TOKYO, Sep. 16, 2009 (Kyodo News International) -- Struggling Japanese chipmakers Renesas Technology Corp. and NEC Electronics Corp. said Wednesday their parent firms plan to inject a total of 200 billion yen as they move toward a merger next April.

The merged entity, expected to be called Renesas Electronics Corp., will likely become not only Japan's largest semiconductor maker, surpassing Toshiba Corp. (OOTC:TOSYY) , but also the world's No. 3 chipmaker, trailing Intel Corp. (NASDAQ:INTC) of the United States and Samsung Electronics Co. of South Korea.

Before the merger, loss-making Renesas will first issue shares to its parent firms -- Hitachi Ltd. (NYSE:HIT) and Mitsubishi Electric Corp. -- to raise 78 billion yen. The merged entity will then issue shares worth 122 billion yen to NEC Corp., Hitachi and Mitsubishi Electric.

NEC Electronics, NEC's chip unit, will be the surviving company with each share of NEC Electronics expected to be worth 1.189 share in Renesas.

Renesas President Yasushi Akao will become the president of the new company -- to be owned 33.42 percent by NEC, 30.73 percent by Hitachi and 25.14 percent by Mitsubishi Electric. NEC Electronics President Junshi Yamaguchi will become the company chairman, the two companies said.

Both NEC Electronics and Renesas have been carrying out restructuring measures including job cuts and shutdown of production lines to combat deep losses caused by stagnant demand and erosion of chip prices.

Through the merger, the two firms hope to boost their global competitive edge in the key areas of microcontrollers and large-scale system integrated circuits, which are mainly used in digital appliances and automobiles.