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Firm boosts strategies amid economic downturn

Posted: 17 Oct 2008 ?? ?Print Version ?Bookmark and Share

Keywords:MCU? SoC? automotive? car?

Tuskamoto:From now on, we should have more presence in the global markets.

Renesas Technology Corp. has announced it will aggressively boost efforts in its international business and expand its MCU share despite shaky economic conditions that may delay its lofty goals.

At its technology event in San Diego, California, Renesas also said that it would continue to keep its IDM strategy intact, especially at a time when many of its rivals are moving toward a fab-lite or fabless model. The company is racing to develop next-generation chips based on 32nm technology.

On the business front, like all chipmakers, Renesas faces the possible impact of the current economic crisis and IC slowdown. The world's largest supplier of MCUs sells its products into the slumping automotive, consumer, industrial and related sectors. It also develops analog products, SoC devices, wireless ICs and others.

"The company has not publicly reduced its sales and profit forecasts for fiscal 2008. But clearly, the current economic crisis in the U.S. and elsewhere could have a 'severe effect' on the semiconductor industry," warned Katsuhiro Tsukamoto, president and chief operating officer, Renesas.

"Consumer demand will drop," Tsukamoto told EE Times during an interview, adding that global capital spending will slow down.

In 2002, Hitachi Ltd and Mitsubishi Electric partnered their logic chip units to form Renesas. In 2007, Renesas was cited as the world's eighth largest IC maker in terms of sales by iSuppli Corp.

Conservative forecast
The Renesas executive did not give his own IC forecast, but the handwriting is on the wall for all chipmakers. Nearly every market research firm, including IC Insights, iSuppli and Gartner, have recently minimized its respective worldwide IC forecasts for both 2008 and 2009.

"Along with the gloomy backdrop, the U.S. housing market is down by 30 percent in terms of overall 'housing starts' year-over-year," analysts said. They added that the U.S. car production is expected to hit about 12 million units in 2008, down some 25 percent from 2007.

It's not all doom-and-gloom in the market, especially for Renesas' core market such as MCUs. Amy Leong, an analyst with Gartner, does not plan to change her global MCU forecast for 2008, which stands at about 5 percent growth. "We are even seeing double-digit growth for 32bit products,'' she said.

Despite the mixed signals in the market, Renesas is still moving full speed with its strategy. Among its goals is to boost its international business, expand its share in MCUs and SoC devices and move into the analog arena.

In fiscal 2007, Renesas realized some 55 percent of its overall sales in Japan, with the remaining 45 percent is coming from the overseas markets. The chip giant realized sales of $9.5 billion on operating profit of $423 million in fiscal 2007.

Prominence in bigger markets
Getting forward, Renesas hopes that its overseas business to surpass its domestic sales. For a good reason, it already has a strong share in Japan, but that market is flat and moving back into a possible recession. The only way for Renesas can grow is to boost its presence in China, Europe, U.S. and other markets.

"In the next two years, the company wants to achieve 40 percent of its revenue in Japan, with the remaining 60 percent from the overseas markets," said Tsukamoto during a presentation at the company's first Renesas Developers' Conference in the U.S.

"We have a strong presence in Japan," he added. "From now on, we should have more presence in the global markets," he noted.

For some time, Renesas has been putting the pieces in place to reach those goals. For example, it has been expanding its design centers in China, France, Malaysia, Vietnam, among other regions. "It is also creating more new products designed for overseas markets," said Dan Mahoney, president and chief executive of Renesas' U.S. arm, Renesas Technology America Inc.

As earlier reported, Renesas seeks to maintain its leadership position in MCUs and fend off competition from Atmel, Freescale, Microchip and others.

Renesas has recently released a slew of MCU offerings, including a new CISC-based architecture and a superscalar, quad-core line. The company also provided more details on the so-called RX, a new, high-end CISC architecture said to reach 200MHz capacity.

On Monday, Renesas expanded its lines, by announcing the SH77721. This is the first product in the new SH-NaviJ series, a new SuperH-based processor made for low-end to mid-range car information terminals, especially small portable navigation units and dashboard-mounted car navigation systems.

It also announced a new generation of MCUs with an on-board LCD controller. The R8C/Lx Series is recent addition to the Renesas R8C family of MCUs, which integrates the powerful 16bit R8C CPU core.

More innovations ahead
On the manufacturing side, Renesas will develop its own processes and remain an IDM. But over time, the Japanese company has been quietly moving toward a fab-lite strategy and has sold some of its older fabs. It is also collaborating more with foundry partners, especially Chartered, Powerchip and Taiwan Semiconductor Manufacturing Co.

Meanwhile, Chartered Semiconductor Manufacturing Pte. Ltd acquired Hitachi Ltd's 8-inch fab in Singapore for $233 million in cash. The transaction also involved a foundry agreement with Renesas.

In another foundry arrangement, Renesas, Sharp Corp. and Powerchip Semiconductor recently agreed to launch a joint venture for the production of drivers and controllers for LCDs. Renesas and Sharp are looking into the possibility to consolidate their respective business operations into the new company based in Taiwan.

For 90nm and other products, Renesas develops 99 percent of those lines in-house, according to Tsukamoto. Many of those lines, especially MCUs, use proprietary flash technologies that are better designed for production within its own fabs.

"Renesas also produces its 65nm and 45nm products in-house, but an increasing portion of those lines are being outsourced to the foundries," he said.

"At present, the company is shipping SoC for mobile phone applications at the 45nm node. By 2010, the company plans to ship its 32nm parts, which may be a mobile phone chip," he added.

In a move to expand its process partnership, Panasonic Corp. and Renesas said they are now collaborating on 32nm technology for SoC designs. The new 32nm SoC process makes use of high-k dielectrics, metal gates and ultralow-k material. For years, the two partners have been working on the joint venture of next-generation SoC technology, in an effort to share the costs and risks. They developed 130nm DRAM composite process in 2001, 90nm SoC process in 2002, 90nm DRAM composite process in 2004, 65nm SoC process in 2005, and 45nm SoC process in 2007.

- Mark LaPedus
EE Times

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