Renesas Electronics Corp. is planning to implement a JPY50 billion ($630 million) capital increase as well as 6,000 job cuts in order to recover from the effects of the destruction brought by the earthquake and tsunami disasters that shook Japan in March 2011, Yomiuri Shimbun reported. Renesas is also reeling from the global oversupply of memory chips that brought prices down as well as from stiff competition and the strong yen.
The 6,000 job cuts represent around 15 percent of Renesas’ total workforce. A source told Reuters that Renesas was considering several plans, including a capital increase, but said discussions were still in early phases. Investors seemed to welcome Renesas’ job cut plans as company shares soared as high as 11 percent.
Renesas, however, declined to comment on the local report. Japanese chipmakers used to account for 27 percent of global semiconductor revenue, and that was in 2003. Eight years later, amidst dropping prices and stiff competition from South Korean companies, Japanese chipmakers only accounted for 19 percent of the global semiconductor revenue in 2011, according to research firm IHS iSuppli.
In 2011, Renesas was forced to close eight sites due to the destruction brought by the earthquake and tsunami in Japan. As a result, local carmakers depending on Renesas had to look for other chipmakers for supply. Sources told Reuters earlier in the year that in view of the current flux in the Japanese chip industry, chipmakers Renesas, Panasonic and Fujitsu Ltd. have been holding talks over the possible merger of their system chip operations, to be backed financially by investment fund Innovation Network Corp. Renesas itself is a result of successive mergers of the chip units of Mitsubishi Electric, Hitachi Ltd. and NEC Corp.