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Business

Fujitsu to wind down chip production

TOKYO -- Fujitsu has decided to withdraw from semiconductor manufacturing and will sell two fabrication facilities over the next several years to Taiwanese and U.S. companies.

     The move is the latest in a series of realignments reshaping the Japanese semiconductor industry amid competition from foreign rivals, and comes as the company seeks to redirect its focus to information technology services such as cloud computing.

     Fujitsu's chip business generated sales of 321.6 billion yen ($3.13 billion) in the year ended March 31. Some industry analysts estimate the combined value of the two factories in Mie and Fukushima prefectures at around 50 billion yen.

     Selling the manufacturing division will lower sales in the semiconductor-related business -- excluding those from the commercial division -- to around 10 billion yen, as its operations will be greatly reduced to include a limited range of activities such as developing supercomputer processing chips for use by other parts of the company.

     A basic agreement has already been reached for Fujitsu to sell the Mie plant to Taiwan's United Microelectronics, or UMC. The facility handles such operations as system chips for image processing used in home electronics.

     As a first step, the companies will establish a roughly 50 billion yen semiconductor foundry by the end of the fiscal year and transfer ownership of the plant to the joint venture. UMC's stake will initially be limited to no more than 30%. Additional investment will be sought, including from other chipmakers and foundries, with Fujitsu aiming to lower its ownership to under 50% by fiscal 2016 or so and bring the venture out from under its wing.

     A previous plan, announced early last year, to sell the Mie plant to Taiwan Semiconductor Manufacturing ended up falling through.

     Fujitsu has entered the final stages of negotiations to sell the other facility in Fukushima Prefecture that makes microcomputers for automobiles, among other devices. The buyer, ON Semiconductor of the U.S., would first take a stake in the production company that operates the plant sometime in fiscal 2014, before gaining majority ownership within several years. The final price tag is estimated at around 10 billion yen.

     The Japanese semiconductor industry has been undergoing major shifts in recent years, as domestic comprehensive chipmakers came under increasing pressure from firms that specialize in either development and design or contract manufacturing. Toshiba and Sony are effectively the only two Japanese companies actively investing in domestic production.

(Nikkei)

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