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Panasonic/Fujitsu merger pegged as a cost-cutting move

Posted: 30 Apr 2014     Print Version  Bookmark and Share

Keywords:Panasonic  Fujitsu  merger  manufacturing 

According to an analyst, a merger intended to build an innovative semiconductor company from castoff parts of two old, tired manufacturers may turn out to be more of an exercise in cost-cutting than an effort to create a dynamic competitor. Tom Starnes, a processor industry analyst at Objective Analysis, said neither the forthcoming merger nor the possibility of having a new player in the chip business is the most interesting thing about the announcement that Fujitsu and Panasonic would split off portions of their chip-design businesses and unite them in an independent third company.

The most interesting thing, he said, is that the two companies announced the same merger with the same goal more than a year ago. They appear to have made almost no progress on it. They don't expect to make any real progress on the actual merging until the fall, and no one has found a reason to complain about the slow pace of the change.

"Fujitsu and Panasonic have both been on the radar for a long, long, long, long time," Starnes said. "They've both done some good things in the past, but we haven't really seen anything new in the way of microprocessors out of them for... forever. When you put them together, there could be some cost cutting, but it's hard to see any synergy there."

Panasonic and Fujitsu announced that, with funding from the Development Bank of Japan Inc., they would form a third company made from the assets of Fujitsu's chip-making subsidiary Fujitsu Semiconductor Ltd and Panasonic's system-LSI business. The new company will have about 3,000 employees (80 per cent of them from Fujitsu) and products and IP that generate about $1.46 billion of annual revenue.

It will not get any facilities to make the chips it will create. Instead, it will outsource manufacturing and focus on product planning, marketing, development and growth in global markets, the companies said.

The new company will focus on producing semiconductor products for growing markets, including cloud computing, medical devices, the Internet of Things and big-data analytics. Starnes said every other technology company has announced the same thing during the past two years.

"They have almost nothing to say about products, and that's what you want to hear, something that lets you know how their product will help each other out or something new they bring to the table that neither one had on its own," Starnes said. "I don't hear any of that here."

Panasonic has a strong history in consumer electronics, and Fujitsu played a pivotal role in the development of the first SPARC chips that drove Sun Microsystems to prominence and helped create the distributed computing business on the strength of RISC-based processors. It now builds supercomputers, and it has made some progress in developing Ferroelectric Random Access Memory products.

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