April 2, 2014 2:00 am JST

Apple looking to buy Japanese chipmaker

YUICHIRO KANEMATSU, Nikkei staff writer

SILICON VALLEY -- Apple is in talks with Japan's Renesas Electronics to take over a unit that designs chips for smartphone displays, whose engineering may help it improve image sharpness and battery life.

     With its share of the smartphone market slipping, Apple seems to want to bring this core technology in-house rather than cede development to the supplier as the U.S. company has for much of its growth.

     Apple has its eye on Renesas SP Drivers, a Renesas joint venture with Sharp and Taiwan's Powerchip. Apple is said to be seeking Renesas' entire 55% stake for an estimated 50 billion yen ($479 million). The Tokyo company appears to have logged a profit of 6 billion yen on sales of some 60 billion yen in the fiscal year ended Monday.

     Most of the unit's 240 or so employees in Japan are expected to stay on after the transfer, which Apple aims to complete by summer.

     Renesas SP is the world's leading producer of drivers and controllers for small and midsize LCDs, with a market share of around one-third. These chips determine a display's quality and performance as well as a phone's overall energy efficiency -- they are said to account for around 10% of battery usage.

     Sharp owns 25% of the venture, with Powerchip, which handles manufacturing, holding the remaining 20%. Sharp is expected to sell all its shares in Renesas SP to Apple if the U.S. company asks for such a transaction after striking a deal with Renesas.

     While Apple generally relies on multiple suppliers for each component, it gets all of its iPhone liquid crystal display chips from Renesas SP. With image quality becoming a crucial selling point for smartphones, Apple apparently wants to meld the design of core display components into overall product development.

     Apple's share of global smartphone shipments fell to 15.2% last year, less than half that of archrival Samsung. China's Huawei and other low-cost competitors are hot on its tail.