Merging on their minds
1 min read
Consolidation is no stranger to the semiconductor industry. As process technologies get smaller, the cash needed to play at the top table gets frighteningly large. One by one, leading companies realise they can't afford to play, particularly in times of economic hardship. And as buyers become even more price sensitive, margins get ever thinner.
The latest additions to the list of merged companies are NEC Electronics and Renesas, who plan to amalgamate their operations in April 2010, after both companies execute 'structural reform plans'. That is probably code for serious job losses, as well as a shrinking of product lines.
Renesas is, of course, already a merged company – the result of the bringing together of Hitachi's semiconductor business and a big chunk of Mitsubishi's operations.
Bearing in mind the amount of activity that appears to have been taking place 'behind the scenes', the 'deal' has been done for some weeks.
But who will be the winners, apart from shareholders in the two companies?
By their own admission, NEC Electronics and Renesas are the two largest mcu suppliers and their combined market share may well attract the interest of the EU, amongst others. But the 'structural reform' heading will probably include some 'slimming' of both company's product lines and this may head off those with an interest in monopolies.
But these two aren't the only Japanese companies with merging on their minds. Fujitsu – previously believed to be talking with NEC – is now said to be in talks with Toshiba.
With a few semiconductor companies in intensive care or close to it, how long it will be before the next merger is announced?
