TOKYO, October 3, 2002 - Hitachi, Ltd. (TSE:6501) and Mitsubishi Electric Corporation (TSE:6503) have reached a basic agreement to establish a new semiconductor company, Renesas Technology Corp., that will focus on system LSI operations. The new company will be established on April 1, 2003 and will aim to be a reliable semiconductor manufacturer, working as an intelligent chip solution provider supporting system partners on a global basis as part of their drive to create a prosperous society in this "ubiquitous" era. This agreement is a result of discussions to integrate system LSI businesses which was agreed to on March 18, 2002.
Hitachi and Mitsubishi Electric will take advantage of the special provisions for corporate reorganization under the Japanese Commercial Code to jointly establish a new company and will move both companies' semiconductor operations to the new company, including microcomputer, logic, analog and discrete devices and memory (flash memory, SRAM etc.) with the exception of DRAMs. The new company will be established following Hitachi’s and Mitsubishi Electric’s completion of the legal procedures for corporate split. The plans are to appoint Dr. Koichi Nagasawa (currently Executive Vice President, Member of the Board Group President, Semiconductor, Mitsubishi Electric) as Chairman & CEO, and Satoru Ito (currently Senior Corporate Officer, President & Chief Executive Officer of Semiconductor & Integrated Circuits, Hitachi) as President & COO.
Upon establishment of the new company, the sales/service divisions and companies in Japan will be integrated. This will create a single, end to end operation of development, design and manufacturing to sales and service, allowing system solutions to be provided based on the customer’s point of view.
Regarding those employees who will be transferred to the new company, the terms and conditions of their existing employment contracts will be honored in accordance with the applicable legal requirements.
Over the past few years, the semiconductor business environment has been characterized by new-product release cycles that are increasingly shorter, as can be clearly seen in the personal computer and mobile telephone markets. There is a strong need to reduce the time required to move the semiconductors used in those products from development to production. Under these circumstances Hitachi and Mitsubishi Electric decided that their semiconductor operations should operate autonomously as a new company to further accelerate decision-making on such issues as funding, capital investment and so forth. Because the system LSI market expansion is forecasted to continue, by fusing the world-leading technical prowess that both Hitachi and Mitsubishi Electric have, the business can be strongly promoted to make the new company the world's top System LSI supplier.
In practical terms, what this will mean is:
1) For microcontrollers, which are the core of system LSIs, securing a steady business base with microcomputers as the new company's flagship business.
2) Enhancing operations in analog, flash memory and discrete devices, where the companies have technological advantages and building this up into a pillar of the new company's profits.
3) In System on Chip (SoC) operations, where both Hitachi and Mitsubishi Electric are strong in the leverage applied technologies, hybrid products using combinations of microcomputer, logic and analog technologies will be designated as a growth area and the company will aim for growth in this field as a new business. In particular, it will aim for the leading position in the mobile, network, automotive, and digital home electronics application fields. Overall, Renesas Technology Corp. plans to achieve sales of over 900 billion yen in FY 2003, its first year.
A stable and firm financial position will be achieved through integration by expanding sales, reducing costs by combining development facilities, sharing manufacturing equipment and purchasing materials in bulk
The brand name to be used for marketing the new company's products is RENESAS*. Unified branding will be applied progressively to products.
About Hitachi
Hitachi, Ltd., headquartered in Tokyo, Japan, is a leading global electronics company, with approximately 320,000 employees worldwide. Fiscal 2001 (ended March 31, 2002) consolidated sales totaled 7,994 billion yen ($60.1 billion). The company offers a wide range of systems, products and services in market sectors, including information systems, electronic devices, power and industrial systems, consumer products, materials and financial services. For more information on Hitachi, please visit the company's Web site at http://global.hitachi.com.
About Mitsubishi Electric
With over 80 years of experience in providing reliable, high-quality products to both corporate clients and general consumers all over the world, Mitsubishi Electric Corporation (FTSE: 6503q.l) is a recognized world leader in the manufacture, marketing and sales of electrical and electronic equipment used in information processing and communications, space development and satellite communications, consumer electronics, industrial technology, energy, transportation and building equipment. The company has operations in 35 countries and recorded consolidated group sales of 3,649 billion yen (US$27.4 billion) in the year ended March 31, 2002. For more information about Mitsubishi Electric, visit Global.MitsubishiElectric.com
* The new unified brand, RENESAS is derived from Renaissance Semiconductor for Advanced Solutions.
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