July 27, 2012 / 5:18 AM / 5 years ago

UPDATE 1-Fujitsu in talks with TSMC to sell chip plant-sources

* Fujitsu plant produces image-processing and supercomputer chips

* Fujitsu says nothing has been decided (Adds details)

TOKYO, July 27 (Reuters) - Japan’s Fujitsu Ltd is in talks to sell its main semiconductor plant to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC), sources close to the matter told Reuters on Friday.

Faced with sky-high costs of upgrading infrastructure, a persistently strong yen and stiff competition from the likes of Samsung Electronics Co Ltd, Japanese chipmakers are scrambling to outsource production.

Fujitsu’s plant in Mie prefecture, western Japan, makes image-processing chips for cameras and number-crunching chips for super computers.

The company plans to sell the plant as part of its overall strategy to separate manufacturing from design, in a bid to puruse a so-called “fab-less” model where it no longer owns the production facilities, or “fabs”, the sources said.

Fujitsu said the news, which was earlier reported by the Nikkei business daily, had not been announced by the company. It said nothing had been decided on the matter.

TSMC spokeswoman Elizabeth Sun declined to comment.

Earlier this year, several sources familiar with the matter told Reuters that Renesas Electronics, Fujitsu and Panasonic Corp were in talks to merge their chip operations and outsource production to TSMC rival GlobalFoundries.

Renesas, the world’s No. 1 maker of microcontroller chips used in cars, is also currently in talks to sell its system LSI plant in northern Japan to TSMC, the Nikkei newspaper said. Both Fujitsu and Renesas aim to complete negotiations by year-end, the daily reported.

Renesas said in May it will outsource the production of its top-end chips to TSMC.

Shares in Fujitsu were trading up 1.5 percent, compared with a 1.2 percent rise on Tokyo’s benchmark Nikkei.

Renesas shares were up 3.1 percent. (Reporting by Maki Shiraki. Additional reporting by Clare Jim in TAIPEI, Neha Alawadhi in BANGALORE. Writing by Mari Saito; Editing by Richard Pullin)

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