Renesas Rises on Turnaround Plan to Pare Workforce, Shut Plants
Renesas Electronics Corp. (6723), a Japanese chipmaker unprofitable since it was set up in 2010, rose to the highest in almost two months in Tokyo trading after saying it will eliminate more than 5,000 jobs to trim losses.
Renesas jumped 4.3 percent to 363 yen, the highest since May 9, as of 9:09 a.m. on the Tokyo Stock Exchange.
The job cuts, which will affect 12 percent of its workforce, will be achieved through offering incentives and early retirements and may save the company 43 billion yen ($539 million) annually, Renesas said in a statement yesterday. The Kawasaki, Japan-based chipmaker may also close or sell as many as 10 of its 18 domestic plants in three years.
“The management’s responsibility is to pick a way for survival, even if that involves pain or sacrifice,” Renesas President Yasushi Akao told reporters in Tokyo yesterday. “We needed to take more drastic measures on our cost structure as our top line is more unstable than before, in addition to the opportunity losses from the earthquake last year.”
The manufacturer, 91 percent owned by NEC Corp. (6701), Hitachi Ltd. (6501) and Mitsubishi Electric (6503) Corp. combined, posted a net loss of 62.6 billion yen in the year ended March 31. Falling demand for TVs and a drop in prices for chips used in computers have eroded profit at Renesas’s unit making System LSI chips, used for functions ranging from processing images for TV screens to crunching data.
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