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Saturday, June 23, 2012
Renesas to get some support from NEC
NEC Corp. said Friday it will provide support to help struggling chip-maker Renesas Electronics Corp. turn its business around.
"As we have received a request from the company for support, we will offer a certain amount of support, taking into account it is our important business partner," NEC Senior Executive Vice President Takashi Niino said at an annual shareholders' meeting in Tokyo.
But he declined to elaborate on the details of support, saying it has not been decided yet. NEC is a major shareholder of Renesas, which controls about 40 percent of the global market for microcontrollers for automobiles.
NEC and two other major shareholders of Renesas have basically agreed to provide ¥50 billion for the firm, sources said.
Under the agreement, Hitachi Ltd. and Mitsubishi Electric Corp. will lend a total of ¥32 billion to the struggling company. For its part, NEC plans to shoulder around ¥20 billion through such means as granting Renesas a moratorium on some payments in business transactions, the sources said.
In addition, four main creditor banks will use the existing credit line to provide ¥50 billion in loans, bringing the total amount of financial aid to about ¥100 billion, the sources said.
11 plants in cross hairs
Struggling chip-maker Renesas Electronics Corp. plans to sell or close 11 of its 19 domestic plants within three years, officials said Thursday.
In a reconstruction program, the company also plans to cut 12,000 to 15,000 jobs, or some 30 percent of the overall workforce, including through voluntary retirements, the officials said.
Renesas will announce the reconstruction program in July after determining target plants and other details.
By restructuring, the company aims to focus on production of microcontrollers, which are used in vehicles and home appliances.
The goal is to achieve a group operating profit of around ¥20 billion in the current business year to March 2013, against a loss of ¥56.7 billion in the previous year.
Renesas was established in April 2010 through the merger of Renesas Technology Corp., a joint venture between Hitachi Ltd. and Mitsubishi Electric Corp., and NEC Electronics Corp., a subsidiary of NEC Corp.
Due to conflicts of interest between Hitachi, Mitsubishi and NEC, Renesas has been failing to cut jobs, streamline its plants or engage in other cost-cutting efforts, suffering chronic red ink.