Japan's Renesas Secures $1.8 Billion Government-Led Bailout
Japan's Renesas Electronics, the world's biggest maker of microcontroller chips, was thrown a lifeline on Monday after gaining 150 billion yen ($1.8 billion) in a government-led bailout.
Slumping orders and relentless competition from South Korean rivals like Samsung Electronics Co Ltd have battered Japanese chipmakers. Renesas is trying to avoid the fate of Elpida Memory Inc , Japan's last maker of dynamic random access memory chips, which filed for bankruptcy protection this year.
The government fund, the Innovation Network Corp Of Japan, will provide most of the aid while eight key manufacturing clients including Toyota Motor and Panasonic will provide roughly 12 billion yen. Renesas also said it was requesting another 50 billion yen in support from the government fund.
The bailout had been well flagged in media reports. Company President Yasushi Akao and Kimikazu Noumi, CEO of Innovation Network Corp of Japan will hold a news conference at 0830 GMT.
Renesas also lowered its sales forecast for the year to March to 820 billion yen from a previous outlook of 868 billion yen.
The latest bailout comes on top of 161 billion yen in syndicated loans from four Japanese banks in September, and before that a separate 97 billion yen Renesas previously received from the banks and its major shareholders.
In return for the support, Renesas, has slashed more than 7,000 jobs this year and vowed to sell or shutter eight out of its 18 Japan plants within three years.
The government-led bailout was put together to counter an earlier bid by U.S. private equity firm KKR & Co LP amid worries that the firm's technology could fall into foreign hands, media reports said.
Renesas shares ended up 3 percent ahead of the announcement on Monday, but have lost close to half their value since the start of April, the beginning of Japan's fiscal year. Tokyo's benchmark Nikkei have slipped 5 percent over the same period.