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Renesas eyes the top mobile tech spot

Posted: 21 Jul 2010     Print Version  Bookmark and Share

Keywords:modem business  Nokia-Renesas  mobile chip supplier 

Renesas President Yasushi Akao

For a traditional Japanese chip company like Renesas Electronics Corp., the chore of effectively managing and getting superior results from 1,100 Finnish engineers recently absorbed in the acquisition of Nokia's modem business is either a) a tall order or b) the impossible dream.

The move, however, illustrates Renesas' naked ambition to transform itself from a Japan mobile chip supplier to the world's mobile technology leader.

The company wants to assure that its new LTE/HSPA+ modem chips can get connected to global markets. It wants them designed into a host of consumer products, ranging from e-readers, touch-screen devices like iPad to digital cameras and other Mobile Internet Devices, all of which go far beyond standard cell phones.

Further, Renesas is clearly seeking the clout and credibility it needs to drive next-generation mobile modem standards after LTE, by leveraging Nokia's decades-long technology expertise and industry experience in the standards organisations.

Such Renesas' hopes and desires appear all the more ambitious when placed in a global context. Renesas, now mainly the supplier of base band processors for handsets used in Japan's NTT Docomo network, holds only a 2 per cent share in the worldwide market in 2009, according to Joseph Byrne, Senior Analyst at Linley Group.

The 100-day plan

In an exclusive interview with EE Times this week, Yasushi Akao, president of Renesas Electronics Corp., explained the company's strategy behind the acquisition of Nokia's modem business.

Akao called the Nokia deal "the offensive move," instrumental to the company's yet to be disclosed "100-day plan," which started in April when the Japanese company officially merged with NEC Electronics.

So-called "defensive moves" in the 100-day plan, expected to include aggressive measures to eliminate redundancies in technology roadmaps, product plans, business operations and resources at the combined company, will be disclosed July 29th when Renesas announces its quarterly financial results.

Although silent on most details in the 100-day plan, Akao stood by his promise of "making tough choices," during his interview. He added: "I am asking those who report to me to come up with a unified plan rather than a dual structure. If operations pursued by the two companies are similar, we must pick one."

Choosing one, however, is problematic particularly in the mobile platform field. Both old Renesas (pre-NEC Electronics merger) and NEC Electronics have been independently pursuing a variety of mobile platform development initiatives, alliances and projects with diverging roadmaps.

Although many analysts like Renesas' acquisition of Nokia's modem business, most remain cautious about end results.

Will Strauss, president of Forward Concepts (Tempe, Arizona) compared the Renesas/Nokia deal to the 2007 STMicroelectronics/Nokia deal, under which 200 Nokia engineers transferred to ST.

Strauss said, "Clearly, with 1,100 people being transferred to Renesas, this is a far bigger deal than the earlier STMicroelectronics deal. I think it's clear that Nokia wants out of the modem chip design business." He warned, however, even after this deal, "Nokia will still insist on multiple suppliers. And I don't see Nokia eliminating ST-Ericsson, Qualcomm, or Infineon (now, maybe Intel) as modem suppliers."

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