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Renesas vision: Serving the smart society

Posted: 05 Oct 2011 ?? ?Print Version ?Bookmark and Share

Keywords:global economy? semiconductor? Japan earthquake?

Renesas Electronics Corp. is facing not only one, but three dilemmas today. The company is still recovering from the vast damages done by the Great March 11 Japan Earthquake. Renesas has yet to complete its reorganization after the Renesas Technology and NEC Electronics merger that took place 17 months ago. And finally, it has to face weakening global economy, which is becoming more and more evident in the electronics industry.

Shortly after the half-anniversary of the earthquake, EE Times sat down in Tokyo with Yasushi Akao, president of Renesas Electronics Corp., in an exclusive interview.

During the interview, the beleaguered Renesas chief looked as cool as ever. He talked about the unimaginable impact the earthquake has had on his company's financials. He openly acknowledged that much of the money that could have been used to improve the company's business operations had to be diverted to the unplanned, unbudgeted special losses resulting from the natural disaster. Akao also acknowledged, "It'll be tough to turn the company into black for the full fiscal year that ends on March, 2012."

Yasushi Akao

Akao: We want to be known as a company that brings [semiconductor] solutions closer to the social infrastructure.

Renesas' strategy to put the merged company on a growth path has not been spelled out in full. Its execution, by any account, has been delayed at least by a year.

Renesas' second quarter just ended on Friday, September 30. Although results had not been disclosed by press time, the company's own forecast (made on August 2) for the first six months of the fiscal year 2011 said that Renesas was expecting a loss of approximately $561 million (43 billion yen) in net income. The company's operating income was forecast to be a loss of approximately $457 million (35 billion yen). To top it off, the "weak global economy," frequently lamented among chip vendors in recent weeks, will certainly affect Renesas' third-quarter results.

But if there is a silver lining, it is the power of the crisis, born out of the earthquake, to prompt Renesas' re-thinking about its redundancy strategy, according to Akao.

More importantly, the earthquake/tsunami's aftermath has triggered an adult converzation among Renesas, its customers and its customers' customers on how to bear the costs associated with the new redundancy plan.

Professionalism, kizuna restored Renesas after quake
All companies have contingency plans, but no one could have anticipated a disaster on the scale of the earthquake and tsunami that devastated northeastern Japan in March. Renesas engineers took an open and collaborative approach to rebuilding and restoring the company's Naka facilities. Read more of the article here.

Akao said that the idea of a "fab network" had always existed at Renesas. The earthquake, however, clarified its necessity and helped Renesas build specific action plans.

The fab network consists of multiple production lines operated both inside and outside Renesas fabs. The fab network, at a time of crisis, should allow the company to flexibly change the volume and products it produces among those different lines. The goal is to be able to make such changes in real time.

That, however, is easier said than done. The solution has three prongs.

First, Renesas needs to secure multiple production lines. Second, Renesas' customers need to evaluate and qualify production lines at different fabsin advance. Third, the plan also requires each fab to keep an inventory of "semi-finished" products at all times.

Under the new business principle, Renesas hopes to restore production lines at any given fab C no matter what happens, "within one month," said Akao. "That's our end game."

However, much of the fab network won't function properly if Renesas and its customers fail to disclose and share informationon specifics such as available capacity at fabs, product roadmaps, and qualification processes. Further, they need to agree on how best to share the cost of building in such redundancies.

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