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© andrzej thiel dreamstime.com Electronics Production | December 10, 2012

Renesas gets government bailout

Struggling Japanese chipmaker Renesas is to receive a JPY 150 billion government-backed bailout. Furthermore, all applicants for the early retirement incentive program retired as of October 31, 2012.
The early retirement incentive program received 7'446 applications, and all applicants retired as of October 31. The restructuring of domestic production sites has been proceeded as planned, including an agreement to transfer Renesas High Components (Aomori Factory) to AOI Electronics CO., LTD. Renesas intends to continue efforts to create a lean organization and management structure, and under the current management framework the company is planning to pursue further rationalization initiatives to boost competitiveness, including further optimization of the personnel structure.

In terms of strengthening the company's financial foundation, Renesas announced in September, new financing totaling JPY 97 billion (USD 1.2 billion) from major shareholders and main banks. Renesas also entered into an agreement for a syndicated loan totaling JPY 161.1 billion (USD 1.95 billion), arranged by the main banks, which allows the company to convert short-term debt to long-term debt and secure stable long-term funding. Through these initiatives Renesas has secured sufficient funding for the foreseeable future to enable implementation of ongoing structural reforms.

As of recently Renesas announced a decision to issue JPY150 billion (USD 1.8 billion) in shares through third-party allotment to The Innovation Network Corporation of Japan (hereinafter “INCJ”), Toyota Motor Corporation, Nissan Motor Co., Ltd., Keihin Corporation, Denso Corporation, Canon Inc., Nikon Corporation, Panasonic Corporation and Yaskawa Electric Corporation, with the aim of establishing a financial foundation resistant to rapid changes in the global economy and domestic business environment and investing in core business areas for growth to enable a recovery in performance.

In the emerging Smart Society brought about by the increasing pace of network connectivity in electronic equipment and social infrastructure, control systems that embed MCUs and IT equipment using SoCs are rapidly converging. Therefore, the new market for control systems based on MCUs is expected to expand. As this transition progresses simultaneously in advanced and developing countries, an extremely large new market will be created for the semiconductor industry to exploit.

By strengthening its earnings base and financial foundation, Renesas aims to respond to these changes in the market and construct high value-added MCU-based kit solutions for customers with further strengthened Analog and Power semiconductors, which are essential to the kit solutions, while improving its competitiveness in SoCs. Renesas will realize growth in this new market by supplying platforms that combines these kit solutions with software including IPs and OS commonly used for each application, contributing to shorter development periods, increased cost competitiveness and productivity for customers.

Renesas plans to use funds raised from this capital increase by third-party allotment to realize its goal of growth in the Smart Society through investment in five areas (development of MCUs and standardization of development basis, Capex related to production, automotive semiconductor solutions, industrial semiconductor solutions, rebuilding the management base). Based on this, Renesas seeks to ensure sales growth in these strengthened areas, and achieve stable profits, while increasing corporate and shareholder value.

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