Another one bites the dust.
Ramsey
Nippon Steel (5401) To Abandon Japanese
Chip Production
TOKYO (Nikkei)-Nippon Steel Corp. decided Monday to withdraw fully
from domestic production of semiconductors, company sources said.
To that end, the steelmaking giant will sell all the shares it holds in
subsidiary Nippon Steel Semiconductor Corp. (6939) to the United
Microelectronics Corp. (UMC) group, one of Taiwan's leading
semiconductor makers, by the end of the year.
Nippon Steel currently holds 30,560 shares of Nippon Steel
Semiconductor, or 56% of the unit's stock outstanding.
Nippon Steel appears to have reached an agreement with UMC under
which the Taiwanese firm will also buy one of the subsidiary's two
chip-production lines. Together, the shares and the line are expected to
sell for an estimated 5 billion yen.
After selling that line to UMC and the second line to another company,
either foreign or domestic, Nippon Steel will pull out of chip
production in Japan.
In the current fiscal year through March 1999, Nippon Steel is
expected to report an extraordinary loss of about 120 billion yen,
mainly on the disposal of debts incurred by the subsidiary. As a result,
the company will likely post a large net loss, not the 5-15 billion yen in
net profit previously forecast.
Nippon Steel entered the semiconductor market fully in 1993 by
purchasing a Minebea Co. (6479) subsidiary. Since then, however,
prices on dynamic random-access memory chips (DRAMs) have declined.
Nippon Steel Semiconductor has sustained substantial losses since
fiscal 1996 and had 7 billion yen of liabilities in excess of assets in
the fiscal year ended March 31.
(The Nihon Keizai Shimbun Tuesday morning edition) |
