Record low shares for Japanese chipmaker Renesas

Published:  29 May at 4 PM

Amid reports that it will cut jobs to increase profits, Japanese chipmaker Renesas is seeing its shares drop to a record low. Newspaper reports and analysts say that Renesas will attempt to raise 100 billion yen (£828 millio; $1.3 billion), sell off some units and cut over 10,000 jobs.

Renesas produces chips used in automobiles and is facing more and more competition from competitors as well as lowered global demand. Its shares dropped as much as 13 percent in Tokyo to 238 yen.

Speculation over Renesas has been circulating for some weeks, while its stakes have declined by over one-third in value during the past month.

The firm is generally expected to reveal a restructuring plan to its biggest shareholders, NEC, Mitsubishi Electric and Hitachi, later this week. Bloomberg News reported that the firm has already handed in the plan to labour unions and lenders.

Renesas is not the sole worldwide chipmaker to be experiencing difficulties. Last February, Elpida Memory in Japan filed for bankruptcy, while the firm's shares were taken off the Tokyo Stock Exchange.

However, many experts have played down the dangers of Renesas's issues escalating to a similar level. Hideyuki Ishiguro from Okasan Securities says if it is able to go through with its restructuring and raise funds, then it will repeat Elpida’s troubles.