NEC, Renesas consider merger
Combined company would be third largest semiconductor company in the world
By Jim Carbone -- Purchasing, 4/17/2009 2:32:00 PM
NEC Electronics Corp. and Renesas Technology Corp. are planning to merge to form Japan’s largest semiconductor company, according to a Japanese newspaper report.
The Nikkei newspaper says the companies were looking to finalize the merger in 2010, although both companies would not comment. A person familiar with the situation told Dow Jones Newswires Thursday that Renesas and NEC Electronics, a unit of NEC Corp. plan the merger to expand their scale amid tough chip market conditions.
If the merger is completed, the two companies would form the third largest semiconductor company in the world behind Intel and Samsung. With combined sales of $12.8 billion the two companies would move ahead of Toshiba which had 2008 sales of $11 billion.
“If they (NEC Electronics and Renesas) are merged, that would give them benefits,” said Haruo Sato, an analyst at Tokai Tokyo Research Center Co. in a Dow Jones Newswires report. "For one, the merger would give them a bigger market share of microcontrollers—about 30%. It would also reduce their capital spending and they could expand their customer base."
Both companies have suffered financially in the downturn. Renesas’ sales in 2008 were $7 billion, down $12.3% from 2007 when its sales were $8 billion, according to researcher iSuppli. NEC managed modest 1.5% sales growth in 2008 as its sales increased to $5.8 billion.
Also see: Gartner: Semiconductor sales fell 5% in 2008
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