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Fujitsu and Panasonic about to walk down LSI aisle

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Fujitsu Semiconductor and Panasonic are ready to jointly launch a new chip company this autumn as part of the duo’s plans to merge their LSI businesses, according to reports.

The new venture will have ¥50 billion (£294m) in funding, with Fujitsu chipping in ¥20bn, Panasonic ¥10bn and the Development Bank of Japan stumping up the rest, “two sources familiar with the matter” told Reuters on Tuesday.

The news comes just over six weeks after Fujitsu announced it was dissolving a joint venture with NEC and NTT to build chips for smartphones.

Fujitsu established Access Network Technology Limited in August 2012, taking a majority 52.8 per cent stake in the business. However, just 18 months later it claimed “fierce competition” had forced it to close the company.

Panasonic will doubtless hope this upcoming venture with Fujitsu doesn’t suffer the same fate.

On paper it has a better chance of success, given that this is not a case of launching into a new technology segment, but the product of a decision taken last year to consolidate the design and development functions of the two firms’ LSI businesses.

At the time they had the following by way of explanation:

In recent years … as market conditions have rapidly deteriorated and overseas semiconductor manufacturers have risen in prominence, the system LSI businesses of Fujitsu Semiconductor and Panasonic have been facing a severe business environment.

In light of this situation, Fujitsu and Panasonic have both come to acknowledge that bringing together their respective advanced technologies and customer bases is vital to build a competitive business globally. Focusing on system LSI marketing, design and development under a fabless model, Fujitsu and Panasonic aim to achieve future growth in system LSI businesses.

Japan's once proud chip giants have suffered a pretty dreadful slump in fortunes over recent years, ultimately leading to Elipda's acquisition by Micron and a $1.8bn government-led bailout of Renesas. ®

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