Report: Japan chip JV plans doomed?

June 5, 2006 – Hitachi Ltd. and Renesas Technology Corp. are on the verge of pulling the plug on their proposed joint chipmaking venture with Toshiba Corp., with a final decision expected in a matter of days, according to local news reports.

In January, the three firms put up some 100 million yen (~US $860,000) to form a planning committee to investigate the feasibility of the proposed JV, which would place a line in an existing Toshiba or Renesas fab. The proposed $860 million (100 billion yen) venture would be used by all the partners to produce their system chips. That committee now has determined that the joint operation would not be able to produce enough chips to make a profit, according to the Nihon Keizai Shimbun, due to doubts about whether the joint effort could secure enough production volume from customers of competitors such as Taiwanese foundries.

This latest JV proposal was for a jointly owned independent foundry, instead of the shared joint fab idea that has been floated for years with little success. A lack of participation from other Japanese chipmakers and government support, plus strong competition with other firms which have already begun qualifying 65nm processes (e.g., TSMC and UMC), also suggest that the idea for a Japanese foundry is basically dead, noted Nikkei Microdevices, back in January.


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