Even experts admit that it is hard to keep up with the cutting edge of the chipmaking world. Not so, alas, for corporate developments at Renesas Electronics. The struggling Japanese chipmaker was the worst performer in the Topix on Monday on concerns that it could struggle to raise the capital it reportedly wants. But all it announced after the market closed was a well-flagged co-operation with Taiwan Semiconductor.
The collaboration with TSMC is smart enough: outsource more microcontroller (MCU) production with the aim of creating a technological standard others could adopt. But MCUs, used in cars, white goods and games consoles among other things, are not the problem. Renesas is already, profitably the world’s number one supplier with about 30 per cent of the market, and more in car-related MCUs, Nomura estimates. The issue is what it does with its lossmaking bits, notably its system-on-a-chip operations. There is no news on this.
Since the current version of Renesas was formed in 2010 by adding NEC’s chip unit to those of Hitachi and Mitsubishi Electric, the company has managed a net loss of Y178bn, virtually wiping out the Y200bn capital injected during the merger by the three, which still hold 90 per cent of the equity. Now executives are reportedly discussing cutting a quarter of its workforce and seeking up to Y100bn in fresh funds. Shares of NEC, the biggest shareholder, dropped 9 per cent on Monday. Renesas fell 11 per cent. Since it avoided producing an earnings forecast earlier this month, its shares have lost two-fifths. A restructuring appears to be on its way. But with no hard news on what it is, investors can be forgiven for reserving judgment. They have seen enough turnround plans to know that coming up with a credible one is only the start.
Source: http://www.ft.com/intl/cms/s/3/5c394484-a893-11e1-a747-00144feabdc0.html#axzz1wGGKVlqW
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