Renesas Design France was a successful high-tech research and development company specialized in telecommunications which has created numerous innovations for the mobile phone industry, and which was latterly chosen by Samsung to provide key components for the Korean manufacturer’s future 4G LT mobiles.
The company, a subsidiary of Japanese firm Renesas, was the only notable competitor of US semiconductor and digital wireless technology giant Qualcomm.
Earlier this year, its Japanese owner, struggling with operating losses of 1.4 billion dollars, decided to sell off its telecommunications activities, writing off significant previous investment in the sector. The business, including Renesas Design France, was sold to California-based US semiconductor company Broadcom for 164 million dollars (120 million euros).
“Broadcom have done an excellent deal,” commented Alain Lavaure, an official with the CFDT union at Renesas Design France, which employs 170 people, most of them engineers. “It carries no risks, either industrial or concerning research. All the new systems are already developed or in the process of production. It will have the commercial returns.”
Broadcom decided to keep Renesas’ subsidiaries in Japan, Finland, India and Denmark, but to close the site in France where its only interest was to collect the patents registered by Renesas. The staff in Rennes are now due to be laid off on October 28th, when the site will be placed in liquidation.
“Fifteen years of investment, research and development, of collective know-how, of aid from the state and local authorities have gone up in smoke,” said Lavaure. “It is an indescribable waste. The government says that telecommunications is a sector for the future but it does nothing to protect it. We are going to lose skills that may take decades to recover.”
Since June, staff representatives have lobbied in vain local Members of Parliament, ministers and government advisors in an attempt to save the site from Broadcom’s planned liquidation of it. “Even the [local administrative] prefect refused to meet us,” said Gilles Ronco, joint secretary of the company’s works council and also a representative of the CGT trades union.
In preparation for the site’s closure, Broadcom sent groups of staff from the other former Renesas subsidiaries around the world to Rennes to become familiar with, collect and export back to their own sites the patented technology and related information. “We were told to delocalize all our know-how, all our skills,” complained Gilles Ronco.
“We had to train, over three or four days, teams who came from abroad,” added Lavaure. “But even with that, they won’t succeed. We worked like madmen for five years to be able to produce new solutions. It isn’t in just a few days that you can acquire know-how that took us years to develop. Then there are also collective skills, habits of working together, of common research, that cannot be transferred.”
But while their anger and frustration at watching their collective skills and achievements become dilapidated is clear, the two union officials are also certain that the staff cannot refloat the site themselves without the support of a larger company.
Several large telecommunications companies have over the past months expressed interest in buying up the site from Broadcom, and began exploratory appraisals. “But they seemed more interested in getting to know what we are working on and the state of our research rather than putting in a takeover offer,” commented one employee, whose name is deliberately withheld. No takeover offer has been made, nor has any company engaged in an official procedure to examine the books of Renesas Design France.
Contacted by Mediapart, a spokesman for Fleur Pellerin, Secretary of State for Small- and Medium-sized Companies and the Digital Economy, said: “The government is naturally attentive to the fate of this company. But there are procedures. The file is now in the hands of the [industry ministry’s] commissar for productive recovery.”
Pellerin’s office said one potential bidder had made themselves known to the ministry, but there was no indication whether an offer will, or could, be made before the deadline for the company’s closure on October 28th.
The union officials say that what has angered them above all is the attitude of the government. “When you make choices you must follow them up, ensure results,” said Ronco. “There is a duty regarding public money, [which are] contributions provided by French citizens. The state has spent millions to support the telecom sector. Local authorities have granted hundreds of thousands of euros via local planning bonuses, and no-one is brought to account.”
They are particularly critical of the manner in which tax credits (i.e. temporary relief on a part of company tax) granted for research and development activities are applied, and which in the case of the Rennes site amounted to a gain of 3 million euros per year over the past decade. “Thanks to that aid, we assured all the development costs,” said Lavaure. However, with the site’s closure, the state will now never see a return on its money, neither through the site’s industrial activity, its payroll nor its patents. Meanwhile, Renesas Design France owes the state 13 million euros in repayable tax credits, which by law are required to be refunded after a three-year period, although there is no indication that Broadcom will default on repayment of the sum.
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English version by Graham Tearse