Japan Eyes Restructuring for Corporate Survival

Large corporations in Japan are seeking to survive the economic crisis by pursuing mergers or transferring workers to promising sectors.

The Japanese daily Nihon Keizai Shimbun yesterday said Japan’s second-largest semiconductor maker Renesas Technology and No. 3 NEC Electronics will be merged. The two companies are negotiating merger conditions, including the type of merger and financing, aiming to reach a deal this month.

The merged company will become Japan’s largest semiconductor manufacturer with sales of 12.8 billion U.S. dollars, beating Toshiba, and the world’s third-largest chipmaker following Intel and Samsung Electronics.

Renesas and NEC’s major products include micon, which is the brain in digital electronic appliances, and system LSI.

In the global micon market, Renesas has the largest share of 20 percent, followed by NEC with 11 percent. With global semiconductor makers suffering from aggravating performance and investment pressure, the two companies have pursued a merger to survive.

Japanese economic experts predicted that the two companies would not survive without a merger since Renesas recorded a deficit of 206 billion yen (2.09 billion dollars) and NEC 65 billion yen (658 million dollars) last year.

Japan’s lone DRAM manufacturer Elpida is considering a tie-up with a Taiwanese corporation. Accordingly, such moves are expected to accelerate the restructuring of the global semiconductor industry.

At the same time, large Japanese corporations have transferred their employees from unprofitable to promising sectors such as environment and new energy.

Sharp is planning to transfer 1,700 workers to its solar battery sector. Toshiba will transfer 1,100 from the underperforming semiconductor sector to flash memory, and Fujitsu will transfer 2,000 from semiconductors to other promising sectors.

Toyota Motor will dispatch tens of its workers to its subsidiaries producing cells for hybrid cars. Hitachi, Yokogawa Electronics and Pioneer will transfer around 100-200 workers to promising sectors.

jkmas@donga.com