By Hiroyuki Kachi
TOKYO--Japan's Renesas Electronics Corp. said Thursday it has decided to discontinue the wireless modem operations it bought from Nokia Corp. /zigman2/quotes/207421390/composite NOK +4.13% , a move that underlines the tough business conditions the chipmaker is facing.
Renesas, the world's biggest supplier of automotive microcontroller chips, said it will terminate the operations by the end of December and then liquidate the business in Finland, India and China.
The decision is another indication of how a severe business environment is prompting the company to concentrate its resources on its main business operations.
The extent of Japan's semiconductor problems was made apparent last year when Elpida Memory Inc. filed for bankruptcy protection. Renesas--created by the merger of the chip units of Hitachi Ltd. (6501.TO), Mitsubishi Electric Corp. (6503.TO) and NEC Corp. (6701.TO) -- was saved last year by a Y200 billion bailout from the Japanese government.
The company in 2010 obtained from Nokia workers at its wireless modem operations, as well as wireless technology used in mobile phone handsets worldwide, through a deal valued around $200 million.
Renesas said it is currently in talks with workers about layoff terms among other things. As of the end of March, the business had 1,100 workers in Finland, 300 in India and 30 in China.
The company said it is currently mapping out the impact on its earnings from the latest decision.
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