Struggling Japan chipmaker Renesas to raise US$1.8 billion
- 10 December, 2012 13:54
Japanese chip giant Renesas is seeking a US$1.8 billion capital injection to invest in new manufacturing techniques. The world's largest microcontroller manufacturer, its products find their way into game consoles from Microsoft and Nintendo, and into cars including Toyota's Prius hybrid range.
Renesas has been attempting to turn its struggling business around for years. It cut nearly 7,500 jobs through an early retirement program this year, and sold off factories. The company hinted at further job reductions in a news release Monday, saying it was planning "further optimization of the personnel structure." For the fiscal year through March, Renesas projects a loss of 150 billion yen (US$1.8 billion), double its loss for the previous fiscal year.
The importance of Renesas to the global supply chain was clear after the magnitude-9.0 earthquake that struck off the coast of the Japan last year, knocking out a major plant in Ibaraki Prefecture, about 250 kilometers from the epicenter. That plant was far enough inland to avoid damage from the resulting tsunamis, but precision machinery was jolted out of alignment and clean rooms were damaged, leading to months of production delays for the company and its key clients.
The company plans to raise capital by issuing new shares to a large government-backed fund and large clients including Toyota Motor, Nissan Motor, Canon, Nikon and Panasonic. The government fund, called Innovation Network Corporation of Japan, may also provide up to 50 billion yen in additional funding. The share sale is to take place from Feb. 23 to Sept. 30 next year. The biggest buyers will be the government-backed fund, followed by Toyota and Nissan.
Renesas said it will use the cash raised to invest in advanced manufacturing for its products, and to develop new solutions for automotive and industrial clients. The company was formed in 2003 from the semiconductor divisions of Hitachi and Mitsubishi Electric, and merged with NEC Electronics in 2010.