Denso Commits to Rejuvenated Renesas

　　Denso Corp., based in Japan and one of the world’s largest Tier Ones, announced Friday a tenfold increase in its share of Renesas Electronics from 0.5% to 5%.

　　With this commitment, Denso bestows a tacit endorsement of the topline recovery accomplished by a once-beleaguered Japanese automotive chip company. Denso’s move also reflects the current thinking among carmakers and Tier Ones who are scrambling to compete in a nascent but ever-accelerating automated vehicle race.

　　Denso explained during the announcement that in developing “competitive vehicle control systems in new fields such as automated driving,” the company considers it “essential to further enhance collaboration with semiconductor manufacturers that have profound experience and expertise.”

　　What it means to Renesas

　　Denso is acquiring the stake from Innovation Network Corp of Japan (INCJ), a state-backed fund, said INCJ in a statement.

　　The deal’s terms were not disclosed, but the transaction is worth about 85 billion yen ($796.9 million), based on Renesas’ share price, reported Reuters.

　　In efforts to save the company, Japan effectively turned Renesas into a state-owned chip manufacturer in the fall of 2013. INCJ — with 90% of its funding from the Japanese government — took over 69.16% of Renesas at that time.

　　Since then, INCJ has gradually reduced its stake in Renesas. With Denso coming in, INCJ’s share drops to 45.6%.

　　Renesas is no stranger to Denso, and Denso’s increased interest is expected to further cement their ties.

　　Last fall, Renesas announced that its R-Car SoC has been selected for Denso’s engine control unit (ECU), which will be used for Toyota’s upcoming autonomous-driving vehicles.

　　At the time of the announcement, Renesas said that Toyota had selected Renesas “as the key semiconductor supplier for its “Highway Teammate,” an autonomous-driving prototype car designed to merge, pass, change lanes, and perform other actions during highway driving under supervision.” Production vehicles are planned for sale by 2020, said the companies.

　　Denso’s plan

　　Denso, a Toyota affiliate, maintains a large global presence, with annual revenue of $40.4 billion and 9% of its revenue spent for its own R&D.

　　Despite being a part of the Toyota Group, sales to Toyota Group account for less than 50% of Denso’s revenue in 2016. In other words, instead of putting all its eggs in one basket (such as Renesas), Denso has focused on developing diversified autonomous vehicle solutions for various car OEMs (other than Toyota).

　　Denso, for example, is a key investor in an AI processor startup called ThinCI (pronounced “Think-Eye”). Last summer, Denso established a new subsidiary to design and develop semiconductor IP cores for components necessary in automated driving. The new chip architecture is being jointly developed with ThinCI, announced Denso at that time. Denso calls it a Data Flow Processor (DFP), describing it as “very different from a CPU or GPU.”

　　Yukihiro Kato, senior executive director at Denso, who delivered a keynote speech at the ISSCC last month in San Francisco, lingered over his description of the Denso-proposed DFP, calling it ideal for “high-speed processing with the pace of natural human reflexes.”

　　Asserting that the automotive industry has entered “a century transformation” period, Kato said that Denso is taking innovation seriously and has its fingers in every core technology development that matters to future mobility.