Mitsubishi bails out Renesas -

Japan's Mitsubishi Electric is stepping in to prop up chipmaker Renesas Electronics.

The company told Reuters that it would provide $185.5 million in loans to the failing chipmaker. Renesas makes microcontroller chips used in cars, which explains the Mitsubishi link.

But lately Renesas has struggled to turn a profit in its system LSI chip business against rivals such as Samsung.

Renesas was the product of successive mergers of the chip divisions of its major shareholders Mitsubishi, Hitachi and NEC. The company said that it will reduce its workforce by 12 percent and halve the number of Japanese plants.

Mitsubishi Electric executive officer Hiroki Yoshimatsu said that after the cheque clears, his company will no longer bail out Renesas as there are no plans to provide further loans.

He said that it will give Renesas the cash to move forward their restructuring plan and return the company to profitability.

Mitsubishi Electric owns a 25 percent stake in Renesas. It did not say if Hitachi and NEC were going to help out.

NEC is due to report its April-June results today so we will know if it has stumped up any cash.