Japan’s state-backed corporate rescue fund may join the nation’s largest manufacturers to take over Renesas Electronics Corp, countering a bid by US private-equity firm KKR & Co for the unprofitable chipmaker.
Innovation Network Corp of Japan may offer financial support to Renesas if asked, an executive of the investment fund said yesterday, declining to be identified because of company policy.
Japanese industrial powers, including Toyota Motor Corp and Panasonic Corp, will join with the fund to invest more than ￥100 billion (US$1.3 billion) for a majority stake in Renesas, the Nikkei Shimbun reported.
KKR offered about ￥100 billion to banks and the three main shareholders NEC Corp, Hitachi Ltd and Mitsubishi Electric Corp for control of Renesas, a person with knowledge of the matter said last month.
Shares of the Kawasaki, a Japan-based company, down 46 percent this year, surged by a record in Tokyo after reports of the bid surfaced.
Renesas, whose customers include Apple Inc and Nintendo Co, is trying to end losses exacerbated by falling demand for its system LSI chips, used for functions ranging from processing images for TV screens to crunching data. It plans to cut 5,000 jobs and may close or sell as many as nine of 18 domestic factories to help end losses.
NEC, Hitachi and Mitsubishi Electric in July said they would provide ￥49.5 billion yen in loans to Renesas. Banks including Mitsubishi UFJ Financial Group Inc, Mizuho Financial Group Inc and Sumitomo Mitsui Trust Holdings Inc have agreed to continue offering about ￥50 billion in lines of credit to the chipmaker, two people with knowledge of the matter said in May.
Japan’s chipmakers have struggled as South Korea’s Samsung Electronics Co extended its dominance. Idaho-based Micron Technology Inc agreed in July to buy Tokyo-based Elpida Memory Inc, after Elpida filed for bankruptcy protection.
Innovation Network has been considering ways to help revive the Japan’s chipmaking industry, the fund executive said yesterday, adding that nothing has been decided on the timing or extent of any support for Renesas.
The fund said in June it would raise ￥4 billion through a private placement of shares to eight companies, including Toyota, Canon Inc and Sony Corp.
Renesas plans to sharpen its focus on producing microcontrollers, used in automobiles and televisions. The business offers an operating profit margin of at least 10 percent, Renesas said in June.
The chipmaking company held a 27 percent share of the global microcontroller market last year, making it the world’s largest supplier of the devices.
It plans to raise the share to 35 percent in five years by targeting emerging markets, and an alliance with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) will help cut costs and widen profit margins, Renesas said in June.
Renesas forecasts that it will return to an operating profit this fiscal year, it said on Aug. 2. Operating profit, or sales minus the cost of goods sold and selling, general and administrative expenses, may total ￥21 billion, for the 12 months ending on March 31, compared with a loss of ￥56.8 billion a year earlier, the chipmaking company said.
Renesas was formed in 2010 through the merger of money-losing chipmaker Renesas Technology Corp, a joint venture between Hitachi, Mitsubishi Electric and NEC Electronics Corp.