In an attempt to bail it out from the red, private equity firm KKR will invest 100 billion yen ($1.27 billion) in Renesas Electronics Corp. The company president Yasushi Akao has his course charted out for him and he says he has his eyes set on making the company survive these trying times.
Although he won’t comment on the actual KKR-Renesas deal, one can only wonder what direction Akao will steer the company to. What we do know is that Akao had initial plans to restructure Renesas when he became the president of Renesas Technology and NEC Electronics in 2010. However changes in the economic scene have forced him to focus on putting Renesas back to profitability.
One of the biggest things he has had to digest, ever since taking charge, is accepting capital infusion from outside sources. New owners mean interferences and difference in visions!
Akao’s original plans had been to cut cost, reorganize the business and make drastic changes in Renesas Electronics independently, by using the gradual 7% revenue growth the company had expected. However his strategy failed miserably and he had to turn to Hitachi, NEC and Mitsubishi, the three shareholders of Renesas, to inject a total of 50 billion yen through loans and other avenues. Bank of Tokyo-Mitsubishi UFJ and three other lenders will further provide 50 billion yen through a credit line.
The long and short of it, this is how Akao plans to move forward:
- Consolidate the company’s current SoC business by stopping investment in R&D, and/or spinning it off to elsewhere.
- Execute a Fab lite strategy: Reduce the company’s nine front-end production lines to seven, either through sales or substantial integration over the next three years. Bring down the company’s nine back-end lines to two, by sales and reducing production.
- While continuing to focus on the MCU business, expand the company’s analog/power semiconductor business proportionate to the industry-wide market size/growth.
- Find a global market opportunity by fostering Renesas’ “smart society” strategy.
[Via EE Times]
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