Hitachi, Mitsubishi to merge chip businesses
By Peter Clarke
Semiconductor Business News
October 3, 2002 (2:03 p.m. EST)
TOKYO — Two of Japan's largest chip makers, Hitachi Ltd. and Mitsubishi Electric Corp., have agreed to merge their chip operations — excluding DRAM memories — into a new $7 billion semiconductor company to be called Renesas Technology Corp. Hitachi is expected to own 55 percent of Renesas with Mitsubishi holding 45 percent.
If the merger can be brought off successfully Renesas would appear high on the world semiconductor rankings, probably in the number two position. It could also mark a departure by two major Japanese companies from a vertically-integrated corporate business model.
The company, with a name derived from Renaissance Semiconductor for Advanced Solutions, is due to be established on April 1, 2003. The agreement is a result of discussions to integrate the system LSI businesses agreed to on March 18, 2002, the companies said today (October 3, 2002).
At the same time the companies are merging their DRAM operations within a previously established Hitachi-NEC joint venture called Elpida Memory Inc.
The companies said they would both move their respective semiconductor operations into Renesas, including microcomputer, logic, analog and discrete devices and memory (flash memory, SRAM etc.) with the exception of DRAMs. Overall, Renesas Technology should achieve sales of over 900 billion yen in FY 2003, its first year, the companies said, or about $7.33 billion at present exchange rates.
Koichi Nagasawa, presently president of semiconductor operations at Mitsubishi Electric, is slated to be appointed chairman and chief executive officer of Renesas, and Satoru Ito, presently president and chief executive officer of semiconductor and integrated circuits at Hitachi, is due to be appointed president and chief operating officer of Renesas.
The companies said the move was an attempt to address the increasingly short development cycles required for semiconductor chips, something particularly true in the personal computer and mobile phone handset markets.
Under these circumstances Hitachi and Mitsubishi Electric decided that their semiconductor operations should operate autonomously as a new company to further accelerate decision-making on such issues as funding and capital investment.
The companies said that they believed Renesas could become the world's top supplier of 'system LSI' chips. System LSI is a Japanese term roughly akin to system-on-chip. The companies said Renesas would aim for the leading position in the mobile, network, automotive, and digital home electronics applications |
