Skip to main content
CNN.com /BUSINESS
CNN TV
EDITIONS




Hitachi, Mitsubishi linking on chips

3g phone
Japan's Big Five have been losing ground to Korean competitors, and are focusing on consumer electronics and 3G phones  


By Alex Frew McMillan
CNN Hong Kong

TOKYO, Japan -- Japanese chip giants Hitachi Ltd. and Mitsubishi Electric Corp. plan to combine the majority of their chip operations, the two comapnies announced Monday, adding they are in talks to merge their large-scale integrated circuit businesses.

Those operations account for 56 percent of Hitachi's total chip sales and 60 percent of the total chip sales for Mitsubishi, the companies state.

The two companies are both members of Japan's embattled "Big Five" chip companies.

The others are Toshiba, Fujitsu and NEC.

With the global downturn in the chip market the "Big Five" have together forecast a combined loss of $11.5 billion for this business year, which ends March 31.

Joint venture within a year

Mitsubishi Electric and Hitachi hope to set up a joint venture in around a year, the joint statement said, integrating their large-scale integrated circuit business.

"Upon the establishment of the new company, both companies will quickly decide on a common brand," they said.

Both Hitachi, Japan's No. 3 chipmaker, and Mitsubishi already sell chips to consumer-electronics giant Matsushita Electric.

Hitachi, which forecasts total chip sales of 510 billion yen ($3.9 billion) this year, has also set up a joint venture with NEC to make chips for computers.

Mitsubishi, which forecasts chip sales of 440 billion yen ($3.4 billion), said last week it has entered an alliance with Toshiba to collaborate on developing a technology platform for third-generation or 3G cell phones.

The company begins a restructuring program as of April 1.

On a broad scale, Japanese chipmakers have been shifting out of unprofitable business lines like Dynamic Random Access Memory chips, where they face heavy pressure from Korean competition.

They have been concentrating on developing chips for consumer electronics, where both Matsushita -- with counts National, Panasonic and JVC among its brands -- and Sony Corp. are the world's largest two players.

Hitachi stock down ahead of news

The Hitachi-Mitsubishi tie-up follows the announcement of several other mergers and alliances as Japan winds toward the end of its business year.

Bank analysts have faulted some as "questionable," claiming they are aimed at appeasing lenders that are seeing their bad-loan portfolios rise.

Hitachi stock ended Monday down 2.04 percent at 911 yen, with Mitsubishi up 0.95 percent at 529 yen. But they announced their tie-up after the market closed.

The tech-driven Nikkei index fell 1.28 percent to end Monday at 11,498.38.

Market watchers said investors were cautious ahead of meetings from the Japanese and United States central banks this week.



 
 
 
 



RELATED SITES:

 Search   

Back to the top