TOKYO – The Monday morning quarterbacks are out in force talking about what went wrong with Renesas Electronics over the past two years. Many of you have already spoken. And the analyses tend to be rich with insight.
When I spoke with Yasushi Akao, president of Renesas Electronics, this week, Akao refused to play the “Japan” card to explain the mess the company is in.
I am sure that Akao, who’s still heading up the troubled company as its president, considers it silly to blame his problems on “Japanese exceptionalism.”
But here’s the thing.
Renesas’ crisis, in my mind, goes back more than two years, and it embodies the rut in which Japan as a nation has been stuck for the last two decades. Renesas was created by Japan, for Japan and of Japan, and Japan is the crux of the issue.
Let me break it down.
Renesas Technology, in my opinion, was forced to merge with NEC Electronics to become Renesas Electronics in 2010 -- in the name of saving the Japanese semiconductor industry. Before becoming Renesas Electronics, Renesas Technology was already a company tasked to absorb chip divisions of Hitachi, Mitsubishi and Matsushita.
Renesas followed similar footsteps already taken by Elpida, an amalgamation of DRAM divisions at Hitachi and NEC Electronics. Elpida, today, is bankrupt.
As Japan’s largest MCU company, Renesas may have also felt responsible for keeping Japan’s automotive industry strong and growing. After all, cars are Japan’s flagship industry.
Renesas (originally Hitachi, Mitsubishi, Panasonic and NEC) also went into the SoC business, because they saw an opportunity to serve Japan’s consumer electronics industry, which is another iconic industry. There’s no denying that Japanese CE brands led the global market with CDs, DVDs, digital cameras and flat panel TV — until, perhaps, 10 years ago.
As long as Japan served as a healthy, growing market, we all know that nobody thought twice about Japan’s all-in-this-together industrial policy. After all, Renesas’ entire eco-system existed in Japan and it was functioning fairly well – up to a point.
From everything from design, manufacture to market and financing, Renesas looked for Japanese partners and did so for Japan.
But it’s time to end that.
Last December, I met in Paris a senior executive working at Renesas Mobile, a subsidiary of Renesas responsible for its mobile chip business. Asked about challenges looming for Renesas Mobile, he talked about the need to balance his company’s growing global business while meeting domestic needs. On one hand, with Renesas Mobile’s new global charter, the executive explained that the company has freed itself from what he called the “golden cage” created by NTT Docomo. On the other, he said that it simply cannot afford to underserve Japan’s leading consumer electronics OEMs that continue to demand custom products.
The phrase, “golden cage,” stuck in my head.
This is not endemic to Renesas Mobile alone. Its parent, Renesas Eelectronics, has been trapped in a “golden cage” called Japan.
It was OK to do what Japan asked Renesas to do as long as the cage remained golden. But being unable to flee from that cage — as the goldplate flakes away, exposing the brass — has kept Renesas frozen in time.
Being a chip company as a national flag carrier is so last century.
It’s time for Japanese bureaucrats, Japanese industries and Japanese management to free Renesas. Let new management fly free, toward a new path for the company.
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