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Rumored Fujitsu, Renesas, and Panasonic LSI merger comes at a challenging time in Japanese tech

Chipmakers Fujitsu, Reneas, and Panasonic are in talks to merge their LSI chip design and development into one company, reports the Nikkei Shimbun.

merger shutterstock 1000
merger shutterstock 1000

What’s an electronics company supposed to do when its home country gets hit by a catastrophic natural disaster, unfriendly exchange rates, high wages, and increased competition from abroad? Renesas, Fujitsu, and Panasonic are thinking about merging their LSI chip businesses, reports the Nikkei Shimbun — the latest in a long list of mergers, joint ventures, sell-offs, and outsourcing that Japanese firms hope to return them to profitability. The newspaper states, unsourced, that the companies are aiming for a basic agreement by the end of March, and are negotiating to form the new company by the end of 2012. As part of the plan, the companies would divest of some of their manufacturing capacity, transferring control of Renesas's Tsuruoka and Fujitsu's Mie production facilities to a recently-established subsidiary of Global Foundries — an American chipmaker. Regarding the rumored venture, Fujitsu put out a press release today that stopped short of a denial, stating, "Fujitsu is exploring possibilities for improving its semiconductor business from many different angles."

In November, Sony, Toshiba, and Hitachi each bought a 10 percent stake in Japan Display — with the Japanese government kicking in the other 70 — in a hope that economies of scale could help them against nimbler competitors in China and South Korea. Next came news that Sony and Hitachi were planning to outsource their battery and TV production, respectively, and on top of everything, Sony, Panasonic, and Sharp all posted huge losses last week, totaling nearly 1.3 trillion yen (approximately $17 billion).

While Japanese companies have been struggling to prop up their struggling TV businesses, they've also had a hard time cashing in on the mobile craze, often deciding to make mobile phones that aren't so well suited to compete in overseas markets. Hopefully, if Kaz Hirai's recent speech on Sony's plans for the future are any indication of the current mindset here, the smart Japanese firms will be able to turn it around in 2012.