Chip Business Picks Up In Japan

Renesas boosts profit for seven consecutive quarters; semis add profit at Toshiba; TEL sales up.


Japan’s semiconductor business is showing signs of recovery after several years of slumping sales due to an overall market recovery, the favorable exchange rate for the yen, and ongoing business restructuring.

Consider Renesas, for example. The company went through several downsizing phases, causing a decline in semiconductor sales by 3.9% to 199.6 billion yen ($1.69 billion) in its fiscal Q2 compared to the previous year. But operating profit was 23.5 billion yen ($200 million), which means it has maintained an 11.3% margin. The company has experienced profitability growth for seven consecutive quarters.

Toshiba likewise boosted its operating profit for the quarter, gaining from strong sales of NAND flash. And Hitachi and Tokyo Electron both saw increases during the quarter.

Automotive sales for Renesas Electronics increased by 8.1 % to 78.8 billion yen ($67 million) compared with the same period in 2013, while general-purpose semiconductor sales showed a 10.4% decrease (119.7 billion yen). Put in perspective, overall automotive-related items show a decrease of 1.2% compared to the previous quarter.

The company said that sales of industrial products have been continuously solid, while white goods were week in Japan and emerging companies. It also noted that while mid-sized LCD driver IC experienced a 20% revenue increase, there will be a loss of 21 billion yen from sales and 4 billion yen from operating profit this quarter due to the sale of Renesas SP Drivers—which makes display drivers chips for smart phones and tablets—to Synaptics. It is estimated that the sales will be reduced to approximately 168 billion yen ($1.42 billion) and operating profit will decline to approximately 13 billion yen ($111 million).

Renesas has continued to downsize, increasing its net worth ratio for total assets back up to 27.9% compared with P/L performance. Moreover, it announced that 1,800 employees will take early retirement.

Toshiba, meanwhile, is showing positive signs, as well. According to Nikkei, there is exponential growth in electricity/infrastructural operations such as nuclear energy and thermal power plants. Orders are increasing both inside and outside of Japan. The news agency only covered semiconductor-related material briefly, though, saying that semiconductor memory for smart phones rebounded from July through September, along with infrastructure-related materials such as power generating systems.

According to Toshiba, from April to September, net sales were 1.7 trillion yen ($14.62 billion), up year over year from 1.63 trillion yen $14.02 billion) in the same period in 2013. Net income for the quarter was 21.9 billion yen ($190 million), compared with 16.2 billion yen ($140 million) in 2013.

Hitachi had sales of 2.36 trillion yen ($20 billion) for the quarter, down from 2.39 trillion yen in the same period in 2013. But net income was $92.7 billion yen ($800 million) in Q2, up from $46.7 billion yen ($400 million) in Q2 2013. No business unit surpassed 10% in operating profitability, at least part of which was due to infrastructure materials. Hitachi has said it will push into a solutions business, bundling technology and services together.

Tokyo Electron, meanwhile, reported that in the first half of fiscal 2015 sales increased to 294.3 billion yen ($2.53 billion), up from 254.5 billion yen ($2.19 billion) in the same period in 2013. Net income was 20 billion yen ($170 million), up from 2.48 billion yen ($20 million) in fiscal 2014.

Japan’s biggest fabless enterprise, Megachips, also announced its acquisition of MEMS oscillator maker, SiTime, a spin-off of Bosch Company, for $200 million. Megachips is now pitching itself as a global company, and this deal is the latest example of that positioning.

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