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Renesas works out EOL deals to survive the crunch

Posted: 11 Aug 2014 ?? ?Print Version ?Bookmark and Share

Keywords:Renesas? EOL? automotive? Hisao Sakuta?

Asked how Renesas plans to compete in automotive dash and in-vehicle infotainment systems, where a host of newcomersincluding Nvidia, Qualcomm, and Intelare moving in, Sakuta said, "We'll need partnerships in a larger ecosystem." The days are long past when a single chip company can make a huge difference in a very large market, he added.

Still painful

During the press conference, Sakuta never deviated from the company's commitment to improvement of its gross margin and how the company plans to achieve it. Sakuta didn't mention even once the Internet of Thingsa familiar current theme among chip vendors announcing their earning results. Asked why, Sakuta said, "I skipped the topic, not because it's unimportant to us, but I see it already as a given." For the IoT market to take off, security remains an unsettled issue, said Sakuta. "Renesas hopes to contribute to IoT, in terms of security and RF."

"I'm often asked to speak to our employees about something big, something that helps them hold big dreams. It's easy to talk about dreams. But if we don't execute our plans, we have no dreams to talk about."

After the press conference, this reporter shared a lift ride with Sakuta. Asked about big surprises since he joined Renesas a year ago, he used the word "soteigai," meaning unforeseeable, (the word got popular in Japan when many authorities used the term to describe what happened at the March 11 earthquake and tsunami in 2011). Sakuta said, "There have been just so many things that were 'soteigai.'"

It's been broadly reported in Japan that the key issue for an ailing Renesas was a double or triple management structure created in each business unit, as a result of the merger of chip divisions of Hitachi, Mitsubishi, and NEC. During the press conference, Sakuta was the first Renesas CEO to blame this redundancy for the company's unnecessarily high fixed costs. "With all that increased fixed cost, Renesas didn't create any new energy or strength."

When asked if the factional struggle among managers from three different parent companies surprised him, Sakuta said, "No. That was an easy problem." Surprising to him was that the job of achieving a full recovery at Renesas "is still agonizing and still very painful."

Over the past two years, Renesas dramatically reduced its head count from 42,800 to 27,200. In early July, Renesas announced yet another reorganisation plan by "redefining the design and development units at Renesas and those at the group's three affiliate companies in Japan."

Renesas is offering an early retirement programme for employees and affiliate companies affected by these changes. While no upper limit or target has been stated, the company is setting the retirement date for those who apply at September 2014.

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Figure 3: Renesas targeted financial model (net sales in billions of yen).

- Junko Yoshida
??EE Times

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