Renesas Electronics, a major semiconductor company in Japan, has confirmed its intention to acquire the American semiconductor manufacturer Integrated Device Technology (IDT), and is currently in final negotiations. The acquisition amount is expected to be around $6 billion. IDT has advantages in the design and development of communication semiconductors, which are core technologies for the “Internet of Things (IoT)”. In the context of the shift in semiconductor value from manufacturing to design and development capabilities, this acquisition may become a step towards restoring competitiveness in Japan’s semiconductor industry.
IDT is a “fabless” company that does not own manufacturing facilities and focuses on semiconductor design and development. The company has advantageous communication semiconductors that can process large amounts of information required for autonomous driving at high speeds. On the other hand, Renesas holds the largest market share in the microcontroller (MCU) field for controlling automobiles and home appliances. It hopes to fully leverage IDT’s technology to enhance its competitiveness in the IoT era.
Renesas plans to acquire shares from IDT’s shareholders, aiming to make it a wholly-owned subsidiary. Analysts believe that since IDT is a publicly traded company, a TOB (Tender Offer Bid) will be implemented, acquiring shares at a premium above the stock price. If successful, the acquisition amount for Japanese semiconductor manufacturers will set a historical high. After the acquisition is completed, IDT is expected to delist from NASDAQ.
Analysts believe that final negotiations regarding the amount and other conditions will begin shortly. The acquisition funds will be paid using approximately 130 billion yen in cash deposits and bank loans available as of the end of June.
Renesas was formed in 2010 by the merger of the semiconductor divisions of Mitsubishi Electric and Hitachi, along with NEC Electronics. Following the Great East Japan Earthquake on March 11, 2011, its main factory in Nakahara (Hitachinaka City, Ibaraki Prefecture) was affected, leading to a management crisis. In 2013, it received funding from the public-private investment fund, the Japan Industry Innovation Corporation, and partners like Toyota, to promote business reconstruction.
Due to the integration of personnel and production bases, along with an increase in semiconductor demand, it turned a profit in the fiscal year 2014 (ending March 2015). In the fiscal year 2017, sales reached 780.2 billion yen, with a net profit of 77.1 billion yen. The Japan Industry Innovation Corporation, which previously held nearly 70% of the shares, has now reduced its stake to just over 30%.
Japan’s semiconductor industry has historically relied on production technology to maintain a leading position globally. However, it has lost out to South Korean companies that have made massive investments in scale and price competitiveness. As the source of semiconductor competitiveness has shifted to circuit design and development, Renesas aims to change its business model through the acquisition of IDT.
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