Archive for the ‘ Renesas ’ Category

Analysis: Why Renesas is creating mobile IC spinoff

Analysis: Why Renesas is creating mobile IC spinoff.

Renesas Electronics’ decision to spin out its mobile semiconductor products into a separate subsidiary is motivated not only by the differences between the markets for microcontrollers and baseband chips, but also to help protect Renesas’ power amplifier business. SAN FRANCISCO—Renesas Electronics Corp. is spinning out its mobile semiconductor into a wholly owned subsidiary because of the markets formicrocontrollers and modem chips are worlds apart, and because executives want to improve the chances of its power amplifiers being designed into reference designs from other baseband suppliers, according to executives and market analysts.

Renesas, the leading vendor of microcontrollers and the third lagest chip company by revenue, said last week it would spin off its mobile chip unit into a new subsidiary, Renesas Mobile Corp., effective Dec. 1. The products being spun out into the new subsidiary include the company’s Mobile Multimedia SoC Business Division and most of the wireless modem business that formerly belonged to Nokia Corp., which Renesas is set to acquire by Nov. 30.

The spinout announcement caught some people off guard because Renesas executives have spoken about the modem chip technology being critical to the company’s future success, and because the acquisition was widely hailed as a bold and aggressive move.

Will Strauss, principal analyst at Forward Concepts Inc., applauded the spinout announcement. Setting up the wireless products in a different business makes sense because the market for wireless chips is such a dramatically different market than Renesas’ core microcontroller business, Straus said. Whereas many microcontrollers are marketed for years to industrial, automotive and other markets, wireless technology is changing so fast that products can become obsolete within a year, he said.

“It’s a good move,” said Strauss, adding that he was also impressed with the speed of Renesas’ operational execution.

Dan Mahoney, president and CEO of Renesas’ U.S. unit, Renesas Electronics America Inc., said the primary reasons for the move were the fast-moving nature of the mobile communications market and the fact that the new unit has the potential to help Renesas with its top-line objective of growing sales outside of Japan. Renesas’ corporate strategy includes a clear directive to by 2012 increase revenue from outside of the Japanese market to 60 percent of the company’s total from 45 percent at the time of the merger between NEC Electronics and Renesas Technology which formed the company.

But a second, equally compelling reason for the move, according to Mahoney is that Renesas’ important power amplifier business depends on the company having its power amplifiers incorporated into reference designs created by baseband chip vendors such as Qualcomm Inc. These suppliers might feel more comfortable sharing technical information with Renesas with the “firewall” of Renesas’ own baseband chip business residing in a separate company, Mahoney said.

Strauss said the strategy makes sense. Baseband suppliers would feel more comfortable doing business with Renesas because it will have “arm’s length” separation from its baseband business.

Linley Gwennap, principal analyst of The Linley Group, said baseband suppliers like Qualcomm would probably try to avoid incorporating Renesas’ parts in their reference design if they can even with the spinout because they would still view Renesas as a baseband competitor.
Gwennap described the spinout as more of a marketing move, with a goal of giving more visibility and branding for Renesas’ mobile products. While U.S. and European companies typically spin out businesses into subsidiaries largely in preparation to sell them, Japanese companies are structured differently and tend to have a lot of subsidiaries that are wholly owned, he said.

Gwennap said Renesas is making some aggressive moves, particularly for a Japanese company, because Japanese companies in general are not known for marketing. “They are making some moves that you wouldn’t expect from a Japanese company,” Gwennap said. “But at the same time, this is kind of just marketing 101 for an American or European company.”

Renesas is making a huge push into the mobile space, Gwenapp said. The company has the potential to be a significant player based on the strength of the Nokia technology, he said, but the company lacks legacy products and key relationships that competitors already have.

“They are just at the very beginning of what they need to do become a major worldwide player in the market,” Gwenapp said. “They have a long way to go and it’s kind of late in the game for them to break in. 3G is pretty well set. What Renesas is hoping is that they can take advantage of the 3Gg to 4G transition to break into the market.”

Prior to acquiring the Nokia baseband unit, Renessas was becoming a bigger supplier to Nokia of other parts, primarily power amplifiers and RF transceivers, Strauss said. Renesas viewed the baseband acquisition as a way to solidify its relationship with Nokia and “get a bigger slice of the pie,” Strauss said. Acquiring the unit also gave Renesas the opportunity to market the technology to other customers besides Nokia, he said.

Mahoney said the Renesas Mobile spinout came out of the “100-day plan” developed by Renesas President Yasushi Akao, but that the company was not ready to disclose it until last week. During Renesas’ recent developers’ conference, Akao said that while some aspects of the 100-day plan had already been made public, other aspects would be forthcoming.

Renesas said that more than 75 percent of Renesas Mobile employees would be based outside of Japan.


Chip Maker Renesas Rethinks Japan Focus –

Chip Maker Renesas Rethinks Japan Focus –

TOKYO—Renesas Electronics Corp. takes the stage as one of the world’s biggest semiconductor makers Thursday, but it faces major challenges in the need to rethink its dependence on the Japanese market and to reorganize overlapping operations.

Bloomberg News

Junshi Yamaguchi, president and chief executive officer of NEC Electronics Corp., left, and Yasushi Akao, president of Renesas Technology Corp., in Tokyo last December.

Born out of a merger between NEC Electronics and Renesas Technology that takes effect Thursday, Renesas Electronics becomes the world’s third-biggest chip maker, with revenue of 1.05 trillion yen ($11.3 billion), according to company figures. This would put it behind only Intel Corp. of the U.S. and Samsung Electronics Co. of South Korea.

One of the company’s top priorities will be increasing its overseas presence. It aims to do so by teaming up with more Chinese chip design houses and seeking chip orders from Taiwanese electronics makers that develop and manufacture appliances sold under Japanese brands, its president Yasushi Akao said in an interview.

“It’s inevitable that our focus will shift more to overseas markets, where growth potential lies,” said Mr. Akao, previously president of Renesas Technology.

“Our resources have so far been a little too concentrated in Japan,” he said. “There are many independent design houses in China, and we need to tap those local resources” by seeking partnerships.

The merged company is the world’s biggest maker of microcontrollers, or chips used to control electronic operations in cars and consumer devices, with a 30% market share. In Japan it is the dominant player, with a 60% share.

But in China—where demand for lower prices is especially strong and Japanese chip makers struggle to offer products that meet local preferences—the share is less than 20%.

Meanwhile, a growing number of Japanese electronics makers are working with Taiwanese and other makers on an original design manufacturer, or ODM, basis. Mr. Akao says the company will approach the Taiwanese players to capture some of that market.

He said Renesas Electronics will try to raise its revenue earned overseas to more than 60% in the next five years, from about 50% now.

In the nearer term, Mr. Akao’s first task is to shape and define the new entity to ensure it is fully integrated. He will need to address the task of reorganizing overlapping operations to do that. “We have said we’ll streamline and consolidate, but it’s never as simple as it sounds,” he said.

For the first 100 days, the company will look closely at each specific operation and decide whether, how and when to consolidate it, he said. But the actual implementation of such plans will likely take at least two years in most areas, he said.

NEC Electronics, the chip-making unit of NEC Corp., and Renesas Technology, a joint venture owned by Hitachi Ltd. and Mitsubishi Electric Corp., had been working toward merging since April 2009.

NEC, Hitachi and Mitsubishi now have a combined shareholding in the merged company of 89.6%. – Enlarged Renesas climbs the chip vendor ranks – Enlarged Renesas climbs the chip vendor ranks.

EE Times

LONDON — The carefully prepared merger transaction of NEC Electronics Corp. and Renesas Technology Corp. has been completed to create Renesas Electronics Corp., the world’s third (or fourth) largest chip company. As a result of its merger Renesas is roughtly the same size as Toshiba and tied in third place with annual sales of about $10 billion.The englarged company employs approximately 47,000 people and claims to be world’s number one supplier of microcontrollers as well as being a leading supplier of advanced SoC chips and a broad range of analog and power devices.

The actual ranking depends on the period surveyed and who and when is taking the soundings. According to an iSuppli Corp. top-twenty ranking fromNovember 2009, Renesas Technology had 2009 sales of $5,664 million in 2009 and NEC Electronics had 2009 sales of $4,403 million This would give the enlarged entity annual sales of $10,067 million compared to Toshiba’s 2009 sales of $10,640 million. However, Gartner recently estimated Toshiba’s 2009 annual sales at $9,604 million, which would rank Renesas third.

Regardless of ranking Renesas Electronics commenced business operations today (April 1) with the appointment of Junshi Yamaguchi as chairman and Yasushi Akao as the president of the board of directors. The expansion of Renesas comes seven years after the company was founded on April 1, 2003 as a merger of the semiconductor operations of Hitachi Ltd. and Mitsubishi Electric Corp.

Renesas Electronics also announced that it had raised 134.6 billion yen (about $1.4 billion) by issuing shares of its common stock to NEC Corp., Hitachi and Mitsubishi Electric. As a result of the merger and the additional stock distribution the ownership of Renesas Electronics is: NEC holds 33.97 percent, Hitachi holds 30.62 percent, Mitsubishi holds 25.05 percent and the Japan Trustee Services Bank Ltd. holds 1.49 percent