Renesas plans to close major chip plant in Japan

TOKYO: Japan's Renesas Electronics Corp plans to close a system LSI chip plant in northern Japan that makes chips for Nintendo Co Ltd's Wii game consoles and other consumer electronics, after failing to find a buyer for the facility, sources familiar with the matter said on Saturday.

The state-of-the-art Tsuruoka plant's 1,000 employees will be offered reassignments or voluntary redundancy, the sources said, as Renesas restructures to focus on making microcontrollers for automotive electronics, where it holds the top global market share. The sources had no estimate for the cost of the shutdown, expected to take place over the next two to three years.

A Renesas spokesman declined to comment.

Several of Japan's chip makers, like the game console and consumer electronics makers they supply, have struggled as consumers start using their smartphones and tablets to play games and take photographs, instead of dedicated devices.

Some, however, have benefited from the smartphone boom, including NAND memory chip maker Toshiba Corp and image sensor chip maker Sony Corp, although Sony's consumer electronics operations are struggling.

Renesas had been in talks to sell the Tsuruoka plant to Taiwan Semiconductor Manufacturing Co, although the sources said the two companies could not reach an agreement. The sources gave no reason for the failed talks, although Japan's system LSI manufacturers have struggled to compete with Taiwan's chip foundries, which produce chips for design firms such as Qualcomm Inc and have invested aggressively in new technologies.

Renesas is due to receive a 150 billion yen ($1.53 billion) investment by end-September led by the state-run Innovation Network Corporation of Japan.

It has declined to join a planned merger of the system LSI operations of Panasonic Corp and Fujitsu Ltd to form a Japanese national champion in the sector. System LSI chips are used in TVs, digital cameras and other consumer electronics.

Renesas makes automotive microcontrollers at its Naka semiconductor plant north of Tokyo.