Chipmaker Renesas plans to raise $1.3b

Tokyo: Renesas Electronics, the world's biggest maker of automotive micro controllers, plans to raise capital of 100 billion yen ($1.3 billion, Dh4.7 billion) and eliminate more than 10,000 jobs, according to the latest draft of a restructuring plan, a person briefed on the matter said.

The Japanese chipmaker presented the proposal last week to its workers' union and lenders Mitsubishi UFJ Financial Group and Mizuho Financial Group. The job cuts would amount to almost a quarter of the company's 42,800-strong workforce as it seeks to return to profit.

Renesas will explain the plan to its main shareholders Hitachi, Mitsubishi Electric and NEC this week, the person said on Friday on condition of anonymity as it may change. It will probably ask the three companies to buy shares to raise 50 billion yen, the Yomiuri newspaper reported on May 22, without saying where it got the information.

Job cuts

Yoichi Kobayashi, a spokesman at Kawasaki city-based Renesas, declined to comment when contacted by phone on Friday. The company may need to eliminate about 12,000 jobs, Takeo Miyamoto, an analyst at Deutsche Bank, wrote in a report on May 23.

The chipmaker has lost about 35 per cent of its market value since May 9, when it said it couldn't provide an earnings outlook because of uncertainty in the chip market. The shares rose 1.9 per cent to 273 yen at Friday's close in Tokyo. Renesas, 91 per cent owned by NEC, Hitachi and Mitsubishi Electric, posted a net loss of 62.6 billion yen in the year ended March 31. Demand for chips used in consumer electronics and personal computers has slumped, Renesas said on May 9. Sharp, Sony and Panasonic, Japan's three biggest television makers, posted combined losses of 1.6 trillion yen last fiscal year, as TV prices declined and a stronger yen reduced overseas earnings and competitiveness.

The major shareholders of Renesas may consider taking "some kind of action" to support the chipmaker if asked, Kenichiro Yamanishi, president of Tokyo-based Mitsubishi Electric, said on May 21.

Renesas was formed in 2010 after the merger of money-losing chipmakers Renesas Technology, a venture between Hitachi and Mitsubishi Electric, and NEC Electronics.

Losses

Elpida Memory, which shares the same origin as Renesas, filed for bankruptcy in February after posting losses for five straight quarters because of falling prices of the main memory used in personal computers.

The Tokyo-based company was formed in 1999 after merging Hitachi and NEC's dynamic random-access memory business.

Mitsubishi Electric later separated its DRAM unit and combined it with Elpida.

Renesas makes microcontrollers, semiconductors used in products ranging from automobiles to consumer electronics for specific tasks such as triggering air bags in cars and controlling DVD players. The company supplies customers including Apple, Sony and Nintendo.