Renesas secures $633 million support from major shareholders
TOKYO (Reuters) - Japanese chipmaker Renesas Electronics Corp on Tuesday secured a combined 49.5 billion yen ($633 million) in financial support from three major shareholders as it fights to survive against tough overseas rivals, sending its shares up 16 percent.
Renesas, the world's No. 1 maker of microcontroller chips used in cars, has been seeking support after sinking to a net loss in the fiscal year ended in March, hit by a strong yen and fierce competition from the likes of South Korea's Samsung Electronics Co Ltd.
The chipmaker, a product of successive mergers of the chip divisions of major shareholders Mitsubishi Electric Corp, Hitachi Ltd and NEC Corp, plans to reduce its workforce by 12 percent and halve the number of domestic plants as part of its restructuring drive.
Mitsubishi Electric said it would provide Renesas with 14.5 billion yen in loans, while Hitachi said separately it would supply loans worth 17.5 billion yen. The loans will be made on October 1.
NEC said it would provide 17.5 billion yen in financial support in the form of guarantees.
"We do not plan to provide any further loans to Renesas (after this)," said Mitsubishi Electric executive officer Hiroki Yoshimatsu, referring to the loans from his company.
"With a responsibility to return these loans, they (Renesas) have to steadily move forward their restructuring plan and return the company to profitability and return the loan," he said.
Of particular focus is how Renesas can revive its money-losing system LSI unit - its worst performing division - which makes system-on-chip products combining processing and other functions used in a range of digital electronics.
Sales in the system LSI division fell 35.5 percent in the last fiscal year, becoming a major drag on the company as Japanese consumer electronics makers cut production of televisions and other goods.
Shares of Renesas closed up 16.4 percent at 263 yen after rising as high as 275 yen.
Mitsubishi Electric shares gained 3.3 percent, Hitachi climbed 2 percent, compared with a 0.7 percent rise in the benchmark Nikkei average. NEC closed up 6.1 percent before its announcement. ($1 = 78.1900 Japanese yen)
(Reporting by Mari Saito; Editing by Chris Gallagher)
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