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The Rising Tide: Japan's economic upturn supporting a new heavy-weight


Of course we all know the important news out of Japan for 2Q09, the first GDP uptick in five quarters.  That's tremendous and portends serious positives for the APAC region as well as global economic recovery momentum.  But there's more to the news out of Japan: as part of the government's stimulus efforts, increases in public spending and use of public funds to bolster those private companies worst effected by the global recession have made cash available.  With an eye to increased consumer spending in Japan as well as improved export numbers, up 6.5% for 2Q09 QoQ (Credit Suisse Japan Macro Flash 17 Aug 2009), the time to invest in local companies is well aligned and is inline to support the positive trend for recovery.

At the center of upstream semiconductor news is Japan with the now-back-on-again merger of Renesas and NEC Electronic into "the world's third-largest semiconductor maker after Intel Corp [...] and Samsung Electronics Co [...]," according to Reuters recent updates.  One of the hurdles though is the amount of debt refinancing necessary and the issue of government support to the tune of roughly 200 billion yen.  This on top of Japan's recent pledge to help Elpida Memory Inc, also severely hurt by the global economic crisis. 

While MarketWatch Commentary tends to not focus on individual companies, the merger, now seen as likely to be completed in early 2010, signals important changes to the supply chain and the competitive landscape, particularly for MCU production.  As for the impact on the industry, the increase in competition is important and will be interesting to watch, particularly as chip makers were hit hard by the global crisis.  There will be an uphill period for the new merged company, likely to fall under Renesas's name, as a result of redundancies in product, design, and then the restructuring post-merger (see HERE for a pro-con summary from EETimes).

While the impact on the global supply chain is likely to be delayed until the restructuring is completed, the opportunities for Japan to restake it's claim to semiconductor manufacturing are ripe.  Along with other trends diversifying into solar PV and the help to Elpida, Japan will be a country to watch as a new, global economy awakens.

Watch for a review of the new geo-economic landscape for the semi industry in the upcoming  MarketWatch Quarterly.

Lisa Ann Cairns, Ph.D.
Written on Thursday, 27 August 2009 00:00 by Lisa Ann Cairns, Ph.D.

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