According to Fujitsu’s press
statement, both companies will consolidate the design and development functions of their large-scale integration (LSI) chip business, which produce processors used in consumer electronics like televisions and digital cameras, and will establish a joint venture company for that business. Discussions are also being held with the Development Bank of Japan on funding the deal.
The move comes as both companies are facing steep losses. In announcing its move Tokyo-based Fujitsu also disclosed it was likely to record a $1 billion loss for the fiscal year ending March 31. Osaka-based Panasonic had earlier warned of a likely $9.6 billion loss in that period; it has laid off 38,000 employees since last April.
“In recent years, however, as market conditions have rapidly deteriorated and overseas semiconductor manufacturers have risen in prominence, the system LSI businesses of Fujitsu semiconductor and Panasonic have been facing a severe business environment,” Fujitsu said in its statement.
Other Japanese semiconductor companies had also been hit hard. Elpida Memory Inc., Japan’s only manufacturer of dynamic random access memory, declared bankruptcy just last year with $5 billion worth of debt. Renesas Electronics Corp., a chip unit joint venture company between Hitachi Ltd., Mitsubishi Electric Corp. and NEC Corp., was saved by a $2.2 billion bailout from the Japanese government.
Fujitsu is being represented by Morrison & Foerster Tokyo partner Kenneth Siegel as well as Saori Nakamura, a partner with Morrison & Foerster’s Japanese associated firm, Ito & Mitomi. Fujitsu has been a longtime client of Morrison & Foerster. In 2009, Siegel advised Fujitsu on its $400 million sale of its hard disk drive business to rival Toshiba Corp.
Panasonic is being represented by Tokyo firm Nishimura & Asahi.
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