Renesas, the world's largest maker of microcontroller chips for cars, is also considering raising more than 100 billion yen ($1.3 billion) in a share issue to pay for restructuring and appease lenders concerned about it its finances, the paper said.

The company - a product of successive mergers of the chip units of Mitsubishi Electric, Hitachi Ltd and NEC Corp - has been mired in the red, buffeted by the strong yen and the weakened state of Japan's electronics industry.

The 14,000 job cuts would amount to one-third of its workforce and represent a much more dramatic restructuring than reported earlier this week.

No one at Renesas could be reached for comment.

The Nikkei said Renesas was also in talks to sell its Tsuruoka system chip factory in northeastern Japan to TSMC. TSMC, the world's largest contract chipmaker, would take on the plant's 1,400 workers if the deal goes through, the paper said.

The Tsuruoka factory, which makes chips for a range of digital electronics, has been one of its biggest burdens due to low utilization rates stemming from the sharp contraction in Japan's flat TV market, the Nikkei said.

A person familiar with the matter told Reuters that TSMC had no plan to buy any Japan plant.

Renesas said earlier this week that it would forge closer ties with TSMC, which already counts Renesas as one of its clients. Renesas did not offer further details of the alliance ahead of a planned news conference on Monday.

The Nikkei said Renesas is also planning to transfer more than 1,000 employees to a new company due to be created through the merger of its system chip operations with those of Fujitsu Ltd and Panasonic Corp.

Renesas has presented its restructuring plan to its main lenders, the Nikkei said.

It will look to sell the new shares to Hitachi, Mitsubishi and NEC, which combined own about 90 percent of the chipmaker, while also sounding out overseas funds as potential investors, the newspaper said.

Renesas posted a 62.6 billion yen net loss in the financial year to end-March, hurt by natural disasters in Japan and Thailand that forced it to shut eight factories.

Mitsubishi Electric said early this week that it was prepared, along with the other two main shareholders, to offer support to Renesas.

($1 = 79.6000 Japanese yen)

(Reporting by Nathan Layne; Editing by Jeremy Laurence)

• A Permanent Economic Emergency