Renesas Widens Loss Forecast on Job Cuts, Chip-Demand Slump
Renesas Electronics Corp., the Japanese chipmaker getting a bailout from a state-backed fund, widened its full-year loss forecast as it cuts staff and reorganizes factories amid slowing demand.
The net loss may be 176 billion yen ($1.9 billion) in the year ending March 31, the Kawasaki, Japan-based company said in a statement today. That compares with an earlier loss forecast of 150 billion yen and the 162 billion-yen average loss of seven analyst estimates compiled by Bloomberg.
Renesas, whose customers include Apple Inc. and Nintendo Co., made a 46.6 billion-yen loss in the quarter ended December amid competition from Freescale Semiconductor Ltd. and a slowdown in TV sales that has sapped demand for system LSI chips. The slump forced Renesas to announce more than 10,500 job cuts since July and to plan the sale of 150 billion yen of new shares to investors led by state-backed Innovation Network Corp. of Japan.
The chipmaker cut its full-year sales forecast to 770 billion yen from 820 billion yen. It predicted an operating loss, or sales minus the cost of goods sold and selling, general and administrative expenses, of 26 billion yen, compared with the previous target of a 21 billion-yen profit.
The company last month announced plans to shed more than 3,000 workers following the removal of about 7,500 positions through a buyout program in October. In total, job losses amount to about 25 percent of the workforce. The company also said last month it will sell three factories to J-Devices Corp.
INCJ will hold 69 percent of the chipmaker following the new share sale. Renesas will use the money it expects from the state-backed fund and investors including Toyota Motor Corp. and Nissan Motor Co. to develop more advanced microcontrollers used in cars and TVs. It may also get another 50 billion yen from INCJ.
Renesas is currently 91 percent owned by NEC Corp., Hitachi Ltd. and Mitsubishi Electric Corp., which helped form the company through the merger of various chip-making businesses. Fujitsu Ltd. and Panasonic Corp. yesterday announced plans to combine their LSI chip businesses in a deal that may get funding from the state-backed Development Bank of Japan.
The “door is open” for Renesas to join the venture, Fujitsu President Masami Yamamoto told reporters yesterday.
Renesas is boosting investment in microcontrollers amid slowing demand fell for system LSI chips, used for functions including processing TV images. The microcontroller business accounted for 43 percent of sales last fiscal year.
The chipmaker had a 27 percent share of the global market for microcontrollers in 2011, according to researcher IHS Inc.’s iSuppli. It controlled 42 percent of the market for microcontrollers used in cars to run systems including airbags and brakes.
To contact the reporter on this story: Naoko Fujimura in Tokyo at email@example.com
To contact the editor responsible for this story: Michael Tighe at firstname.lastname@example.org