Yoshida in Japan: Fujitsu-Panasonic SoC JV deal makes no sense

TOKYO--The merger of two ailing semiconductor businesses at Fujitsu and Panasonic, reported but not confirmed last week, will be a nonstarter. It will neither save Japan’s semiconductor industry nor improve Japan’s standing in system-on-chips (SoCs), which outside of Japan is virtually nil.

"Negative one plus negative one makes negative three," Takashi Yunogami, a director of Fine Processing Institute, dryly said in an interview with EE Times here Monday (Feb. 4). Yunogami was critical of Japanese bureaucrats and corporate executives who have been busy in recent years structuring mergers among struggling Japanese companies and calling it “synergy.”

Yunogami, formerly an engineering expert in dry etching at Hitachi, is now author of books on the Japanese semiconductor industry and a lecturer at several universities.

There is mounting evidence to support Yunogami’s argument.

Back in 2000, Japan had five separate chip companies--excluding captives. They were: Toshiba, Hitachi, NEC, Fujitsu and Mitsubishi. Hitachi spun off its semiconductor division, which became Renesas Electronics through subsequent mergers--first with Mitsubishi and then with NEC Electronics. Fujitsu also spun out its chip operation--now Fujitsu Semiconductor. Toshiba is the only company that neither separated its semiconductor business as an independent company nor forged a merger with another Japanese chip company. Twelve years later, Renesas’ revenue is continuing a spectacular downward spiral and Fujitsu’s chip business is beginning to slip. Only  Toshiba remains on a growth track.

In any culture, mergers are never easy. But it’s clear that the prolonged process of merging chip operations at Hitachi, Mitsubishi and NEC sucked the life out of Renesas. No "synergy" is evident.

So, if you muttered "Not again," when you heard about the latest speculation about a Fujitsu-Panasonic deal, you are not alone.

This time around, though, the intriguing feature about the report was the absence of Renesas from the current round of rumor. The originally envisioned joint venture was supposed to be a three-way merger among SoC businesses at Fujitsu, Panasonic and Renesas.

As late as last June, Fujitsu President Masami Yamamoto was quoted in the Japanese media saying that Fujitsu still wants a system chip merger with Renesas and Panasonic. Yamamoto said in his interview with the Asahi newspaper that such a merger would only be considered if Renesas carries out an aggressive turnaround plan.

The absence of Renesas in the latest speculation implies two things: 1) Renesas is still far from actually completing its turnaround plan, with no additional bandwidth left to save its already feeble SoC business; 2) Renesas Mobile, Renesas’s mobile SoC subsidiary, sees no advantage in merging with either Fujitsu or Panasonic.



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