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Renesas to transfer semiconductor manufacturing plant to Sony


Renesas Yamagata Semiconductor, a wholly-owned subsidiary of Renesas Electronics, is to transfer its Tsuruoka Factory (12-inch front-end wafer fabrication line of the semiconductor manufacturing facility and related equipment) to Sony Semiconductor Corporation (SCK), a wholly-owned subsidiary of Sony.

Background of the Asset Transfer

As announced on August 2nd, 2013, Renesas Electronics has been promoting the realignment of Renesas Group's manufacturing sites in Japan in an effort to strengthen its financial base. As part of this process, the firm is working to maintain and strengthen its high-quality technology in the areas where its strengths lie, such as Flash MCUs (microcontrollers) and low-power operation technologies, while concentrating and consolidating its front-end facilities based on production efficiency and cost-to-performance ratio.

As announced on April 12th, 2012, Sony is positioning the imaging business as one of its core electronics businesses. As part of this strategy, Sony has been exploring opportunities to increase its production capacity for image sensors, a key component used in mobile products such as smartphones and tablets, for which increasing demand is anticipated.

Based on the background above, Renesas Electronics and Sony signed the asset transfer agreement, under which a semiconductor manufacturing facility and related equipment are expected to be transferred to SCK on March 31st, 2014. This asset transfer is subject to the receipt of necessary regulatory approvals.

After the asset transfer, the system LSIs and others produced at the Tsuruoka Factory will be produced there for Renesas Electronics by SCK on a contract basis for a certain period of time as agreed by Renesas Electronics and Sony. After expiration of that period, Renesas Electronics will shift the production of the system LSIs to its Naka Factory or discontinue production, as Renesas Electronics previously announced to its customers.

Assets to be transferred and their location                        

The semiconductor manufacturing equipment as well as incidental assets, such as land, buildings, etc., at the Renesas Yamagata Semiconductor's Tsuruoka Factory (12-inch front-end wafer fabrication line of the semiconductor production facility), as agreed by Renesas Electronics and Sony.

Timeline of the Asset Transfer

The date of asset transfer agreement is January 29th, 2014 while the date of the asset transfer is planned for March 31st, 2014.

Financial Outlook

As a result of the asset transfer, Renesas Electronics expects to record the difference between the expected transfer price and the book value of the assets at the time of the transfer as an extraordinary loss in the third quarter of the fiscal year ending March 31st, 2014. However, the amount of book value is currently being evaluated and will be disclosed once such amount is confirmed.

Renesas Electronics intends to disclose the consolidated forecasts for the third quarter of the fiscal year ending March 31st, 2014 where the impact from the asset transfer will be included once such impact is confirmed.

No material impact is anticipated on Sony's consolidated financial results for the fiscal year ending March 31st, 2014 as a result of the asset transfer.

Sony is currently evaluating its forecast of the consolidated financial results for the fiscal year ending March 31st, 2014 to take into account the asset transfer and other factors that might affect such forecast.

In connection with the asset transfer, Sony has also announced "Sony Establishes Yamagata Technology Centre to Increase Production Capacity for CMOS Image Sensors".

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