develop system chips for smart phones, automobiles and other products and will go head to head with their US and South Korean rivals including Intel and Samsung Electronics.
The joint venture will receive several hundred million US dollars from government-backed investment fund Innovation Network Corp of Japan (INCJ) to be invested in the development of new products, the Nikkei said. If realized, the plan will create a company with annual sales of ¥500 billion ($6.5 billion). The move will leave Toshiba as the only other Japanese company still making system chips used for electronic devices and automobiles. Renesas, Fujitsu, Panasonic and INCJ aim to reach a basic agreement by the end of March.