Japan's NEC Corp will not provide a fresh capital injection to support loss-making chipmaker Renesas Electronics Corp, a senior NEC executive said in a newspaper interview. NEC's vice president Takashi Niino said his company rejected the request partly because all electronics makers were facing a difficult operating environment and NEC's shareholders would not agree to a cash infusion, Niino said in an interview with the Asahi newspaper published on Saturday.
Renesas, a product of successive mergers of the chip divisions of Mitsubishi Electric Corp, Hitachi Ltd and NEC, has been trying to raise more than 100 billion yen ($1.26 billion) in fresh capital and plans to cut at least 12,000 jobs, sources have said.
Niino said NEC cannot take on any laid-off workers from the chipmaker as the electronics maker was in the midst of its own restructuring process and plans to cut 10,000 employees from its payroll.
"If we were to take on the workers, the current situation facing the company (NEC) could worsen," Niino said. NEC, which along with its employee pension fund holds a 35 percent stake in Renesas, has struggled with steep losses in its mobile handset and IT hardware businesses. The company logged a net loss of 110.3 billion yen ($1.4 billion) for the business year that ended on March 31.
NEC has not yet made any decision on whether to provide loan guarantees instead to support Renesas, Niino said. Japanese media reported on Friday that Renesas was asking its major shareholders for loan guarantees after they balked at a plan to inject fresh capital.
Renesas, the world's leading supplier of microcontroller chips used in cars, is battling high costs and tough overseas competitors. It logged a massive net loss this year after it was forced to shut eight of its factories because of natural disasters last year in Japan and Thailand. In addition to the sweeping restructuring plan, Renesas also plans to cut employees' pay by 7.5 percent for the nine months ending March, 2013, sources familiar with the matter told Reuters on Saturday. Renesas employees would also be asked to forgo their winter bonuses this year, sources said.
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