Chip makers Renesas Technology Corp. and NEC Electronics Corp. said Tuesday they are aiming to make a net profit in the second year of their planned merger by cutting costs and boosting overseas sales.
The companies have signed an agreement to finalize the merger ratio, under which one Renesas common share will be exchanged for 20.5 NEC Electronics shares.
The new company, to be named Renesas Electronics Corp., will be the world's third-largest semiconductor maker, trailing Intel Corp. of the U.S. and Samsung Electronics Co. of South Korea.
NEC Electronics, a unit of NEC Corp., will absorb Renesas, owned 55 percent by Hitachi Ltd. and 45 percent by Mitsubishi Electric Corp., after raising about ¥206 billion by issuing shares to their parent firms.
When they merge in April, the two companies hope to boost their combined overseas sales share from 44 percent as of the end of fiscal 2008 to 60 percent by tapping into demand in China and other emerging markets and expanding sales of chips for environmentally friendly products, they said.
The deal has been approved by antitrust authorities in the U.S., Europe and Brazil, but it is still being reviewed in Japan, China and South Korea, NEC Electronics President Junshi Yamaguchi said.
Speaking about the outlook for next year's semiconductor market, Yamaguchi said, "A strong recovery is unlikely, but the economy will gradually pick up and push up (sales) of chips."