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Crippled by the unprecedented economic crisis, ailing semiconductor and electronics makers are desperate for a helping hand to stem their losses.

That aid is now on its way as the government rolls out a new capital-boosting plan that will allow struggling companies outside the financial sector to receive de facto public funds to prop up their deteriorating financial base.

Loss-making Elpida Memory Inc. and Pioneer Corp. are already preparing to apply for the program this month, while Hitachi Ltd. and Toshiba Corp. are believed to be studying the option. Other electronics makers, including Fujitsu Ltd. and Mitsubishi Electric Corp., have also been ravaged by losses in their chip-making affiliates.

Government officials have hinted at their willingness to essentially bail out Elpida, the world’s third-largest and the country’s sole maker of dynamic random-access memory chips mainly used for personal computers, in the name of saving Japan Inc.

“Chip makers in each country are all facing extremely tough business conditions on the back of a severe global slump in the semiconductor industry,” Vice Minister of Economy, Trade and Industry Harufumi Mochizuki said recently.

“I believe that for Elpida to stand firm would hold an extremely important meaning in terms of our industrial polices,” he said.

Elpida, which anticipates a group net loss of ¥180 billion for the business year that ended March 31, has already signed a technology partnership with Taiwan Memory Co., a new company set up by the Taiwanese government to support its embattled chip makers.

But calls for aid from Japan’s government have been strong amid fears Elpida will face the same fate as other global industry giants like Spansion Inc. of the U.S. and Qimonda AG of Germany, which were swept under by a severe slump caused by an erosion of chip prices, a chronic supply glut and plummeting demand.

“We can’t let the chip-making industry disappear from Japan. We hope the government will also help us out,” a senior official at a major semiconductor firm said.

Under the program recently outlined by METI, companies like Elpida will be able to receive capital investments from the Development Bank of Japan on condition the government covers 50 percent to 80 percent of possible losses on their failure.

The plan is essentially designed for companies believed to be suffering temporary profit declines due to the global financial turmoil and covers only those entities that can map out a plan to improve their earnings within three years.

The use of public funds is also seen by major electronics giants — nostalgic for the dominant position they enjoyed in the 1980s — as a way to facilitate realignment in an industry that analysts view as overcrowded.

A move toward consolidation is not new.

Elpida was established in 1999, originally as a joint venture between Hitachi and NEC Corp., which later absorbed Mitsubishi Electric’s DRAM division. Renesas Technology Corp. was also founded through a joint venture between Hitachi and Mitsubishi Electric in 2003.

A new shakeup is under way with Renesas and NEC Electronics Corp. planning a merger by next spring to create the world’s No. 3 chip maker, trailing Intel Corp. of the U.S. and Samsung Electronics Co. of South Korea.

The two firms make microcontrollers and system large-scale integrated circuit chips commonly found in digital home appliances, mobile phones and automobiles.

“System LSIs are pivotal to the (Japanese) industry,” NEC President Kaoru Yano said at a recent news conference announcing the integration plan.

“We must have a strong company in Japan for system LSIs for the future of the nation’s industry and for Japan’s future,” Yano said.

But experts caution that the troubles plaguing the industry stem from deeper structural flaws and an overall decline in global competitiveness of Japan’s manufacturing industry.

“One reason behind weak semiconductor makers is the decrease in strong manufacturers of assembled products,” said Yoshiharu Izumi, an analyst at JPMorgan Securities Japan Co.

For the “revival” of chip makers, Izumi said electronics makers like Sony Corp. and Panasonic Corp. will also need to work harder to produce global megahit products like Apple Inc.’s iPhone.

“A further consolidation of semiconductor makers alone would not lead to recovery,” he added.

Ryutaro Kono, chief economist at BNP Paribas Securities (Japan) Ltd., said saving companies hit by slumping exports would result in Japan’s structural problems, including excess capacity and excess employment, being neglected.

“By saving companies that should be weeded out from the market, economic resources like labor, material and capital will not be efficiently utilized and will remain at firms with low profitability,” Kono said.

He said it would be misleading to eye public funds as an emergency measure to combat a temporary external shock like the global financial crisis and warned that a fall in exports is likely to be permanent.

“There is a high possibility that government involvement in industrial revitalization will have devastating results,” he said, and corporate revival should be left to market mechanisms.

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