Mitsubishi, Hitachi to form chip joint venture

Mitsubishi Electric Corp. and Hitachi Ltd. have agreed to strengthen their semiconductor businesses by forming a joint venture that will focus on system LSI (large-scale integration) operations, the two companies announced Thursday.

The agreement finalizes a decision made in March to integrate the companies' system LSI businesses.

The new company, Renesas Technology Corp., expected to be established on April 1, 2003, will be owned 55 percent by Hitachi and 45 percent by Mitsubishi Electric. Both will move most of their semiconductor operations, including microcomputers, logic, analog and discrete devices and Flash and SRAM (static RAM) memory to the new company.

By focusing on the mobile, network automotive and digital home electronics application fields, the new company plans to achieve ¥900 billion yen (US$7.3 billion) in its first fiscal year.

Mitsubishi Electric's Executive Vice President Koichi Nagasawa is to be appointed chairman and chief executive officer (CEO), and Hitachi's Senior Corporate Officer Satoru Ito will be president and chief operating officer of Renesas, the companies said.

"Nowadays, it is too risky for a single company to invest in development and infrastructure (in the semiconductor industry)," said Etsuhiko Shoyama, president and CEO of Hitachi at a news conference. "We definitely want to make this joint venture the world's top-class chip company."

Although Mitsubishi Electric and Hitachi hope Renesas will operate as an independent company from its parent companies, Mitsubishi sees it as important for the company to work closely with Renesas, Tamotsu Nomakuchi, president and CEO of Mitsubishi Electric said. Hitachi, meanwhile, hopes to make use of Renesas' research and development center, Shoyama said.

Mitsubishi Electric, which had been seeking ways to scale down its DRAM (dynamic RAM) businesses, also announced plans Thursday to transfer its standard DRAM business to Elpida Memory Inc., a joint venture of Hitachi and NEC Corp.

Elpida plans to gain the right to acquire all of Mitsubishi Electric's standard DRAM products by the end of March 2003, and, ultimately, Mitsubishi plans to withdraw from all of its standard DRAM business, including production, said Katsuhiro Tukamoto, Mitsubishi Electric's memory division manager. The company's technological tie-up with Taiwanese foundry Powerchip Semiconductor Corp. will be taken over by Elpida, the three companies said.

With this agreement, Elpida will become the only DRAM supplier in Japan, said Kenji Tokuyama, president and CEO of Elpida.