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5 Reasons Renesas Ditched Modem Business

6/28/2013 05:00 PM EDT
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breizh_audio
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Re: Analysis misses the essential point...
breizh_audio   7/2/2013 8:07:36 AM
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RMC design center in France (Renesas Design France) originally started within REL operations before joining RMC. This R&D design center was mainly in charge of supplying 2G modem for Renesas operations in the past.

junko.yoshida
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Re: Analysis misses the essential point...
junko.yoshida   7/2/2013 7:55:32 AM
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breizh_audio, I am familiar with RMC's operation in Rennes. (I was meaning to visit, while I was in France, but never had the opportunity) So, when you say "by former REL employees," are these people (who built Audio Voice sybsystem, for example) are NOT RMC employees? Just curious. 

junko.yoshida
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Re: Analysis misses the essential point...
junko.yoshida   7/2/2013 7:49:26 AM
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earofvan, thanks for commenting. I have heard a lot of these Chinese "design houses." Which one are you referring to, if I may ask.

breizh_audio
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Re: Analysis misses the essential point...
breizh_audio   7/2/2013 6:18:17 AM
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I just want to point out that a non negligeable part of the RMC modem has also been designed in France by former REL employees (For example Audio Voice subsystem is completly done in Rennes, France).

 

renesasian
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Re: Analysis misses the essential point...
renesasian   7/2/2013 4:35:14 AM
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There have been some critical strategic mistakes, Renesas Electronics have cut critical staff at critical times (especially in Android development) and the customer support has been horribly underresourced. 

But having horribly underresourced customer support has resulted in huge direct support from R&D for customers, introducing huge costs but also making the company extremely focussed on customers.

RMC's triple mode LTE modem has been on the parket since last November, but in only one device. That says a lot about how RMC has failed.

earofvan
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Re: Analysis misses the essential point...
earofvan   7/2/2013 2:05:55 AM
Just before the announcement of the shutting down, I attended a techinical presentation showing RMC product progress. In a recent AT&T test, the audio processing module implemented in RMC modem even outperformed the Samsung Galaxy 4. I would say our Finnish colleages have done a great job in this regard. Of course I mean this only from the engineering point of view.

I am not sure if Kobayashi san is right about everything. But everytime I was informed about the company's tough situation, the earthquake and Japanese currency would be blamed for sure. I am wondering if Mr. AkioMorita or Matsushita would say the same thing?

As for China, when a small local design house decided to make smart phones, Qualcom reached them and provided their solution even with angel investment. Now this design house sells 10M smart phones a year with estimated market value of 4B dollars. Will Samsung Galaxy ACE easily make this far? Will any of our decision makers have any idea about its name? I doubt that.

 

 

Tatsuo Kobayashi
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Re: Analysis misses the essential point...
Tatsuo Kobayashi   7/1/2013 11:52:10 PM
Hi Junko,

I am sorry if I came across rude. Perhaps I am pained by the way mismanagement, lack of accountability, and apathy has ruined two large semiconductor companies, viz. Renesas Technology and NEC Electronics. At some point in time, they had the total revenue fo 16-17 Billion Dollars and they directly employed 50,000+ people (not sure how much indirect employment they generated). Today, they are a one company, and down to 7-8 Billion Dollars revenue and direct employment of about 30,000 people. Billions of dollars of GDP and thousands of jobs lost in Japan due to mismanagement. What kind of (dis-)service this so called elite management did to the country? 

"But don't you think that it's about time for those Japanese employees at RMC today to stop expecting their automatic"return" to Renesas?"

Their return is guaranted. Because, all RMC employees are on a temporary transfer from Renesas Elec. to RMC. They are still very much on the rolls of Renesas Elec. and their pension / social insurance is still with Renesas. So, this concern does not arise for them. 


"There isn't much Renesas left to start with."

I agree. But who cares? When you meet Renesas management next time, ask them what is their "Utilization Rate" of internal human resources. They would have no idea about it, because they do not track it!! No one in the company knows how many people are sitting idle and just drawing their salaries! This is simply unthinkable in the States here. I would suspect that the utilization rate of Renesas is less than 70%, it means they should generate the same revenue with at least 20% fewer people (if they really know how to efficiently manage the company, and if they really want to take unpopular measures). When you have 8,000 - 10,000 people in the company sitting and doing nothing worthwhile, would it really matter if another 400-500 people join these freeloaders? Besides, after the investment from Government backed fund, many employees think they are now semi-government employees, and government will keep on pumping the money whenever required. So, no worries..enjoy! 

 

 

 

junko.yoshida
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Re: Analysis misses the essential point...
junko.yoshida   7/1/2013 10:40:26 PM
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Thanks for your detailed analysis here, Kobayashi-san.

You wrote:

"As an outsider, I knew almost 1 year back that Renesas didn't have money to run RMC...I am sure Renesas / RMC management also saw this coming. Yet, they did nothing. Why didn't they approach private equity firms or angel investors or potential buyers one year back when they knew this was coming?"

In your analysis, you wasted no time to get to the point. I do applaud you for that.

The management's inaction, indeed, was the biggest crime -- no question. 

You pointed out that my nationality might have clouded my editorial judgement. Perhaps. But in my mind, it was something that goes out without saying... (also as a reporter, I needed something more to write about than just blaming the management's incompetence for its failure. But again, that's probably an excuse on my part.)

You also wrote:

"...Despite of this shutdown, most of the RMC employees in Japan are happy..because they will go back to Renesas, they won't have to work for demanding clients like Samsung, and they won't have to take the pain of communicating in English with team members sitting in Europe and India."

Now, that's a frightening thought.. but I have actually heard the same story.

But don't you think that it's about time for those Japanese employees at RMC today to stop expecting their automatic"return" to Renesas?

There isn't much Renesas left to start with.

Tatsuo Kobayashi
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Freelancer
Analysis misses the essential point...
Tatsuo Kobayashi   7/1/2013 9:08:54 PM
Junko,
Long back in the very same forum I had predicted that RMC is not going to survive. It has come true. I had even predicted that KKR buyout offer will be blocked and Renesas is not going to have a foreign CEO despite there were such rumors. After reading the 5 reasons you have mentioned here for Renesas fall, I am really surprised that you missed (was it intentional?) the most fundamental reasons. Being a native Japanese, I can understand that as a Japanese reporter you may not be willing to openly criticize the Renesas management, which has remained mostly Japanese till day. However, that does not change the ground reality. Living in a denial mode does not help at all. Change in market order, China strategy, consolidation issues are all fine..but they are not the primary reasons. When other companies operating in the same market conditions are making money, why couldn't RMC? It is because RMC and Renesas do not have what it takes to survive and thrive in the market. I have seen Renesas group and many other companies very closely, and I have no qualms in saying Renesas had / and still has one of the most mediocre guys in the management team. I was shocked when Mr. Kawasaki was made President of RMC..He is an outright non-performer..I don't know on what basis was he selected for this job. They should have gotten an outsider with solid experience of pulling through the difficult weather. When companies remain in denial mode, when they refuse to come out of their cozy shell, when they promote mediocrity...they are bound to fall. That's exactly what is happening with RMC, ST Ericsson and even companies like Nokia. RMC had to bite the dust because of its useless management. I would suggest you to analyze the management quality of companies like Qualcomm, Broadcom, NVIDIA, Mediatek vis-a-vis Renesas / RMC. You will get your answers. As an outsider, I knew almost 1 year back that Renesas didn't have money to run RMC...I am sure Renesas / RMC management also saw this coming. Yet, they did nothing. Why didn't they approach private equity firms or angel investors or potential buyers one year back when they knew this was coming? Despite of this shutdown, most of the RMC employees in Japan are happy..because they will go back to Renesas, they won't have to work for demanding clients like Samsung, and they won't have to take the pain of communicating in English with team members sitting in Europe and India. Let me use this space to make another prediction. Things are not good at all with Renesas. Right now they have 30,000 employees, but I see less than 10,000 after 5 years. 

junko.yoshida
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Re: It's Samsung!
junko.yoshida   7/1/2013 3:31:25 PM
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RMC is not laying off everyone in the company. RMC "will support" its customers, according to the company. The issue is, there is no roadmap for RMC's next-generation chip.

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