February 1, 2014 3:06 am JST

Renesas to withdraw from LCD chip business

OSAKA -- Japanese semiconductor firm Renesas Electronics has decided to sell off an LCD driver chip subsidiary, exiting from the business altogether as part of restructuring efforts, The Nikkei learned Friday.

     The company will unload Renesas SP Drivers, which handles development and sales of driver chips used in small and midsize LCDs. In the current fiscal year through March, the unit is expected to generate sales of some 60 billion yen ($577 million), securing 6 billion yen or so in profit. Operating in Tokyo and Nara Prefecture, the company employs about 240 workers.

     Renesas has a 55% interest in Renesas SP Drivers. Sharp and Taiwan's Powerchip also own 25% and 20% of it, respectively. Renesas is planning to unload its entire stake.

     Bidding will be held as early as March, with the sale expected to wrap up by the end of this year. The company will likely fetch tens of billions of yen. Powerchip and other foreign chipmakers are apparently showing interest.

     The market for LCD driver chips for small and midsize LCDs is expanding thanks to the rise of smartphones. In 2013, the market for mobile-phone-use chips, which help send image data to cell phone screens, grew 25% to some $2.5 billion.

     Renesas SP Drivers is the industry leader in this field, with a global market share of some 30%. But as product prices fall due to competition from South Korean and Chinese newcomers, the parent decided to unload this business. Back in 2012, Renesas pulled out of the business of driver chips for large LCDs as well.

     The firm will now focus on automotive and industrial chips, to secure more long-term, stable contracts.

     Renesas plans to shut five factories in Japan and slash its workforce by 25%, or 5,400. But so far only one of the five plants has a sales deal in place. Many details have yet to be sorted out.