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Global Economy Forces Merger Between Japanese Chipmakers

April 28, 2009

In the shadow of the global economic downturn, NEC Electronics and Renesas Technology announced plans for a merger to create Japan’s largest semiconductor maker, the AFP reported.

The proposed merger will integrate the operations of both companies by April 2010 and both plan to sign a merger agreement in July.

This would make the new company the world’s number three chipmaker behind Intel Corp. of the United States and Samsung Electronics Co. of South Korea.

The companies released a joint statement announcing that the decision came “in light of fierce global competition” in the semiconductor market.

The global economic downturn has slowed consumer demand for computer chips used in electronic equipment, cars and other products.

Both companies hope to improve finances and operations before the merger takes place, so that the new company would start out with some security in the volatile chip market.

The statement said: “Upon completion of these structural reforms, the two companies will integrate their operations to achieve synergies and boost profitability.”

Renesas is a joint venture between Hitachi Ltd. and Mitsubishi Electric Corp. and is the second-biggest Japanese chipmaker after Toshiba.

NEC Electronics is a subsidiary of leading high-tech company NEC Corp. and is currently the third-rated chipmaker in Japan.

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