Renesas Electronics Corporation (TSE: 6723, “Renesas”), a premier supplier of advanced semiconductor solutions, today announced that Renesas and J-Devices Corporation (“J-Devices”) have signed a definitive agreement (DA) to transfer part of the manufacturing facility at Renesas Semiconductor Singapore Pte. Ltd. (“Renesas Semiconductor Singapore”), a wholly-owned subsidiary of Renesas Electronics, to J-Devices Semiconductor Corporation (“J-Devices Semiconductor”), a wholly-owned subsidiary of J-Devices, as agreed by Renesas and J-Devices (the “Transfer”). In accordance with the Transfer, the companies have also signed an agreement to outsource manufacturing of part of the Renesas products that are currently manufactured at Renesas Semiconductor Singapore to J-Devices Semiconductor as agreed by both companies (the “Contract Production”).
1. Background of the Transfer and Contract Production
To bolster its business foundation, Renesas is moving forward with the realignment of the manufacturing sites of the Renesas Group with the aim of boosting production efficiency, realizing a more flexible production system, and maintaining and strengthening the technological advantage. As part of these efforts, in line with a strategy of increasing the share of back-end manufacturing outsourcing while taking into consideration distribution of manufacturing capacity according to added value, in 2013, Renesas transferred three of its back-end manufacturing facilities in Japan to J-Devices, a strategic partner in the company’s back-end manufacturing operations, while proceeding with restructuring measures that include a shifting to contract production of some products. Now, from the viewpoint of the future expansion of the manufacturing business in Singapore and efficient utilization of overseas manufacturing sites, a decision has been made to transfer equipment owned by Renesas Semiconductor Singapore to J-Devices Semiconductor and to shift manufacturing of the Renesas products currently produced at Renesas Semiconductor Singapore to J-Devices Semiconductor, which has an established track record in automotive products, and to other Renesas back-end manufacturing subsidiaries.
By proceeding with the realignment of its manufacturing sites in Japan and overseas, Renesas intends to boost the production efficiency of these operations to the upper limit and to maintain a high rate of production, while at the same time utilizing outsourcing to optimize production overall and achieve high efficiency, thereby improving cost competitiveness and realizing a production system capable of generating profits.
2. Timeline of the Transfer and the Contract Production
2-1. Timeline of the Transfer
: The Transfer is expected to be completed in the fiscal year ending March 31, 2016 (planned)
2-2. Timeline of the Contract Production
: The Contract Production is expected to begin in the second half of the fiscal year ending March 31, 2016 (planned)
3. Future Outlook
In accordance with the Transfer, Renesas has begun negotiations with the local labor union based on its policy to terminate production operation of Renesas Semiconductor Singapore in the second half of the fiscal year ending March 31, 2016. Renesas intends to disclose more details concerning Renesas Semiconductor Singapore when confirmed information is available.
Following the Transfer, Renesas plans to shift manufacturing of the Renesas products that are currently produced at Renesas Semiconductor Singapore, to the Kumamoto Factory of J-Devices Semiconductor Corporation, Renesas Semiconductor KL Sdn. Bhd., one of Renesas’ overseas back-end manufacturing subsidiary, and the Oita Factory of Renesas Semiconductor Kyushu Yamaguchi Co., Ltd., retaining the equivalent quality and performance.
No major impact is anticipated on Renesas’ consolidated financial results for the fiscal year ending March 31, 2014 as a result of the Transfer.
About Renesas Electronics Corporation
Renesas Electronics Corporation (TSE: 6723), the world’s number one supplier of microcontrollers, is a premier supplier of advanced semiconductor solutions including microcontrollers, SoC solutions and a broad range of analog and power devices. Business operations began as Renesas Electronics in April 2010 through the integration of NEC Electronics Corporation (TSE:6723) and Renesas Technology Corp., with operations spanning research, development, design and manufacturing for a wide range of applications. Headquartered in Japan, Renesas Electronics has subsidiaries in 20 countries worldwide. More information can be found at www.renesas.com.