July 6, 2012 — Semiconductor maker Renesas Electronics Corporation (TSE: 6723) will reorganize, in “urgent need of business recovery,” reforming semiconductor fabs in Japan and “streamlining employees.” The impetus is a FY2011 sales drop that resulted from a sluggish macro economy, the 3/11 Japan earthquake off Sendai, and Thailand’s floods in late 2011 that disrupted the PC supply chain.
Renesas’ business operations began in April 2010 through the integration of NEC Electronics Corporation (TSE:6723) and Renesas Technology Corp. The goal since this merger has been a double-digit operating profit. Renesas’s goals include a strong microcontroller (MCU) business as its core competence, intensification of analog and power semiconductor businesses by producing synergy with MCU business, and acceleration of drastic concentration on SoC business. These are pillars of Renesas’ focus on international customers and the automotive/smart society segment.
Renesas plans to continue production at its Naka (200/300mm), Kofu (200mm), Shiga (Renesas Kansai: 200mm/GaAs), Saijo (200mm), and Kawashiri (Renesas Kyushu/Yamaguchi: 200mm) fab lines. It will decrease production at its Takasaki (150mm), Shiga (Renesas Kansai: 150mm), and Kochi (150mm) fab lines. Production will decrease or stop at Tsuruoka (Renesas Yamagata: 125/300mm), and Yamaguchi (Renesas Kyushu/Yamaguchi: 150mm). Kofu (150mm) and Takasaki (125mm) are scheduled for closure.
For back-end fab and packaging, Renesas will continue its Yonezawa (Kita Semi) site and shrink its Oita (Renesas Kyushu/Yamaguchi) and Kumamoto (Ozu) (Kyushu Semi) sites with the option of transferring the load to another location. Its Hakodate (Kita Semi), Aomori (Renesas High Components), Fukui (Renesas Kansai), Yanai (Yanai Semi), Yamaguchi (Renesas Kyushu/Yamaguchi), and Kumamoto (Nishiki, Renesas Kyushu/Yamaguchi) locations are all seeing production decreases, with the possibility of closure.
Renesas is discussing an early retirement incentive program with its labor union. More than 5,000 employees are expected to apply. Employees of Renesas Electronics and its domestic subsidiaries will be offered special incentives in addition to retirement pay to retire at the end of October 2012. Outplacement support will be provided on request. There is currently no limit on the number of applications for early retirement that Renesas will consider.
Following the implementation of cost reduction strategies, Renesas expects annual cost reduction of about 43 billion yen. It is too early in the execution to discuss specific areas wherein expenses will fall, Renesas says.
Renesas Electronics Corporation (TSE: 6723) supplies semiconductors including microcontrollers, SoC solutions and a broad range of analog and power devices. More information can be found at www.renesas.com.