Renesas Electronics Announces the Implementation of Further Rationalization Initiatives, Including Optimization of the Personnel

  Renesas Electronics Announces the Implementation of Further Rationalization
  Initiatives, Including Optimization of the Personnel Structure

Business Wire

TOKYO -- January 16, 2013

Renesas Electronics Corporation (“Renesas Electronics” or “the Company”, TSE:
6723), a premier  supplier of advanced semiconductor solutions, announced in
“Renesas Electronics Announces Share Issue through Third-Party Allotment, and
Change in Major Shareholders, Largest Shareholder who is a Major Shareholder,
Parent Company and Other Related Companies,” released on December 10, 2012,
the Company’s intention to pursue “further rationalization initiatives,
including further optimization of the personnel structure.” The Company
presented a proposal and explanation to the labor union today regarding this
direction of actions, and consultations have begun. A description of these
initiatives is provided below.

Based on the direction of actions announced on July 3, 2012, in “Renesas
Electronics Announces the Direction of Various Measures to Establish Robust
and Profitable Structure,” the Company has proceeded according to plan with
efforts to secure support and capital from major shareholders and main banks,
personnel rationalization measures centered around an early retirement
incentive program, the restructuring of production facilities in Japan, and
other initiatives. In addition, the Company is implementing measures aimed at
assuring future growth, as announced on December 10, 2012, in “Renesas
Electronics Announces Share Issue through Third-Party Allotment, and Change in
Major Shareholders, Largest Shareholder who is a Major Shareholder, Parent
Company and Other Related Companies.”

As announced on December 10, 2012, in “Renesas Electronics Revises Full-Year
Forecasts,” due to factors such as prolonged debt worries in Europe, further
market slowdown in China and other emerging economies as well as the effect on
demand from the increased uncertainty in Japan-China relations, the Company
has lowered its financial forecasts, and the sales are on a downward trend.

Against this background, the Company intends to implement further
rationalization initiatives with the aim of strengthening the revenue base by
improving the cost structure; speeding up decision-making; achieving increased
adequacy and efficiency in our business operations; and further boosting
competitiveness through measures including restructuring of the design,
development, production, and sales structures (collectively referred to below
as “the goals of the initiatives”). A proposal and explanation regarding the
above was presented today to the labor union, and consultations have begun.

1. Content of Proposal and Explanation to the Labor Union:

1-1. Outline of Proposal and Explanation:

Implementing various measures including the optimization of the personnel
structure while slimming down and improving the efficiency of the
organization, as well as restructuring of Renesas Electronics subsidiaries
(collectively referred to below as “the restructuring measures”) in order to
achieve the goals of the initiatives, the Company today presented to the labor
union a proposal for implementation of an early retirement incentive program
intended for employees of the Company and its consolidated subsidiaries in
Japan. Consultations between the Company and the labor union have begun and
the explanation regarding the restructuring measures has been given at the
same time.

1-2. Outline of Proposal Regarding Implementation of Early Retirement
Incentive Program:

An outline related to the implementation of the early retirement incentive
program is presented below. Once a final decision is reached on the program’s
implementation details through consultations with the labor union, a new
announcement of the final conditions will be released.

(1) Eligible persons:   Main career track employees age 40 or over of the
                         Company and its consolidated subsidiaries in Japan
(2) Planned retirement   September 30, 2013
date:
                         The special incentive will be added to their normal
(3) Benefits:            retirement payment. In addition, outplacement support
                         will be provided through outside agencies for those
                         who request it.

Note that details of the early retirement incentive program, such as the
maximum number of applicants who will be accepted, have not yet been decided,
but in total around three thousand several hundred applicants are anticipated.

1-3. Content of Explanation of the Restructuring Measures:

(1) Outline of Measures to Optimize the Personnel Structure while Slimming
Down and Improving the Efficiency of the Organization:

The Company’s employees not directly involved in production, including
managers, comprised a large proportion of the personnel structure even after
implementation of the early retirement incentive program that took effect on
October 31, 2012. In order for the Company to implement, unfailingly and in
parallel, both cost structure improvements and a growth strategy moving
forward, we aim to improve the efficiency of employees, an issue that has been
under study for some time, and to speed up decision-making.

(2) Restructuring of Renesas Electronics Subsidiaries:

The Company will review the positioning of its subsidiaries within the Renesas
Group in order to realize the goals of the initiatives. The direction of
actions regarding restructuring measures was explained to the labor union
today as described below.

A. Restructuring of Sales Organization, Including Merger of Sales Company in
Japan:

Since the merger of April 2010, the Company has endeavored to make more
efficient and to strengthen the sales organization for the Japanese market
through measures aimed at shrinking the direct sales business, strengthening
and restructuring of sales channels involving dealerships, consolidation and
elimination of branches of a sales company in Japan, and reassigning Renesas
Group sales personnel to our dealerships. In addition to the above, the
Company will merge its sales company in Japan, Renesas Electronics Sales Co.,
Ltd., with Renesas Electronics in order to speed up decision-making and
improve response capabilities to customers.

A-1. Schedule of the Merger:

Planned merger date: October 1, 2013

Note that details, such as the method of the merger of the Company and its
sales company in Japan as part of the above-mentioned restructuring of the
sales organization, are undecided at this point in time.

B. Restructuring of Design and Application Technology Companies and Design
Support Companies:

As announced on December 10, 2012, in “Renesas Electronics Announces Share
Issue through Third-Party Allotment, and Change in Major Shareholders, Largest
Shareholderwho is a Major Shareholder, Parent Company and Other Related
Companies,” the Company aims, in addition to the business of supplying
customers with kit solutions leveraging the Company’s core competence MCUs,
and incorporating Analog and Power semiconductors or SoCs, to provide
platforms consisting of common software, including IP and OS, that is
optimized respectively for each application, thereby contributing to shorter
development time, increased cost competitiveness, and higher productivity for
customers.

To realize the direction of actions toward the growth described above, as
measures to further strengthen the development organization and improve the
efficiency, the Company will review the positions and roles of its wholly
owned subsidiaries, Renesas Solutions Corp. (“RSO”), Renesas Micro Systems
Co., Ltd. (“RMS”), and Renesas Design Corp. (“RDC”) in the design and
development of Renesas products and their integration into solutions, and
restructuring will be carried out in line with the strategic direction of the
Company’s business (referred to collectively below as “restructuring of design
and application technology companies”). In addition, as measures to further
strengthen design support and quality assurance and to improve the efficiency,
the Company will restructure the design support, quality assurance, and
IT-related operations of its wholly owned subsidiaries, Renesas Takasaki
Engineering Service Co., Ltd. (“Takasaki ES”), Renesas Musashi Engineering
Services, Co., Ltd. (“Musashi ES”), and Renesas Kitaitami Engineering Services
Co., Ltd. (“Kitaitami ES”), and the design support functions of the Company’s
Tamagawa site (referred to collectively below as “restructuring of design
support companies”).

B-1. Restructuring of Design and Application Technology Companies and
Restructuring of Design Support Companies:

(1) Outline of Restructuring of Design and Application Technology Companies:

•The software development and tool development functions of RMS have been
consolidated at RSO (implementation complete).

•The hardware (circuit) design functions of RMS and RDC will be integrated
into a newly established design company.

(2) Outline of Restructuring of Design Support Companies:

•Musashi ES and Kitaitami ES will be merged into a newly established design
support company.

•The design support functions of the Company’s Tamagawa site and Takasaki ES
will be consolidated into a newly established design support company.

B-2. Schedule of the Mergers

(1) Restructuring of Design and Application Technology Companies:

Planned restructuring date: October 1, 2013

(2) Restructuring of Design Support Companies (Merger of Musashi ES and
Kitaitami ES, and consolidation of design support functions of the Company’s
Tamagawa site and Takasaki ES):

Planned restructuring date: October 1, 2013

Note that details, such as the method of the mergers accompanying the
above-mentioned restructuring of design and application companies as well as
design support companies, are undecided at this point in time.

C. Merger of Production Companies:

Since the merger of April 2010, the Company has undertaken measures to reform
the production structure, with restructuring of production facilities as the
key component. In addition, the Company has proceeded according to the
direction of actions announced on July 3, 2012, in “Renesas Electronics
Announces the Direction of Various Measures to Establish Robust and Profitable
Structure,” implementing wide-ranging restructuring of its production
facilities in Japan as part of further measures to reform the production
structure.

The above-mentioned measures to reform the production structure included in
2012 the closing of the Tokyo facility and the transfer to Murata
Manufacturing Co., Ltd., of the Nagano facility of the Company’s wholly owned
production company, Renesas Eastern Japan Semiconductor, Inc. (“Eastern Japan
Semiconductor”); the transfer to Aoi Electronics Co., Ltd., of Renesas High
Components, Inc., a wholly owned subsidiary of Eastern Japan Semiconductor;
and also in 2012 the transfer to Fuji Electric Co., Ltd., of the Tsugaru
Factory and consideration of the transfer of the Hakodate Factory of the
Company’s wholly owned production company, Renesas Northern Japan
Semiconductor, Inc. (“Northern Japan Semiconductor”). These measures were
expected to result in a significant contraction in the business scale of both
companies moving forward, so a drastic reassessment of the position of the two
companies within the production structure of the Renesas Group was necessary.
Under this circumstance, the Company will merge the two companies in order to
boost organizational and personnel efficiency.

C-1. Outline of Restructuring, Including Merger of Production Companies:

Eastern Japan Semiconductor and Northern Japan Semiconductor will be merged.

C-2. Schedule of the Merger:

Planned merger date: October 1, 2013

Note that details, such as the method of the merger accompanying the
above-mentioned restructuring of production companies, are undecided at this
point in time.

2. Outlook Moving Forward:

It is uncertain at this time what impacts with the implementation of the
proposals of the early retirement incentive program referenced in section 1-2
above and the explanations of the restructuring measures referenced in section
1-3 will have on the Company’s consolidated financial performance in the
current fiscal year and after, but an announcement will be made as soon as
they are determined.

<Reference>

Renesas Electronics Sales Co., Ltd.

Location:           2-6-2, Ote-machi, Chiyoda-ku, Tokyo, Japan
Representative:      Yoshihiko Miura, President
                     Sale of electronic components such as semiconductor
                     devices and integrated circuits; sale of electronic
Main business:       equipment and communications equipment; software
                     development, design, manufacture, sale, maintenance, and
                     consulting related to the preceding
Amount of capital:   ¥2.5 billion
Established:         April 1, 2003
Shareholder:         Renesas Electronics Corporation: 100%
                     

Renesas Solutions Corp.

Location:           2-6-2, Ote-machi, Chiyoda-ku, Tokyo, Japan
Representative:      Shinji Suda, President
                     Semiconductor application technology business;
Main business:       development, design and production of software
                     development tools; semiconductor technology training and
                     web information services
Amount of capital:   ¥300 million
Established:         April 2, 2001
Shareholder:         Renesas Electronics Corporation: 100%
                     

Renesas Micro Systems Co., Ltd.

Location:           3-1, Kinko-cho, Kanagawa-ku, Yokohama, Kanagawa Pref.,
                     Japan
Representative:      Hiroshi Iguchi, President
                     MCU development and design; SoC development and design;
                     core development and design of analog, IP, and memory
Main business:       devices; ASIC development and design; base technology
                     development and design; design and development of MCU and
                     SoC development tools; etc.
Amount of capital:   ¥400 million
Established:         May 23, 1980
Shareholder:         Renesas Electronics Corporation: 100%
                     

Renesas Design Corp.

Location:           4-1-3, Mizuhara, Itami, Hyogo Pref., Japan
Representative:      Hideharu Takebe, President
Main business:       Semiconductor design and development
Amount of capital:   ¥400 million
Established:         December 1, 1982
Shareholder:         Renesas Electronics Corporation: 100%
                     

Renesas Musashi Engineering Services, Co., Ltd.

Location:           5-20-1, Josuihon-cho, Kodaira, Tokyo, Japan
Representative:      Toshiyuki Abutsuka, President
                     Testing and analysis of semiconductor devices and
Main business:       electronic components; development and operation of
                     information systems; etc.
Amount of capital:   ¥50 million
Established:         April 1, 1990
Shareholder:         Renesas Electronics Corporation: 100%
                     

Renesas Kitaitami Engineering Services Co., Ltd.

Location:           3-5-8, Higashi Tada, Kawanishi, Hyogo Pref., Japan
Representative:      Hideaki Arima, President
                     Testing and analysis of semiconductor devices and
Main business:       electronic components; manufacture and sale of equipment
                     and component for testing and analysis; etc.
Amount of capital:   ¥50 million
Established:         April 2, 2007
Shareholder:         Renesas Electronics Corporation: 100%
                     

Renesas Takasaki Engineering Services Co., Ltd.

Location:           111, Nishiyokote-machi, Takasaki, Gunma Pref., Japan
Representative:      Eiji Minamimura, President
                     Design support business; quality assurance business;
Main business:       semiconductor manufacturing-related business; IT solution
                     business; etc.
Amount of capital:   ¥50 million
Established:         July 2, 1999
Shareholder:         Renesas Electronics Corporation: 100%
                     

Renesas Northern Japan Semiconductor, Inc.

Location:           145-1, Nakajima, Nanae-cho, Kameda-gun, Hokkaido Pref.,
                     Japan
Representative:      Kosuke Tanaka, President
Main business:       Semiconductor back-end production and contact
                     manufacturing service
Amount of capital:   ¥2.55 billion
Established:         October 1, 2002
Shareholder:         Renesas Electronics Corporation: 100%
                     

Renesas Eastern Japan Semiconductor, Inc.

Location:           2-14-1, Kyobashi, Chuo-ku, Tokyo, Japan
Representative:      Hideyuki Todokoro, President
Main business:       Semiconductor development, design, production, and sales
Amount of capital:   ¥400 million
Established:         October 1, 2002
Shareholder:         Renesas Electronics Corporation: 100%
                     

About Renesas Electronics Corporation

Renesas Electronics Corporation (TSE: 6723), the world’s number one supplier
of microcontrollers, is a premier supplier of advanced semiconductor solutions
including microcontrollers, SoC solutions and a broad range of analog and
power devices. Business operations began as Renesas Electronics in April 2010
through the integration of NEC Electronics Corporation (TSE:6723) and Renesas
Technology Corp., with operations spanning research, development, design and
manufacturing for a wide range of applications. Headquartered in Japan,
Renesas Electronics has subsidiaries in 20 countries worldwide. More
information can be found at www.renesas.com.

Contact:

Voce Communications, a Porter Novelli Company
Jessica Kerr,415-975-2213 (U.S.)
Jessica.kerr@porternovelli.com
 
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