Time for the Semiconductor Industry to Reorganize

Japanese semiconductor makers Renesas Technology Corp. and NEC Electronics Corp. are in talks for a merger, according to the Nikkei.

Renesas Technology Corp, the second-largest Japanese semiconductor maker, is a 55%-45% joint venture between Hitachi and Mitsubishi Electronics. NEC Electronics, the third-largest, is 65% owned by NEC Corp. Both companies have been struggling due to weak demand and have been looking at ways to save costs. The combination of those 2 companies will create the Japan's largest semiconductor maker, surpassing Toshiba, and will rank third in the world after Intel and Samsung Electronics.

The move may trigger further industry consolidation involving other chip makers like Toshiba and Fujitsu.