January 17, 2013

TOKYO, Japan, January 17, 2013 — Renesas Electronics Corporation (“Renesas Electronics” or “the Company”, TSE: 6723), a premier supplier of advanced semiconductor solutions, announced in “Renesas Electronics Announces Share Issue through Third-Party Allotment, and Change in Major Shareholders, Largest Shareholder who is a Major Shareholder, Parent Company and Other Related Companies,” released on December 10, 2012, the Company's intention to pursue “further rationalization initiatives, including further optimization of the personnel structure.” The Company presented a proposal and explanation to the labor union today regarding this direction of actions, and consultations have begun. A description of these initiatives is provided below.

Based on the direction of actions announced on July 3, 2012, in “Renesas Electronics Announces the Direction of Various Measures to Establish Robust and Profitable Structure,” the Company has proceeded according to plan with efforts to secure support and capital from major shareholders and main banks, personnel rationalization measures centered around an early retirement incentive program, the restructuring of production facilities in Japan, and other initiatives. In addition, the Company is implementing measures aimed at assuring future growth, as announced on December 10, 2012, in “Renesas Electronics Announces Share Issue through Third-Party Allotment, and Change in Major Shareholders, Largest Shareholder who is a Major Shareholder, Parent Company and Other Related Companies.”

As announced on December 10, 2012, in “Renesas Electronics Revises Full-Year Forecasts,” due to factors such as prolonged debt worries in Europe, further market slowdown in China and other emerging economies as well as the effect on demand from the increased uncertainty in Japan-China relations, the Company has lowered its financial forecasts, and the sales are on a downward trend.

Against this background, the Company intends to implement further rationalization initiatives with the aim of strengthening the revenue base by improving the cost structure; speeding up decision-making; achieving increased adequacy and efficiency in our business operations; and further boosting competitiveness through measures including restructuring of the design, development, production, and sales systems (collectively referred to below as “the goals of the initiatives”). A proposal and explanation regarding the above was presented today to the labor union, and consultations have begun.

1. Content of Proposal and Explanation to the Labor Union:

1-1. Outline of Proposal and Explanation:

Implementing various measures including the optimization of the personnel structure while slimming down and improving the efficiency of the organization, as well as restructuring of Renesas Electronics subsidiaries (collectively referred to below as “the restructuring measures”) in order to achieve the goals of the initiatives, the Company today presented to the labor union a proposal for implementation of an early retirement incentive program intended for employees of the Company and its consolidated subsidiaries in Japan. Consultations between the Company and the labor union have begun and the explanation regarding the restructuring measures has been given at the same time.

1-2. Outline of Proposal Regarding Implementation of Early Retirement Incentive Program:

An outline related to the implementation of the early retirement incentive program is presented below. Once a final decision is reached on the program's implementation details through consultations with the labor union, a new announcement of the final conditions will be released.

(1) Eligible persons:
Main career track employees age 40 or over of the Company and its consolidated subsidiaries in Japan
(2) Planned retirement date:
September 30, 2013
(3) Benefits:
The special incentive will be added to their normal retirement payment. In addition, outplacement support will be provided through outside agencies for those who request it.

Note that details of the early retirement incentive program, such as the maximum number of applicants who will be accepted, have not yet been decided, but in total around three thousand several hundred applicants are anticipated.

1-3. Content of Explanation of the Restructuring Measures:

(1) Outline of Measures to Optimize the Personnel Structure while Slimming Down and Improving the Efficiency of the Organization:

 

The Company's employees not directly involved in production, including managers, comprised a large proportion of the personnel structure even after implementation of the early retirement incentive program that took effect on October 31, 2012. In order for the Company to implement, unfailingly and in parallel, both cost structure improvements and a growth strategy moving forward, we aim to improve the efficiency of employees, an issue that has been under study for some time, and to speed up decision-making.

(2) Restructuring of Renesas Electronics Subsidiaries:

The Company will review the positioning of its subsidiaries within the Renesas Group in order to realize the goals of the initiatives. The direction of actions regarding restructuring measures was explained to the labor union today as described below.

A. Restructuring of Sales Organization, Including Merger of Sales Company in Japan:

Since the merger of April 2010, the Company has endeavored to make more efficient and to strengthen the sales organization for the Japanese market through measures aimed at shrinking the direct sales business, strengthening and restructuring of sales channels involving dealerships, consolidation and elimination of branches of a sales company in Japan, and reassigning Renesas Group sales personnel to our dealerships. In addition to the above, the Company will merge its sales company in Japan, Renesas Electronics Sales Co., Ltd., with Renesas Electronics in order to speed up decision-making and improve response capabilities to customers.

A-1. Schedule of the Merger:

Planned merger date: October 1, 2013

Note that details, such as the method of the merger of the Company and its sales company in Japan as part of the above-mentioned restructuring of the sales organization, are undecided at this point in time.

B. Restructuring of Design and Application Technology Companies and Design Support Companies:

As announced on December 10, 2012, in “Renesas Electronics Announces Share Issue through Third-Party Allotment, and Change in Major Shareholders, Largest Shareholder who is a Major Shareholder, Parent Company and Other Related Companies,” the Company aims, in addition to the business of supplying customers with kit solutions leveraging the Company's core competence MCUs, and incorporating Analog and Power semiconductors or SoCs, to provide platforms consisting of common software, including IP and OS, that is optimized respectively for each application, thereby contributing to shorter development time, increased cost competitiveness, and higher productivity for customers.

To realize the direction of actions toward the growth described above, as measures to further strengthen the development organization and improve the efficiency, the Company will review the positions and roles of its wholly owned subsidiaries, Renesas Solutions Corp. (“RSO”), Renesas Micro Systems Co., Ltd. (“RMS”), and Renesas Design Corp. (“RDC”) in the design and development of Renesas products and their integration into solutions, and restructuring will be carried out in line with the strategic direction of the Company's business (referred to collectively below as “restructuring of design and application technology companies”). In addition, as measures to further strengthen design support and quality assurance and to improve the efficiency, the Company will restructure the design support, quality assurance, and IT-related operations of its wholly owned subsidiaries, Renesas Takasaki Engineering Service Co., Ltd. (“Takasaki ES”), Renesas Musashi Engineering Services, Co., Ltd. (“Musashi ES”), and Renesas Kitaitami Engineering Services Co., Ltd. (“Kitaitami ES”), and the design support functions of the Company's Tamagawa site (referred to collectively below as “restructuring of design support companies”).

B-1. Restructuring of Design and Application Technology Companies and Restructuring of Design Support Companies:

(1) Outline of Restructuring of Design and Application Technology Companies:

  • The software development and tool development functions of RMS have been consolidated at RSO (implementation complete).
  • The hardware (circuit) design functions of RMS and RDC will be integrated into a newly established design company.

(2) Outline of Restructuring of Design Support Companies:

  • Musashi ES and Kitaitami ES will be merged into a newly established design support company.
  • The design support functions of the Company's Tamagawa site and Takasaki ES will be consolidated into a newly established design support company.

B-2. Schedule of the Mergers

(1) Restructuring of Design and Application Technology Companies:

Planned restructuring date: October 1, 2013

(2) Restructuring of Design Support Companies (Merger of Musashi ES and Kitaitami ES, and consolidation of design support functions of the Company's Tamagawa site and Takasaki ES):

Planned restructuring date: October 1, 2013

Note that details, such as the method of the mergers accompanying the above-mentioned restructuring of design and application companies as well as design support companies, are undecided at this point in time.

C. Merger of Production Companies:

Since the merger of April 2010, the Company has undertaken measures to reform the production structure, with restructuring of production facilities as the key component. In addition, the Company has proceeded according to the direction of actions announced on July 3, 2012, in “Renesas Electronics Announces the Direction of Various Measures to Establish Robust and Profitable Structure,” implementing wide-ranging restructuring of its production facilities in Japan as part of further measures to reform the production structure.

The above-mentioned measures to reform the production structure included in 2012 the closing of the Tokyo facility and the transfer to Murata Manufacturing Co., Ltd., of the Nagano facility of the Company's wholly owned production company, Renesas Eastern Japan Semiconductor, Inc. (“Eastern Japan Semiconductor”); the transfer to Aoi Electronics Co., Ltd., of Renesas High Components, Inc., a wholly owned subsidiary of Eastern Japan Semiconductor; and also in 2012 the transfer to Fuji Electric Co., Ltd., of the Tsugaru Factory and consideration of the transfer of the Hakodate Factory of the Company's wholly owned production company, Renesas Northern Japan Semiconductor, Inc. (“Northern Japan Semiconductor”). These measures were expected to result in a significant contraction in the business scale of both companies moving forward, so a drastic reassessment of the position of the two companies within the production structure of the Renesas Group was necessary. Under this circumstance, the Company will merge the two companies in order to boost organizational and personnel efficiency.

C-1. Outline of Restructuring, Including Merger of Production Companies:

Eastern Japan Semiconductor and Northern Japan Semiconductor will be merged.

C-2. Schedule of the Merger:

Planned merger date: October 1, 2013

Note that details, such as the method of the merger accompanying the above-mentioned restructuring of production companies, are undecided at this point in time.

2. Outlook Moving Forward:

It is uncertain at this time what impacts with the implementation of the proposals of the early retirement incentive program referenced in section 1-2 above and the explanations of the restructuring measures referenced in section 1-3 will have on the Company's consolidated financial performance in the current fiscal year and after, but an announcement will be made as soon as they are determined.

Reference

Renesas Electronics Sales Co., Ltd.

Location:
2-6-2, Ote-machi, Chiyoda-ku, Tokyo, Japan
Representative:
Yoshihiko Miura, President
Main business:
Sale of electronic components such as semiconductor devices and integrated circuits; sale of electronic equipment and communications equipment; software development, design, manufacture, sale, maintenance, and consulting related to the preceding
Amount of capital:
¥2.5 billion
Established:
April 1, 2003
Shareholder:
Renesas Electronics Corporation: 100%

Renesas Solutions Corp.

Location:
2-6-2, Ote-machi, Chiyoda-ku, Tokyo, Japan
Representative:
Shinji Suda, President
Main business:
Semiconductor application technology business; development, design and production of software development tools; semiconductor technology training and web information services
Amount of capital:
¥300 million
Established:
April 2, 2001
Shareholder:
Renesas Electronics Corporation: 100%

Renesas Micro Systems Co., Ltd.

Location:
3-1, Kinko-cho, Kanagawa-ku, Yokohama, Kanagawa Pref., Japan
Representative:
Hiroshi Iguchi, President
Main business:
MCU development and design; SoC development and design; core development and design of analog, IP, and memory devices; ASIC development and design; base technology development and design; design and development of MCU and SoC development tools; etc.
Amount of capital:
¥400 million
Established:
May 23, 1980
Shareholder:
Renesas Electronics Corporation: 100%

Renesas Design Corp.

Location:
4-1-3, Mizuhara, Itami, Hyogo Pref., Japan
Representative:
Hideharu Takebe, President
Main business:
Semiconductor design and development
Amount of capital:
¥400 million
Established:
December 1, 1982
Shareholder:
Renesas Electronics Corporation: 100%

Renesas Musashi Engineering Services, Co., Ltd.

Location:
5-20-1, Josuihon-cho, Kodaira, Tokyo, Japan
Representative:
Toshiyuki Abutsuka, President
Main business:
Testing and analysis of semiconductor devices and electronic components; development and operation of information systems; etc.
Amount of capital:
¥50 million
Established:
April 1, 1990
Shareholder:
Renesas Electronics Corporation: 100%

Renesas Kitaitami Engineering Services Co., Ltd.

Location:
3-5-8, Higashi Tada, Kawanishi, Hyogo Pref., Japan
Representative:
Hideaki Arima, President
Main business:
Testing and analysis of semiconductor devices and electronic components; manufacture and sale of equipment and component for testing and analysis; etc.
Amount of capital:
¥50 million
Established:
April 2, 2007
Shareholder:
Renesas Electronics Corporation: 100%

Renesas Takasaki Engineering Services Co., Ltd.

Location:
111, Nishiyokote-machi, Takasaki, Gunma Pref., Japan
Representative:
Eiji Minamimura, President
Main business:
Design support business; quality assurance business; semiconductor manufacturing-related business; IT solution business; etc.
Amount of capital:
¥50 million
Established:
July 2, 1999
Shareholder:
Renesas Electronics Corporation: 100%

Renesas Northern Japan Semiconductor, Inc.

Location:
145-1, Nakajima, Nanae-cho, Kameda-gun, Hokkaido Pref., Japan
Representative:
Kosuke Tanaka, President
Main business:
Semiconductor back-end production and contact manufacturing service
Amount of capital:
¥2.55 billion
Established:
October 1, 2002
Shareholder:
Renesas Electronics Corporation: 100%

Renesas Eastern Japan Semiconductor, Inc.

Location:
2-14-1, Kyobashi, Chuo-ku, Tokyo, Japan
Representative:
Hideyuki Todokoro, President
Main business:
Semiconductor development, design, production, and sales
Amount of capital:
¥400 million
Established:
October 1, 2002
Shareholder:
Renesas Electronics Corporation: 100%

About Renesas Electronics Corporation

Renesas Electronics Corporation (TSE: 6723) delivers trusted embedded design innovation with complete semiconductor solutions that enable billions of connected, intelligent devices to enhance the way people work and live. A global leader in microcontrollers, analog, power and SoC products, Renesas provides comprehensive solutions for a broad range of automotive, industrial, infrastructure, and IoT applications that help shape a limitless future. Learn more at renesas.com. Follow us on LinkedIn, Facebook, Twitter, and YouTube.


The content in the press release, including, but not limited to, product prices and specifications, is based on the information as of the date indicated on the document, but may be subject to change without prior notice.

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