LONDON — As they prepare to merge, Renesas Technology Corp. and NEC Electronics Corp. are clearing the decks of their semiconductor manufacturing facilities in order to provide a optimum base for growth. If they merge as planned next April to form Renesas Electronics, the resulting semiconductor business will have sales of around $12 billion, making it the third largest chip company behind Intel and Samsung.

At the end of the last financial year the pair had 15 IC manufacturing sites and 25 lines between them and by April 1 this will be cut to 10 sites with 16 lines.

Renesas is ahead of the game, reducing its lines from 12 to 8, already having sold threes 8-inch lines on three different sites. It sold Renesas Semiconductor Europe (Landshut) GmbH (RSEL) and its 8-inch line to enable Silicon Foundry Holding (SFH) to establish LFoundry, and earlier disposed of its Kumamoto site (8-inch line) to Japan's Mitsubishi Electric (Tokyo) and HNS in Singapore with its 8-inch line. It is completing the reduction by integrating a 5-inch line in Kofu into a 6-inch line at the same site.

NEC is playing catch-up by cutting five of its 13 lines. Having already closed an 8-inch line at its Yamagata facility and a 300mm prototype line at Sagamihara. Two more 6-inch lines are for the chopping block at Roseville, Calif. and Kyushu Yamaguichi (Japan) and its Sougang (Beijing, China) 6-inch line is being sold.

"Both companies are IDMs and have a lot of factories, so that as one company there would be far too many," said Matthew Trowbridge, chairman of Renesas Technology Europe.

"Because of various changes through the end of last year, both companies were already engaged in a process of rationalization of production lines. It is something that happens anyway as technology moves from 5 to 6 to 8-inch and on to 12-inch wafers and from 130 to 90 to 65nm and so on. It has just been accelerated by recent events."

"People are saying there is going to be a shortage of manufacturing capacity in 2010 so we are quite comfortable with the capacity we will have moving in to 2010. None of the changes have been done by obsoleting products, they have been done by transferring products to other fabs or by wafer purchase agreements for transferred factories."

Increased component sales and orders keep the surviving manufacturing sites busy. For the first half of the 2009 financial year, 56 percent of the combined companies sales were in Japan and according to Trowbridge the target is for 60 percent sales to come from outside Japan. "Our objective is overall sales growth as well as the change in percentage," said Trowbridge. "The measure will depend on how many design wins we gain but we will expect a significant amount to come from China."

To promote the growth the company is targeting expansion of microcontroller sales in Europe, US and Asia. This might be a tall order as the combined company will have a 31 percent share of the MCU market according to Gartner research issued in April. But says Trowbridge the combined breadth of the microcontroller product lines should provide sales opportunities for analog and discrete products. While the MCU market is $14 billion, the $35 billion analog/discrete market does look like providing an exciting opportunity for growth.

This story appeared in the November 2009 print edition of EE Times EuropeEuropean residents who wish to receive regular copies of EE Times Europe, subscribe here.

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