Fujitsu to spin off chip unit

TOKYO: Japanese electronics giant Fujitsu plans to spin off its semiconductor business into a separate company as part of efforts to reduce costs, news reports said on Sunday. It is expected to announce the plan as early as Monday, the Asahi Shimbun and public broadcaster NHK said, quoting unnamed sources.

Under the plan, Fujitsu will separate the semiconductor division in a few months and form a new company by consolidating its chip production bases in Japan, Asahi and NHK said.

Fujitsu’s chip business accounts for 10% of its entire sales, but has long suffered losses due to growing costs of research and development as well as equipment investment, NHK said.

With the planned spin-off, Fujitsu hopes to separate losses from its balance sheet and make the division take more flexible measures such as a merger with its rivals to survive tough competition in the industry, it said.

For the six months to September last year, Fujitsu posted a net loss of 9.34 billion yen ($87 million), reversing a profit of 14.85 billion yen in the same period in 2006, mainly due to declines of hard disc drive and semiconductor chip prices.

Fujitsu had tried to make semiconductors a core business and has bought a Japanese chip plant operated by US-based Spansion for $150 million.