NEC, Renesas Merger Creates No. 3 Chip Firm

TOKYO -- Renesas Technology and NEC Electronics said Wednesday they will complete a merger by April after their Japanese parent companies agreed to inject 200 billion yen ($2.2 billion) into what would become the world's No. 3 chipmaker.

After the deal is completed, NEC Corp., the parent of NEC Electronics, will have 33.4% stake in the new entity -- Renesas Electronics Corp. Existing Renesas Technology shareholders Hitachi (HIT Quote) and Mitsubishi Electric will own 30.7% and 25.1% respectively, the companies said in a statement.

The merger will be between near-equals with each NEC Electronics share worth 1.189 share in Renesas Technology.

Japanese chipmakers have been battered by the global slowdown, intensifying competition and plunging prices. They have been cutting jobs and production.

Through the merger, the companies hope to grow more competitive in large-scale system integrated circuits, which are used in digital appliances, as well as other new business.