Loss of its biggest factory will force Renesas to restructure

Article by Anita Panait, on June 14, 2012

Renesas Electronics Corp. is still the world's largest producer of automotive semiconductors despite losing its biggest plant following the earthquake that occurred in Japan in March 2011. According to industry rankings published by Strategy Analytics Ltd., Renesas accounted for 13.8 percent of the semiconductor industry's automotive sales of $23 billion in 2011. Right behind Renesas were Infineon Technologies AG, STMicroelectronics N.V., Freescale Semiconductor Inc., and NXP Semiconductors. STMicroelectronics overtook Freescale as the world’s No. 3 chipmaker.  Renesas, meanwhile, managed to increase its automotive revenues by 10 percent to $3.2 billion, despite the loss of its Naka chip plant in Japan, according to Chris Webber, vice president of Strategy Analytics' automotive practice.

Webber said that global sales of automotive semiconductors soared 11 percent in 2011, and gave predictions of a 10 to 12 percent increase this year.

However, some roadblocks are on the way. One of them is the current debt crisis in Europe as well as the economic slowdown in China, both of which could result to lower global auto sales. Another roadblock is that Renesas posted JPY63 billion in the fiscal year ended March 31, 2012.

Reuters cited company sources as saying that Renesas is planning to conduct almost $1.3 billion capital increase as well as cut 12,000 of its 44,000 jobs around the world. A Renesas executive, however, said the company has yet to decide about a possible restructuring.

Renesas’ financial woes have been caused partly by dwindling demand for flat-panel TV. However, demand for engine control units has increased steadily since recession. According to Webber, carmakers are updating engine control units as they develop more efficient powertrains. He added that the fast-paced growth of collision avoidance and infotainment systems helped lift semiconductor sales. [source: Autonews]

Topics: renesas

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