By Jennifer Tan and Kiyoshi Takenaka
HONG KONG (Reuters) - Japanese electronics makers may muscle aside smaller rivals by pooling resources for a huge new chip plant, but analysts say the heightened competition could also put profits out of reach for years.
Faced with too many players spreading resources too widely, a consortium of Japanese firms wants to wrestle back to the center stage of the global chip market, which Japan ruled in the late 1980s when NEC Corp. (6701.T: Quote, Profile, Research, Stock Buzz), Toshiba Corp. (6502.T: Quote, Profile, Research, Stock Buzz) and Hitachi Ltd. (6501.T: Quote, Profile, Research, Stock Buzz) were the world's top three players.
Last year, none of those firms were in the top ranks.
Hitachi, Toshiba and Renesas Technology -- a venture between Hitachi and Mitsubishi Electric Corp. (6503.T: Quote, Profile, Research, Stock Buzz) -- said in January they would study the feasibility of setting up a contract microchip-making business, taking aim at a market dominated by Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC)
(2330.TW: Quote, Profile, Research, Stock Buzz).
The project could cost $867 million and begin operations in 2007, according to some reports.
"The Japanese getting into the foundry business is incrementally negative for TSMC, which should see a little bit more price competition," said Goldman Sachs analyst Donald Lu.
"The impact will not be disastrous. We don't expect any actual loss of market share for TSMC, but it could be a real pain in the neck." Continued...
© Thomson Reuters 2008. All rights reserved.
| Paper | Aug 20 - 21, 2008 | Manufacturing |
| Japan Investment | Jul 01 - 2, 2008 | Country Summits |
| Global Real Estate | Jun 23 - 25, 2008 | Real Estate |
| Consumer and Retail | Jun 16 - 18, 2008 | Consumer Retail |
| Investment Outlook | Jun 09 - 12, 2008 | Financial Services / Exchanges |
