Renesas to sell US$1.8b in shares to Japan fund, companies

Renesas Electronics, the ailing Japanese chipmaker, will sell at least 150 billion yen (US$1.8 billion) of new shares to a government-backed fund and customers as part of a bailout plan.

A group led by Innovation Network of Japan will buy 1.25 billion shares for 120 yen apiece, Renesas said on Monday. That compares with Monday’s closing price of 308 yen in Tokyo trading. INCJ will own about 69 per cent of Renesas after the sale, according to the statement. Mitsubishi Electric, Hitachi and NEC  currently own a combined 91 per cent of Renesas.

The capital will help Renesas, a supplier to Apple and Nintendo, boost spending to develop more advanced microcontrollers used in cars and TVs. Japanese chipmakers have struggled amid falling demand, the strong yen and competition from Samsung Electronics, causing Elpida Memory to file for bankruptcy protection in February before agreeing in July to be acquired by Micron Technology.

Renesas may get an additional 50 billion yen of investment or financing from INCJ if more funds are needed, according to the statement. The chipmaker may eliminate as many as 5,000 positions and shut more factories under INCJ’s proposal, a person familiar with the plan said last week.

A group of companies including Toyota Motor, Nissan Motor, Denso, Keihin, Panasonic, Nikon, Yaskawa Electric and Canon will also invest in Renesas, according to Monday’s statement. Toyota will hold 2.5 per cent of Renesas, it said.
Renesas is cutting jobs and considering closing or selling plants as demand drops for its system LSI chips, used for functions including processing TV images.

The chipmaker plans to increase its focus on the microcontroller business, which accounted for 43 per cent of Renesas’s sales last fiscal year.