Renesas, Panasonic and Fujitsu are talking about merging their semiconductor businesses. It is thought the process could take a year.
Renesas was itself formed by a merger between the chip businesses of Hitachi and Mitsubishi in 2003. Last year NEC Electronics, the semiconductor subsidiary of NEC, was also merged into Renesas.
There is talk that the manufacturing activities of all the merged companies will be spun off into a joint venture between Globalfoundries and a Japan government-backed body Innovation Network Corp.
The Japanese government is expected to back such a joint venture with a large investment.
The last best chance for the Japanese semiconductor companies to retain their independence came in 2006, when a joint foundry project, backed by the government, was proposed.
A company called Advanced Process Semiconductor Foundry Planning Company under the leadership of Hirokazu Hashimoto of NEC was set up.
However after extensive talks the project failed because the different companies involved could not agree on what processes the foundry should run.
"The basic idea of the foundry is because there are not so many IDMs which can afford next generation fabs," Dr Tsugio Makimoto, former CEO of Hitachi semiconductor, told EW at that time, "the rest of the IDMs will go fab-lite,"
With the collapse of the foundry initiative, it was inevitable that the Japanese companies would have to consolidate to get the economies of scale to continue manufacturing.
The high point for the Japanese semiconductor industry was reached in 1987 when six Japanese semiconductor companies Matsushita/, Panasonic, Mitsubishi, Hitachi, NEC Fujitsu and Toshiba – separately enjoyed positions in the world’s top ten semiconductor producers.
Since then, consolidation has not stopped the overall industry decline. Only Renesas and Toshiba are in the top ten today.