(Bloomberg) — A decade ago, Renesas Electronics Corp. it was under government control and bleeding money. Now valued at $35 billion, the Japanese chipmaker is targeting a market value of around $100 billion by 2030, thanks to a series of overseas acquisitions.
Bloomberg’s Most Read
Behind these deals is Hidetoshi Shibata, a former Merrill Lynch banker. Five years into his tenure as CEO, the 51-year-old sees new businesses in India and in AI-enabling microcontrollers helping the company double annual revenue to a record $20 billion by the end of the decade. His ambition to triple the company’s valuation to ¥16 trillion to ¥17 trillion comes as a new wave of enthusiasm for AI lifts shares of the chipmaker behind the Toyota Motor Corp., Honda Motor Co. crisis.
Formed from the chip arms spun off from NEC Corp., Hitachi Ltd. and Mitsubishi Electric Corp., Renesas was in 2009 the world’s third-largest chipmaker by sales, after Intel Corp. customers. Additionally, damage caused to a key factory in the March 2011 earthquake in Japan prompted automakers to reduce their exposure to any single supplier, and Renesas quickly ceded ground to rival NXP Semiconductors NV.
Since joining the company as chief financial officer in 2013, Shibata has orchestrated a series of acquisitions. This year, Renesas announced a $6 billion deal to buy Australian-listed software company Altium Ltd. to advance product development and electronics design.
In 2021, the company acquired U.K.-based Dialog Semiconductor Plc for $6 billion and previously purchased San Jose-based Integrated Device Technology Inc. and Milpitas, Calif.-based Intersil Corp. , in part to expand beyond the automotive sector into data centers and consumers. devices. Shibata has also expressed interest in compound semiconductors, which remain popular among electric vehicle manufacturers.
“We need to be a true global player,” Shibata said in an interview last month. “It doesn’t make sense to be a major player in Japan. We have to be at the top, globally. I want to make it happen.”
Its buying spree helped reduce Renesas’ dependence at home and expand abroad. Japan accounted for 26% of total sales last year, down from 44% in 2016. Sales to other Asian countries and Europe and North America increased during the same period.
India, which currently accounts for just a fraction of Renesas’ sales, will be important for future growth, according to Shibata. The company aims to obtain at least 10% of the South Asian country’s revenue by the end of this decade, betting on the growing electronics needs of this market. Renesas plans to increase the number of employees in India by 20 times to 1,000 employees by 2025.
“For about ten years, Renesas has continued to lose market share,” said Masaya Yamasaki, senior analyst at Nomura Securities Co. “Now they look ready to move forward more aggressively – they have a good balance in their product portfolio. .”
Renesas’ effort coincides with an aggressive campaign by Japan to transform the world’s fourth-largest economy into a chip powerhouse. In less than three years, Tokyo has committed to investing 4 billion yen ($25 billion) in semiconductors and other advanced technologies, including up to 15.9 billion yen to cover a third of the costs of expanding capacity in three Renesas factories. The Tokyo government has also encouraged listed companies to take steps to improve shareholder value, with Shibata’s comments a rare example of a Japanese CEO laying out plans to increase share prices.
As of 2023, Renesas is the second-largest automotive processor maker after NXP, followed by Infineon Technologies AG, according to TechInsights analyst Asif Anwar.
Renesas is incorporating chips into its semiconductors, reducing costs while allowing for more customization, he said. The strategy aims to help Renesas meet growing demand for chip architectures suitable for electric vehicles and autonomous and connected vehicles.
“Renesas will say they want to be number one, just like NXP, Infineon and Qualcomm,” Anwar said. “We’ll see over the next three or four years how this changes over time and who comes out on top.”
(Corrects tenth paragraph to show that government subsidies are for three Renesas factories, not one.)
Bloomberg Businessweek Most Read
©2024 Bloomberg LP
