Details Emerge on Sony’s Acquisition of Factory Producing Wii U’s DRAM: 30 Billion Yen Investment

Details Emerge on Sony’s Acquisition of Factory Producing Wii U’s DRAM: 30 Billion Yen Investment

A few weeks ago we reported about Sony possibly planning to acquire the Renesas plant at Tsuruoka, in the Yamagata Prefecture, Japan. The factory produces one of the most important components of Nintendo’s Wii U: its embedded DRAM chip, that is considered the “heart” or the “life stone” of the console.

A few days ago, the morning edition of the Japanese financial newspaper Nihon Keizai Shinbun included more information on the acquisition, that is becoming more and more a solid possibility at this point.

According to the newspaper Sony is now considering an acquisition plan that would require an initial purchase investment of seven billion yen (67 million dollars), but a further investment of 30 Billion Yen (287 million dollars) is being considered to convert production to CMOS sensors for smartphones. The company is expected to decide on the pro and cons of the acquisition by the end of January.

An acquisition would save the jobs of about 70% of the 1000 employees, excluding those working on semiconductors for automotive, as the factory was scheduled to close before Sony’s intervention.

Another very interesting detail is that the rather low final purchase price has been determined due to the fact that Renesas is planning to move part of the facilities and equipment of  the Tsuruoka factory to its main plant at Naka, in the Ibaraki prefecture.

This opens multiple possible long run outcomes for Nintendo, that still hasn’t announced official plans to relocate the production of Wii U’s embedded DRAM. If Sony converts only part of the production at Tsuruoka to CMOS sensors and retains the ability to produce the DRAM, Nintendo could very well acquire the chip from the rival. It’s not unprecedented and in the world of business it’s an everyday occurrence.

If Renesas manages to restore production of the DRAM at Naka (which is very possible, as the crucial factor to its production was the specially tuned equipment located at Tsuruoka, and at least part of it could be moved to Naka), Nintendo could continue to receive stock from there, just changing the location of manufacturing.

On the other hand, if Sony fully converts the production of Tsuruoka to CMOS sensors and Renesas doesn’t manage or intend to restore production of the DRAM at Naka (one of the factors behind the previously determined closure of Tsuruoka was low demand for the DRAM chips) Nintendo will have to find another supplier for the long run, while in-house stocks of the chip are expected to last at least for a while.

[Thanks for the tip: Masaki]