Government Technology Featured Article
December 10, 2012
Renesas Secures Funds from a Government Led Bailout
By Tabitha Naylor, Contributing Writer
Earlier today, hit by slumping orders and competition from rivals like Samsung (News - Alert) Electronics Co Ltd, Renesas Electronics Corp, Japanese chipmaker, secured a 150 billion yen ($1.8 billion) lifeline from a government-led bailout. In exchange for a two-thirds stake in the world's biggest maker of microcontroller chips for cars, Renesas, the taxpayer-funded Innovation Network Corp of Japan (INCJ), will provide 138.4 billion yen.
Approximately 12 billion yen will be provided by eight key manufacturing clients including Toyota Motor Corp, Nissan Motor Co, Canon Inc. and Panasonic Corp. Sources familiar with the talks have told Reuters (News - Alert) that, to counter an earlier bid by U.S. private equity firm KKR & Co LP, the bailout was put together amid worries that the firm's technology could fall into foreign hands.
Earlier this year, seeing that fellow chipmaker, Elpida Memory Inc. was driven into bankruptcy, and thus to avoid the fate, Renesas, said that it would spend 60 billion yen on research and development and capital spending related to its core microcontroller business. The company said it was also requesting another 50 billion yen in support from the government fund.
Kimikazu Noumi, CEO for INCJ, told a joint news conference that if provided, Renesas would use extra funds to expand abroad through mergers and acquisitions.
"The fact that clients are putting up money is positive since it means Renesas will be able to gain some business from them. But domestic firms' influence over the company could prevent the firm from expanding abroad," said Akira Minamikawa, vice president and principal analyst at IHS (News - Alert) iSuppli in Tokyo.
Yasushi Akao, president for Renesas, denied the fact that clients-turned-shareholders would exert influence over the company's products. He added that since the government fund holds a two-thirds stake, it will not be a problem as this means that it will take leadership on this matter.
Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO Miami 2013, Jan 29- Feb. 1 in Miami, Florida. Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.
Edited by Brooke Neuman
LATEST GOVERNMENT TECHNOLOGY NEWS
FXCM SHAREHOLDER ALERT: Shareholder Rights Law Firm Johnson & Weaver, LLP Announces Investigation of FXCM Inc.