Japanese chipmakers: SoC it to me Science versus economics, or Moore's law meets the law of diminishing returns. The global chipmaking industry has famously doubled the power of its products roughly every two years since Intel's Gordon Moore predicted it would in 1965. But add a slowdown in demand for consumer electronics to the cost of keeping up, and staying profitable demands serious scale. Enter Japan's latest mooted merger. Panasonic, Fujitsu and Renesas are discussing spinning off their system-on-a-chip (SoC) operations to create a national champion, with the backing of Japan's Innovation Network Corporation, a government fund. SoCs are used in more complex devices such as televisions and mobile phones, which fits with computing's direction, even if end-product sales are sluggish. But SoCs are tough to produce, with high development costs and short product cycles, and they need cutting-edge production. The three companies will collectively suffer operating losses of almost Y80bn on semiconductors this financial year, according to Nomura, with SoCs accounting for the majority of this. A combination would mean the most for Renesas, whose SoC unit contributes about a quarter of its sales and is its worst-performing unit. The business is smaller beer for Fujitsu (about 7 per cent of total sales) and Panasonic (less than a 10th). That makes a deal more likely since small, troubled, high-cost units have to be a prime target for cutting at a time when Japan's exporters are being forced into a deep rethink of their finger-in-every-pie business structure. This is no novel solution; Renesas in its current form - less than two years old - was designed to be a national chipmaking champion. Adding Futjitsu's and Panasonic's SoC units would roughly quintuple its SoC sales. Critical details - would the new group manufacture in-house? - are needed to judge properly whether a combination could work. Still, any decluttering of Japan's fragmented electronics industry would at least show the others that it can be done.