mannerisms

Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.

The Heroes Of Renesas

The response of the Japanese to the March 11 2011 earthquake won the admiration of the world. No company was more admired than Renesas whose semiconductor manufacturing capacity was cut in half by the disaster.

By March 14th one Renesas quake-affected plant had re-opened; 11 days later two more re-opened and a further five plants were being prepared for a re-start.

The worst hit was the big Renesas fab at Naka. At the end of March Renesas said it had ‘no idea’ when it could get Naka running again. Then, in April, it said it expected to resume volume wafer production in July.

In fact the 8 inch line at Naka resumed volume production on June 1st, and the 300mm line resumed volume production on June 6th.

Naka product was in customers’ hands by the end of August, wafer starts were back to pre-earthquake levels at the end of July, and total output was at pre-earthquake levels by the end of October.

It was a remarkable achievement.

Now Renesas’ owners, Hitachi, Mitsubishi and NEC, are said to be contemplating selling a big stake in Renesas to New York private equity firm KKR.

KKR’s modus operandi, as seen from its stewardship of NXP, is to close plants, sack tens of thousands of people, run up huge debts and sell off business units.

KKR has no record of achieving growth at NXP. In six years as the owner of  NXP, it has failed to grow revenues or profits.

It may be that Renesas has to trim its labour force, but it would be to the everlasting shame of Hitachi, Mitsubishi and NEC if Renesas’ heroes were sacked to make profits for foreigners

KKR sacked so many NXP people on such poor terms that the Dutch government applied to the EU authorities for funds to relieve their hardship. How will the Japanese government feel about using taxpayers’ money to relieve the hardship of Renesas workers who have been sacked to boost the profits of a New York private equity firm? 

The Japanese banks are stuffed with money. There is no need for Hitachi, Mitsubishi and NEC to go outside Japan for capital.

If solutions are needed for Renesas’ problems then it is to be hoped that it will be a Japanese solution. Anything else would be a betrayal of Renesas’ heroic employees.

Tags: admiration, dutch government, remarkable achievement, semiconductor manufacturing, volume production

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7 Comments

  1. July 03, 2012 17:30

    The semiconductor market is a characterized by high risks that puts a premium of dynamic management. Japanese and for that matter European semiconductor makers need massive increases in dynamism or they will not survive.

  2. David Manners
    July 03, 2012 15:46

    Brilliant Chris, you’re absolutely spot on there.

  3. Chris Davison
    July 03, 2012 15:36

    What Renesas needs is American designers and marketers not American capital.

  4. Hal555
    July 02, 2012 20:44

    I must agree with Martijn and with your prior column David http://www.electronicsweekly.com/blogs/david-manners-semiconductor-blog/2012/05/sayonara.html, Japanese managers are too grown up to be competitive in high tech.
    Check the Renesas website and see the entire management board and executive team is Japanese, I am stunned Renesas is “reaching out” to KKR while announcing major fab closings and layoff/early retirements, all not very Japanese tactics.
    Perhaps the situation reached a point of inflexion where Renesas must become less Japanese. All I can say is cultural changes are the most difficult.

  5. martijn
    June 28, 2012 09:56

    “If solutions are needed for Renesas’ problems then it is to be hoped that it will be a Japanese solution.”
    The “japanese solution” IS the problem, as you pointed out in a recent post as well
    http://www.electronicsweekly.com/blogs/david-manners-semiconductor-blog/2012/05/sayonara.html
    (ever consolidating, but not innovating, trying the same trick even though it stopped working 15 years ago).
    If they get money from a Japanese firm/bank that stakeholder would expect a Japanese solution, which has not worked for any Japanese company in the past decade.
    Not saying KKR is the way to go, but painful changes have to be made. Get a loss-running fab back online fast is commendable but doesn’t pay the bills.

  6. David Manners
    June 28, 2012 06:31

    How very true, Greg, whenever they announce new product plans I invariably think: ‘That’s really conservative.’ They’re trapped in a time warp three years behind the leading edge.

  7. greg
    June 27, 2012 22:43

    I use one of their RF chips in a product. Recently we’ve been redesigning it and I notice they really haven’t had any significant new product introductions in the last 5 years (in the RFIC space). So in the new product I’ve gone for something else.
    It kind of reminds me of that Troubleshooter show with John Harvey Jones 20 odd years ago. He visited Stoke and went to a China manufacturer (cups/plates) and in the whole company only found 1 designer.