原文：Opinion： Response to Renesas CEO letter

　　http://www.eetimes.com/electronics-news/4088305/Opinion-Response-to-Renesas-CEO-letter

　　Completing a merger transaction between the former NEC Electronics Corp. and Renesas Technology Corp. entities， the newly established Renesas Electronics Corp. （Tokyo） commenced business operations on April 1.

　　Yasushi Akao， president of the merged company， issued a letter to shareholders （See below）。 In the letter， Akao talks about the company‘s focus， integration plans， profit targets and other topics.

　　It won’t be easy for the new Renesas. I myself believe that the new Renesas faces many challenges going forward. For a list of those challenges， go to page 2. Here‘s the letter to shareholders：

　　Dear Shareholders and Investors，

　　In April 2010， Renesas Electronics Corporation began its new start as a merged company between NEC Electronics and Renesas Technology.

　　In light of fierce global competition in the changing semiconductor market， it is imperative for the future growth of the new Renesas Electronics to attentively respond to changes in the market condition and provide semiconductor solutions that address customer demands.

　　Renesas Electronics will focus on the three product areas; microcontrollers， SoC solutions， and analog & power devices. To expand sales and profits， Renesas Electronics will further enhance its business efficiency， leverage merger synergies， and accelerate global business operations.

　　In particular， Renesas Electronics will leverage its world-leading microcontroller business to create strong products through synergies among other product areas. Furthermore， we will further reinforce our solution businesses， which provide a one-stop solution service across all product areas to attain sustainable sales growth. On the other hand， we will strengthen marketing and product development for a growing green market， such as Smart Grid， eco-friendly devices and green vehicles， and for emerging markets including China and India to expand global business.

　　On the business management front， we will continue to pursue structural reform measures that NEC Electronics and Renesas Technology have both been working on prior to the merger， aiming to establish a powerful dedicated semiconductor company that will beat the changing market condition.

　　For the fiscal year ending March 2011， Renesas Electronics aims to attain operating profit. It also plans to execute various restructuring measures necessary to establish a strong business foundation. The company aims to attain net profits for the fiscal year ending March 2012， and to achieve double-digit operating margin in near term.

　　It is our utmost goal to increase corporate value through enhanced customer satisfaction.。 I ask our shareholders and investors for your kind support and guidance as we begin the exciting year as Renesas Electronics.

　　Renesas Electronics Corporation

　　President

　　Yasushi Akao

　　The big challenges

　　In my opinion， here’s the big challenges for the new Renesas going forward：

　　1. Profitability. The company aims to attain net profits for the fiscal year ending March 2012， but I don‘t buy that. For years， NEC Electronics failed to make a profit. Privately-held Renesas was recently in the red.

　　The only way the new Renesas will make a profit is by cost-cutting and layoff measures. And I mean big layoffs. Both NEC Electronics and the old Renesas failed to make the tough decisions before to cut costs. What makes you think the new Renesas will make the tough decisions now？

　　I see a sea of red ink for the foreseeable future.

　　2. Integration. I see this as a nightmare for the new Renesas. When I look at the new organization chart， it looks simple and seemless. After thinking about it for awhile， however， the new Renesas has basically made one org chart run by two companies （i.e. Renesas and NEC. To me， it appears that Renesas is still operating like two companies. That spells losses and confusion.

　　3. Product plans. The product integration issues will also be a nightmare. In microcontrollers， for example， the merged Renesas will support nearly a dozen architectures， including from the old NEC and Renesas. The old Renesas recently rolled out the RX MCU line， which is supposed to merge Renesas’ MCUs under one architecture. But what about NEC‘s lines？

　　An executive from NEC told me that the new Renesas would support all MCU architectures for the foreseeable future. That’s good for customers， but bad for support and service--and the bottom line.

　　4. Fab plans. The old Renesas and NEC have their own leading-edge fabs. That makes sense. But the two companies also own too many older fabs. Some of these must be closed to cut costs.

　　The new Renesas also must wake up and make another tough decision： It must embrace the foundries--or else. Renesas and NEC do limited business with the foundries. But does it make sense to keep most production in-house？ I say no.

　　5. Process plans. Despite the merger， NEC Electronics and Renesas will continue to move forward with their own， respective leading-edge technology alliances. Renesas and Panasonic have a partnership. NEC Electronics and others are part of IBM‘s ’‘fab club.’‘

　　In time， Akao said the new Renesas will pick one partnership. Good idea. But I doubt that decision will be made in the near term.