When a 9.0-magnitude quake knocked out one of the Renesas Electronics Corporation's chip-making factories in northeastern Japan last year, Toyota Motor and other manufacturers dispatched hundreds of workers to help get the plant running again.
On Monday, some of Japan's largest manufacturers pitched in again, contributing to a government-led bailout worth 150 billion yen ($1.8 billion) for the struggling chip maker. The effort underscores the importance of the company's advanced microcontroller chips to Japanese industry and the reluctance to give the technology to foreign firms.
In a statement, Renesas said the government fund, the Innovation Network Corporation of Japan, would provide most of the aid. Eight Japanese manufacturers â€" including Canon, Nikon, Nissan, Panasonic and Toyota â€" will contribute roughly 12 billion yen. The capital injection will help Renesas increase spending on the advanced microcontrollers used in cars and electronic devices, the company said. To prop up its finances, Renesas had requested an additional 50 billion yen from the government.
While Renesas, which based in Kawasaki, staged a swift comeback from the quake and tsunami that struck Japan last year, it has been less successful in dealing with competition from rivals like Samsung Electronics of South Korea.
Elpida Memory, a Japanese manufacturer of dynamic random access memory chips, filed for bankruptcy protection in February. Elpida is now being acquired by the American chip maker Micron Technology, based in Boise, Idaho.
In August, reports that the American private equity firm K.K.R. had offered to invest as much as 100 billion yen in Renesas sent the company's shares soaring. But it also raised concerns about foreign control of a company that supplies many of Japan's leading manufacturers.
Japan's reliance on Renesas stems, in part, from the company's legacy. In 2003, Hitachi and Mitsubishi Electric merged their s emiconductor businesses to form Renesas Technology. Then in April 2010, Renesas merged with NEC Electronics, the former semiconductor division of NEC, to create the current company.
As a result, manufacturers, which once employed different preferred chip suppliers, ended up buying products from the newly merged Renesas. Along with automotive microcontrollers, Renesas also supplies specially tailored chips for electronics companies like Canon and Ricoh.
With Japan's major manufacturers facing tough competition and a slowing global economy, Renesas has struggled to turn a profit. For the 12 months through March, Renesas expects to report a net loss of 150 billion yen, after losing 62.6 billion yen in the period a year earlier.
In the bailout plan announced on Monday, Renesas said it would sell 1.25 billion new shares priced at 120 yen to the fund and the Japanese manufacturers, giving them a 69 percent stake in the chip maker. That price represents a deep dis count from the company's closing price of 308 yen on Monday in Tokyo.
The aid package comes on top of 161 billion yen in syndicated loans Renesas secured from four Japanese banks in September, and a separate 97 billion yen it previously received from banks and its major shareholders. In return for that previous support, Renesas has promised to sell or close 8 of its 18 plants in Japan within three years, and to eliminate more than 7,000 jobs.
Shares in Renesas rose 3 percent in Tokyo before the announcement on Monday. The company has lost 35 percent of its market value this year.
