Hitachi calls time on chip production

Japanese electronics giant Hitachi has decided to stop in-house production of processors by 2014 as part of efforts to boost its competitiveness on the world stage.

The Tokyo-headquartered conglomerate, which produces everything from nuclear and wind power plants to dump trucks and fridges, said the Micro Device Division of its Information & Telecommunication Systems business would make its last chip on 31 March 2014.

After that date the division will restrict its chip-based activities to the “development, design and quality assurance” of processors for Hitachi Group products, with staff and other resources redistributed throughout the group, the firm said in a statement.

Hitachi explained that its decision had been informed by a changing semiconductor industry which has “seen an increasingly horizontal division of labour in terms of development, design and manufacturing in recent years”.

The firm added that it has already outsourced production of other products in order to cut manufacturing costs and improve efficiencies.

Hitachi first began its involvement with semiconductors back in 1975 when it opened a Device Development Centre, now part of the Micro Devices Division, but its decision on Friday can be seen in the context of a country whose best chip-making days appear to be behind it.

Firms such as Toshiba, Renesas and Fujitsu were hit hard by a global slowdown in the second quarter, and analysts have warned that the slide will continue if they don’t upgrade factories to meet the growing demand for sub-28nm production.

Toshiba last year signalled the closure of half of its plants in Japan while Renesas is restructuring after a ¥200bn (£1.6bn) bailout in October.

There was no news on where Hitachi will outsource its chip production. ®