{"id":3582,"date":"2018-09-11T08:30:31","date_gmt":"2018-09-11T08:30:31","guid":{"rendered":"https:\/\/athis-consulting.com\/news\/?p=3582"},"modified":"2018-10-02T10:27:46","modified_gmt":"2018-10-02T10:27:46","slug":"japans-renesas-to-buy-u-s-chipmaker-idt-for-6-7-billion","status":"publish","type":"post","link":"https:\/\/athis-technologies.com\/news\/innovation\/manufacturing\/2018\/japans-renesas-to-buy-u-s-chipmaker-idt-for-6-7-billion\/","title":{"rendered":"Japan’s Renesas to buy U.S. chipmaker IDT for $6.7 billion"},"content":{"rendered":"
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Renesas Electronics Corp’s logo is seen on its product at the company’s conference in Tokyo, Japan, April 11, 2017.<\/p>\n<\/div>\n<\/div>\n

The deal for the U.S. chip design firm underscores fierce competition between global chipmakers as they seek to boost their product line-ups and market share in the highly lucrative field of automotive chips.<\/p>\n

Renesas is second only to NXP Semiconductors NV in auto-related chips and commands 30 percent of the global market for microcontrollers used in cars. But it is weak in so-called analog chips which process signals from things such as sound, light or temperature into digital data.<\/p>\n

In particular, Renesas has been keen to get its hands on IDT\u2019s know-how in analog semiconductors for wireless networks and sensors – expertise crucial to develop autonomous driving and connected car technology.<\/p>\n

It will pay $49 per share in cash for IDT\u2019s outstanding shares, a 16 percent premium to their closing price on Monday.<\/p>\n

\u201cWe were weak in chips for wireless networks needed for the Internet of things and connected cars. We\u2019ve been wanting to get such assets,\u201d Renesas Chief Executive Officer Bunsei Kure told a news conference.<\/p>\n

Renesas said that the combination with IDT will allow the Japanese firm to provide more comprehensive chip systems for its clients. IDT is also strong in chips for data centers, opening up a new stream of revenue for Renesas.<\/p>\n

Renesas\u2019 stock climbed 4 percent higher in afternoon trade, regaining some ground lost in a 14 percent slide since the Japanese firm said it was considering buying IDT on Aug. 31.<\/p>\n

While IDT has averaged nearly 20 percent revenue growth in the past four reported quarters, some analysts worry that benefits from the deal could be hard to come by.<\/p>\n

\u201cRenesas is weak in telecommunications chips, so the combination isn\u2019t bad,\u201d said Akira Minamikawa, principal analyst at IHS Markit. \u201cBut IDT doesn\u2019t have many automotive clients. Bringing their chips up to the level needed for automotive standards will not be easy.\u201d<\/p>\n

IDT generates just 11 percent of its revenue from automotive and industrial businesses.<\/p>\n

The deal comes on the heels of last year\u2019s purchase of U.S. chipmaker Intersil Corp for $3.2 billion which also expanded its portfolio of analog chips.<\/p>\n

The companies need to gain approval from the Committee on Foreign Investment in the United States (CFIUS), which scrutinizes deals for potential national security issues, as well as from antitrust authorities in markets such as China.<\/p>\n

Renesas said it was confident of obtaining the necessary approvals.<\/p>\n

Renesas, which expects the deal to close in the first half of 2019, will finance the acquisition with 679 billion yen ($6.1 billion) of bank loans as well as cash, and expects to repay 200 billion yen every year.<\/p>\n

The loan will be offered by the core banks of Mitsubishi UFJ Financial Group Inc\u00a0and Mizuho Financial Group Inc, a source with direct knowledge of the matter told Reuters. The source was not authorized to be talk publicly on the matter and declined to be identified.<\/p>\n

S&P Global Ratings put Renesas on a negative credit watch, saying it might cut the firm\u2019s rating by one or two notches if the acquisition proceeds as planned.<\/p>\n

\u201cKey financial ratios for Renesas Electronics would likely deteriorate significantly – even taking into account IDT\u2019s possible contribution to earnings,\u201d S&P said.<\/p>\n

Renesas was late to join a wave of consolidation in the chip industry as it struggled to recover from damage suffered at key plants in an earthquake that hit Japan in 2011.<\/p>\n

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Reporting by Makiko Yamazaki, Additional reporting by Taro Fuse, Chris Gallagher, Chang-Ran Kim and Taiga Uranaka; Writing by Sayantani Ghosh; Editing by Edwina Gibbs<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Renesas Electronics Corp’s logo is seen on its product at the company’s conference in Tokyo, Japan, April 11, 2017. The deal for the U.S. chip design firm underscores fierce competition between global chipmakers as they seek to boost their product line-ups and market share in the highly lucrative field of automotive chips. Renesas is second […]<\/p>\n","protected":false},"author":1,"featured_media":3583,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"amp_status":"","_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"Japan's Renesas to buy U.S. chipmaker IDT for $6.7 billion","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[242,10],"tags":[],"jetpack_publicize_connections":[],"yoast_head":"\nJapan's Renesas to buy U.S. chipmaker IDT for $6.7 billion - AthisNews<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/athis-technologies.com\/news\/innovation\/manufacturing\/2018\/japans-renesas-to-buy-u-s-chipmaker-idt-for-6-7-billion\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Japan's Renesas to buy U.S. chipmaker IDT for $6.7 billion - AthisNews\" \/>\n<meta property=\"og:description\" content=\"Renesas Electronics Corp’s logo is seen on its product at the company’s conference in Tokyo, Japan, April 11, 2017. 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