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Business

Ricoh selling chip unit to Nisshinbo in structural overhaul

Deal is part of reinvention to cope with falling sales of office machines

TOKYO -- Printer and copier manufacturer Ricoh is planning to sell a semiconductor subsidiary to Nisshinbo Holdings for a price estimated slightly above 10 billion yen ($88.7 million) in an effort to shed a noncore operation and shift resources to growth fields.

Ricoh has picked Nisshinbo as the prospective buyer of Ricoh Electronic Devices, choosing the electronics and automobile brakes producer over a team led by the Development Bank of Japan. Ricoh and Nisshinbo will enter into preferential negotiations to hammer out specifics such as the treatment of the unit's nearly 600 workers.

In 2014, Ricoh split off its semiconductor-related business as Ricoh Electronic Devices. The wholly owned unit boasts expertise in power chips used for such purposes as protecting smartphone batteries.

With offices going paperless, Ricoh is increasingly struggling in its flagship office equipment business. To rebuild its operations, the company has been consolidating production bases, overhauling its sales and maintenance service structures as well as unloading segments deemed unlikely to generate synergies with the mainstay business. These efforts are expected to save more than 100 billion yen over the next three years through March 2020.

Seeking to diversify, Ricoh will also formulate a growth strategy that includes such fields as commercial printing and health care. But the Tokyo-based company is not the only player in the industry turning to the hot medical market: Canon has acquired the diagnostic imaging concern Toshiba Medical Systems for 665.5 billion yen, and Fujifilm Holdings has purchased reagent maker Wako Pure Chemical Industries for 155 billion yen. Ricoh must find a way to compete with these better-financed rivals.

For its part, Nisshinbo aims to leverage the deal to beef up its business for the "internet of things" market. Nisshinbo's group members include semiconductor concern New Japan Radio and communication device producer Japan Radio. But the weak maritime market has depressed demand for communication products for vessels, while business with the public sector, which buys weather radars and disaster prevention systems, has been soft.

Ricoh Electronic Devices' battery control chips and communication device systems from Japan Radio and New Japan Radio are essential to internet of things-based data transmissions. Nisshinbo will combine these technologies to enhance the performance of devices installed in automobiles and industrial machinery. Automated driving and robot development are potential areas of expansion as well.

(Nikkei)

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