TOKYO: Renesas Electronics' shares jumped 14 percent Monday after a report that Japan's state-backed turnaround fund and leading domestic firms will invest about $2.55 billion in the troubled chipmaker.
The stock was at 301 yen in early afternoon trade in Tokyo after the weekend report by Japan's leading Nikkei business daily.
The Nikkei said the government-backed Innovation Network Corp. of Japan (INCJ) will buy about two-thirds of Renesas for 150 billion yen ($1.9 billion) in a deal likely to be agreed next month.
About 10 leading Japanese companies -- including Toyota, Nissan, Honda, Panasonic, Canon and Nikon -- are expected to pitch in another 50 billion yen combined, the report said without citing sources.
The INCJ and other players would supply Renesas with funding before the end of the year, paving the way for the firm to start afresh as a specialist in microcontrollers, the Nikkei said.
The participating firms want to ensure stable supplies of high-quality microcontrollers used in cars and electronics products by rescuing Renesas, it said.
"It's critical for the industries that depend on Renesas that the company somehow stays in Japanese hands, as a sale to an overseas entity could very well end up in it being broken up and sold off," a Japanese asset manager told Dow Jones Newswires.
"Keeping the firm intact would be an obvious plus for both Renesas and its customers."
Japan's microchip sector has struggled with a strong yen and fierce competition, especially from South Korean and Taiwanese rivals.
Renesas is among several Japanese manufacturers who were severely hit by last year's quake-tsunami disaster, which battered the country's economy.
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