Japan's Renesas eyes $550 mn savings, cutting 5,000 jobs

Struggling Japanese chipmaker Renesas Electronics said Tuesday it is looking to save 43 billion yen ($550 million) annually, mostly by slashing at least 5,000 jobs.

The company said in a statement it will offer an early retirement programme to its domestic workers, saying "we expect 5,000 and some hundreds more people to apply."

It also said it will reorganise domestic production facilities to concentrate on its mainstay businesses. It will reduce output and hand over plants to other companies.

The announcement came after Renesas lost 62.6 billion yen in the year to March as Japan's microchip sector struggles with a strong yen and fierce competition, especially from South Korean and Taiwanese rivals.

Japanese manufacturers were also hit by last year's quake-tsunami disaster.

Renesas will focus on overseas markets and microcontroller chips used for next-generation energy-efficient vehicles and various electronic appliances as part of a major overhaul of its business portfolio, it said.

The early retirement programme, to be offered between September 18 and September 26, will ask workers to retire on October 31 with usual retirement allowances and additional payments.

"With this measure, we expect an annual cost-reduction effect of 43 billion yen from next fiscal year," it said.

The company's president said last week he had won agreement for financial help from top shareholders, the technology giants NEC, Hitachi and Mitsubishi Electric, along with creditor banks.

"The three top shareholders have expressed their basic agreement to our request for necessary capital. We are still discussing details and conditions," Yasushi Akao told a shareholders meeting in Kawasaki City, near Tokyo.

His comments confirmed reports that Renesas's biggest investors, which own about 90 percent of its shares, would help the firm that was created by the merger of their own chip divisions over the past decade.

In May, Renesas said it would boost the outsourcing of its chip production to Taiwan Semiconductor Manufacturing Co., including a bigger share of its output of microcontrollers.

On Tuesday, Renesas shares surged 9.77 percent to close at 348 yen before the announcement of its restructuring plan.