NEC Electronics and Renesas Technology Corp, both major suppliers of automotive semiconductors, plan to merge in about a year, with NEC the surviving entity. The consolidated company would rank third among semiconductor suppliers.

NEC Electronics separated from NEC Corporation in 2002. Renesas was formed the following year when Hitachi and Mitsubishi merged their semiconductor businesses. NEC and Renesas agreed to explore the possibility of business integration “in light of fierce global competition in the semiconductor market.” The new company will have three major product groups – microcontrollers, system-on-chip products, and discrete products. “In order to address the ongoing challenges of the current economic downturn,” the firms said, NEC and Renesas will each execute structural reform plans, after which they will integrate operations to achieve synergies.

The firms plan to sign an agreement in late July, and to integrate operations next April 1.