Gentlemen, we are now in a state of necessity, and necessity knows no law - Reich Chancellor Bethmann-Hollweg
CHIP DESIGNER Renesas said it will report a ¥85bn (around £673m) loss as a result of a large number of employees enrolling in a voluntary early retirement plan.
Renesas had announced it would be offering employees the chance to take early retirement as the firm desperately tries to cut expenses in order to stay afloat. Apparently Renesas was caught off guard by the sheer number of employees that wanted out, leaving the firm to not only forecast a ¥85bn loss but to take out a ¥161.1bn (£1.25bn) syndicate loan.
According to Renesas it was only expecting a few hundred to sign up for the retirement scheme but more than 5,000 put their names forward. The firm was quick to say that this mass exodus should have little affect on its business operations, pointing out that while early retirement packages might cost the firm ¥85bn, it will save ¥54bn (£427m) every year in payroll costs.
To finance Renesas' restructuring, the firm took out a ¥161.1bn (£1.25bn) syndicate loan from four Japanese banks claiming that the money is needed to "stabilize the financial base required to accelerate Renesas' structural reform and further development of solutions to enable the Smart Society".
Like other Japanese chip vendors, the company has suffered losses as Chinese chip fabs undercut firms such as Renesas and Elpida. With the firm losing over 5,000 employees in the coming year and facing a considerable loan to service, the pressure on Renesys is unlikely to lift any time soon. µ
Sign up for INQbot – a weekly roundup of the best from the INQ