Struggling chipmaker Renesas Electronics Corp., seeking to accelerate restructuring efforts, plans to slash another 5,400 domestic employees, or around 20 percent of its workforce, by the end of March 2016 through early retirements, according to company sources.
The labor union, however, opposes the plan. The move by the labor side could make it difficult for the company to carry out the personnel cuts.
Renesas aims to achieve an operating margin of 10 percent in fiscal 2016. It cut about 3,000 employees last fall after the third round of calls for early retirement, but it has been forced to consider additional restructuring measures as it fell short of its goal.
The semiconductor maker has been rebuilding its management after seeing its business deteriorate due to the strong yen in the past and intensifying competition from overseas rivals.
During the three calls for early retirement since its launch in 2010 through the merger of Renesas Technology Corp. and NEC Corp.’s semiconductor unit, more than 11,000 workers left the company.
After announcing the closure of some production bases, Renesas received ¥150 billion in investment from the government-backed Innovation Network Corporation of Japan and eight Japanese companies, including Toyota Motor Corp., last September.
Renesas intends to further slash its fixed costs to improve profits as its profit plan does not see sales increasing, the sources said.
As for the envisioned personnel cut, the company plans to introduce a new program to encourage employees to transfer to other companies in addition to soliciting early retirements, the sources said.
PCs tumble in Asia
Sales of personal computers fell 10 percent in the Asia-Pacific region last year due to sluggish economic growth and tough competition from mobile devices, an industry analyst said.
International Data Corp. said Tuesday that sales of PCs fell to 108 million units outside Japan, marking the region’s first annual double-digit decline.
“The economic sluggishness in big emerging markets in the region adversely affected buying sentiment,” IDC said. “On the consumer side, smartphone and tablet distractions spread throughout the region this year, further contributing to the sharp decline in the PC market.”
IDC analyst Handoko Andi added that “2014 is expected to remain another challenging year for the PC market as competition will only grow among the devices.”