• New CEO says outsourcing will lower costs, help hedge on forex
  • Chipmaker has begun to move research to Vietnam, China

Renesas Electronics Corp. is doing something that only a decade ago would be unthinkable for a Japanese semiconductor maker -- outsource research overseas.

Outsourcing more R&D reduces the cost of developing components for new applications in autonomous cars and the internet of things, Chief Executive Officer Bunsei Kure said on Thursday. It’s also a way to hedge against currency swings, Kure told reporters days after Renesas shareholders approved his appointment as CEO and president.

Bunsei Kure
Bunsei Kure
Photographer: Kiyoshi Ota/Bloomberg

Japanese companies like Hitachi Ltd., NEC Corp. and Toshiba Corp. dominated the semiconductor market in the 80s and 90s by closely guarding their manufacturing and design know-how. They’ve since struggled to adapt to a shift in demand toward cheaper components in consumer electronics and PCs, ceding ground to Asian rivals like Samsung Electronics Co. Renesas, struggling after years of posting losses, is betting that cost discipline and a focus on automotive and industrial applications will revive the business.

“Development costs are becoming even more important to us than manufacturing costs,” Kure said. “It’s just not possible to secure enough engineers domestically.”

Renesas has already begun to relocate some development overseas, employing about 600 researchers in Vietnam and 300 in China, as well as some in Malaysia, Kure said. He declined to give details about his further outsourcing plans.

Renesas was formed in 2010 when government-backed investment fund Innovation Network Corp. of Japan brought together the struggling chip operations of Mitsubishi Electric Corp., Hitachi and NEC. INCJ controls about 69 percent of the company, according to data compiled by Bloomberg. While Nidec Corp., Kure’s previous employer, has expressed interest in that stake, Kure said he prefers the chipmaker remained independent.

“There is a pattern of success emerging among global chipmakers, which all focus on a specific segment,” Kure said. “All of these companies are independent. We intend to follow that success pattern.”

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