Renesas Plans to Eliminate More Than 3,000 Additional Jobs
Renesas Electronics Corp. (6723), the ailing Japanese chipmaker, plans to cut more than 3,000 additional jobs as it prepares to raise at least 150 billion yen ($1.7 billion) from a government-backed fund and customers.
Renesas began talks with labor unions today and plans to eliminate the positions through buyouts by Sept. 30, the Kawasaki-based company said in a statement. No upper limit for buyout applications has been set, and the impact on earnings hasn’t been determined, Renesas said.
The reduction adds to about 7,500 positions cut through a buyout program in October, taking the planned job losses to about 25 percent of Renesas’s workforce. The supplier to Apple Inc. (AAPL) and Nintendo Co. agreed to sell new shares to a group led by Innovation Network Corp. of Japan last month to raise funds as Japan’s chipmakers struggle amid falling demand, a strong yen and competition from Samsung Electronics Co. (005930)
“The downside risk for Renesas shares may be limited for now with this restructuring,” said Takashi Oba, a senior strategist at Okasan Securities Co. “Renesas must start to show evidence of a recovery, such as posting an operating profit, and concentrate on its strengths.”
Renesas, which employed 41,900 people as of September, fell 1 percent to 288 yen at 9:55 a.m. in Tokyo trading. The stock was headed for the lowest close since Dec. 3. Japan’s benchmark Nikkei 225 Stock Average gained 0.5 percent.
The chipmaker said last month that it may get an additional 50 billion yen of investment or financing from INCJ if more funds are needed. A group of companies including Toyota Motor Corp. (7203), Nissan Motor Co. (7201), Denso Corp. (6902), Keihin Corp. (7251), Panasonic Corp. (6752), Nikon Corp. (7731), Yaskawa Electric Corp. (6506) and Canon Inc. (7751) will also invest in Renesas, the company said then.
Renesas plans to increase spending to develop more advanced microcontrollers used in cars and televisions, after demand fell for its system LSI chips, used for functions including processing TV images. The microcontroller business accounted for 43 percent of Renesas’s sales last fiscal year.
Falling demand and prices for chips, along with a stronger yen, caused Tokyo-based Elpida Memory Inc. to file for bankruptcy protection in February before agreeing in July to be acquired by Boise, Idaho-based Micron Technology Inc. (MU)
Renesas has posted 177.6 billion yen in combined losses since it was formed in 2010 through the merger of money-losing chipmakers Renesas Technology Corp., a venture between Hitachi Ltd. (6501) and Mitsubishi Electric Corp. (6503), and NEC Electronics Corp.
Last month, Renesas cut its revenue forecast for the year ending March 31 to 820 billion yen from a previous estimate of 868 billion yen. The company maintained its net loss forecast of 150 billion yen, compared with a loss of 62.6 billion yen last fiscal year.
Renesas had a 27 percent share of the global market for microcontrollers in 2011, according to researcher IHS iSuppli. It controlled 42 percent of the market for microcontrollers used in cars to run systems including airbags and brakes. A lack of the components after the March 2011 earthquake and tsunami in Japan forced automakers to shut factories.
Renesas clinched loan contracts for about 200 billion yen with lenders including Sumitomo Mitsui Trust Holdings Inc. (8309), the chipmaker said Sept. 28.
Mitsubishi Electric, Hitachi and NEC Corp. (6701) currently own a combined 91 percent of Renesas.
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