Renesas Gets Real

Renesas is slimming down, focussing and increasingly looking to foundries after last year’s narrow escape from the clutches of private equity.

Now that the Japan government has saved it from that grisly fate, Renesas is looking to implement some of the profitability improvement measures which private equity management would have undoubtedly introduced.

Renesas has reduced headcount from 48,000, when it merged with NEC Electronics in April 2010, to 33,000 now.

In the same timeframe, it has reduced fixed costs by 20% representing about $2 billion.

The company’s break-even point is now at about $3.6 billion.

Renesas will continue to operate its front-ends st Naka, Kawashiri and Saijo but other front-end facilities will be either scaled back or consolidated as Renesas looks increasingly to foundries.

‘As we scale back the facilities we operate ourselves, we plan to strengthen our relationships with foundries/subcontractors as strategic partners’ says Renesas.

Like big UK companies in the 1970s and 80s Japan has tended to look on its big companies as vehicles to absorb labour – more as instruments of social policy than economically productive units.

Globalisation is making that attitude unsustainable.

Tags: headcount, narrow escape, Private equity, relationships, timeframe

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