UPDATE 1-Japan's Renesas looks at outsourcing chips to TSMC

(Adds company comment, background)

TOKYO, Oct 23 (Reuters) - Japan's Renesas Technology Corp said on Thursday it is considering outsourcing part of its chip production to Taiwan Semiconductor Manufacturing Co (2330.TW) to cut costs and concentrate on designing cutting-edge chips.

But Renesas, a joint venture between Hitachi Ltd (6501.T) and Mitsubishi Electric Corp (6503.T), has no plans yet to begin concrete talks with TSMC, the world's largest contract chip manufacturer, Renesas spokesman Hirotaka Ohno said.

Chipmakers are tightening their belts and looking for ways to cut costs amid fears that a weakening consumer appetite for electronics will hurt demand for chips.

The global slowdown comes just as Renesas and other chip makers are racing to invest in equipment to mass-produce next-generation chips which would make gadgets smaller and more powerful without draining the battery.

Renesas aims to start mass production of next-generation chips use in mobile phones around 2011.

Japanese chipmakers have prided themselves on their manufacturing capabilities, but the deal with TSMC could save Renesas several tens of billions of yen in development costs and hundreds of billions of yen to set up new production lines.

Renesas said early this year it will outsource manufacture of chips that run LCDs to TSMC rival Powerchip Semiconductor Corp (5346.TWO). Domestic peer NEC Electronics (6723.T) plans to use computer memory maker Elpida Memory Inc's (6665.T) unused production lines to make chips. (Reporting by Nathan Layne and Mayumi Negishi; Editing by Michael Watson)