»No longer fast follower, but leading company«

"content expansion"

There was a lot of discussion at the Analysts' Day about "content expansion" as a growth driver, what do you understand by this?

One example. Today Renesas delivers components for x dollars into simple servers. The next generation of servers will use NVDIMMs in addition to DDR4 DRAMs, so the value of components that we can deliver into them will increase by a factor of 1.5. If we're talking about the most advanced server variants currently available, our content has already increased by a factor of 2 and in the next generation this factor will increase to 3. The move from DDR4 to DDR5 will allow Renesas to significantly increase its content because we will then be delivering not only interface products, but also power management ICs, I3C hub, and temperature sensors.

Renesas has used the acquisitions to develop so-called Winning Combinations, can you give some examples?

There are now almost 150 winning combinations. These are reference designs in which we combine MCUs, sensors, power management, etc. One example is our camera module with pricing at about 25 dollars. Despite its low price, it is one of the best solutions, even in low light conditions. By next year, we will integrate our new RZ/V2M into this module, so we’ll have the entire content without using an external ISP (Image Signal Processor). Another example is a UWB-based social distancing band, which will be available as a sample in the second half of 2020. A third example is our latest reference design for 48 V e-scooters. The e-scooter is the first example that really incorporates the entire know-how of all companies - Renesas, Intersil and IDT.

Renesas has changed its sales strategy…

Yes. We'll summarize this under "Deeper" and "Broader". Renesas' sales have always been focused on a small number of very large customers, so we were very good at that. But as I mentioned above with the MCUs, that's not enough. So "Broader" is all about finding new customers who may be small today, but will be the next "nest" in the future. One example: MIYO is an Australian company that specializes in smart home applications. In some cases, we were represented in these devices with our flow sensors, but now our MCUs, PMICs and connectivity ICs are also integrated.

And the change in strategy is already producing visible results: if you compare the number of customers each company used to have, it's twice as many today.

The term "Deeper", in turn, describes the strategy that we are now supplying customers who previously only bought analog from us, for example, with our MCUs/MPUs, and vice versa. Our Winning Combinations help here.

In addition, we have also changed our distribution strategy. Renesas used to believe that the more distributors, the better. But the problem is that this strategy does not create the right awareness for Renesas among the individual distributors. We have now reduced the number of distributors worldwide by 44 percent. As a result, we have received 45 percent more application engineering support and sold more analog and power products than ever before. This is despite the fact that power and analog/mixed signal need a completely different level of support than MCUs.

Renesas has also changed its strategy in the power sector. What was that about?

For one thing, we didn't invest in areas where there was competition in the past. Now we are also competing directly with established manufacturers, with products that have better parameters and good process technology.

Intersil wanted to win major customers with customized PMICs. We have also changed this strategy, because there are examples in the market that show that too much dependence on individual large customer can become difficult. Accordingly, we are positioning ourselves much more broadly here and, in addition to the area of "Industrial Power", we are also addressing "Core Power", i.e. the power supply of processors/GPUs etc. Here, too, we can offer products that, thanks to our digital approach, perform significantly better than almost all competing components.

You spoke of good process technology, Intersil used to focus exclusively on CMOS, where does the process know-how come from?

Intersil has always had the process knowledge, but the design teams were told to only use standard CMOS processes exclusively. I see it completely differently: I don't care if we use a foundry as a niche supplier as long as it gives us the technology we need for differentiating components.

Will Renesas bring its own PMICs to market for its MPUs?

Yes, we are developing optimized PMICs for our MPUs, it would be a pity if we did not use our know-how and had to rely on our competitors. In the next six months, we will introduce corresponding products.

Are all these changes enough for Renesas' IIBU to meet its long-term goal of a 6-8 percent growth rate?

Yes. This is shown, for example, by the fact that our design-ins are increasing significantly and that our Winning Combinations are attracting a lot of attention in the market. In addition, the new roadmaps in the MCU and MPU area are already showing the first signs of success and COVID-19 has even accelerated demand for our products in some areas.

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1. »No longer fast follower, but leading company«
2. Gain in market share
3. "content expansion"