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Report claims NEC and Renesas to merge

NEC Electronics Corp and Renesas Technology Corp are reportedly in final negotiations to merge their operations and form Japan's biggest semiconductor maker by sales.

The Nikkei business newspaper reported yesterday the companies aim to reach an agreement this month and are likely to complete the merger in 2010. It didn't cite any sources.

Both companies are facing heavy losses in the current economic downturn and have decided it would be difficult to survive on their own, the paper said. The merger would create the world's third-largest chip maker, behind United States firm Intel Corp and South Korea's Samsung Electronics.

The companies both issued press releases that they had made no such announcement, and had not decided on a merger.

A merger would allow the two companies to phase out older, less productive chip lines and get better economies of scale.

In trade yesterday, NEC Electronics was up 12 percent to 930 yen (US$9.43), while the benchmark Nikkei 225 stock average nudged up less than a percent. Renesas is jointly owned by Hitachi and Mitsubishi Electric.



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