Japan's second largest semiconductor maker Renesas Technology Corp. and the third biggest firm in the sector NEC Electronics Corp. have agreed to merge next year.
Renesas, owned jointly by Hitachi Ltd. (55 percent stake) and Mitsubishi Electric Corp. (45 percent stake), and NEC Electronics, in which NEC Corp. holds a 65 percent stake, have reached a basic agreement to merge into a single entity as early as next April. An official announcement on the merger will be made on 27 Apr 09.
Following the agreement, the owner companies will start discussions on realignment plans of their production sites and each company's ratio of capital contribution to the new company, which will focus on the Large Scale Integration (LSI) circuit business.
The new firm will be the largest in the semiconductor industry in Japan, with expected annual sales of over 1.2 trillion yen, overtaking the current leader Toshiba.
The new joint venture is also expected to become the third-largest semiconductor company in the world, following U.S. chipmaker Intel Corp. and South Korea's Samsung Electronics Co.