Japanese chipmaker Renesas Electronics announced that it expects to post its first net loss in six years in 2025, due to weak demand for its main automotive chips and a low percentage of revenue from artificial intelligence.

Renesas Revenue Report

Renesas Electronics reported a net loss of ¥51.7 billion ($330 million) on Thursday, a stark contrast to its 2024 profit forecast of ¥219 billion.

Revenue fell 2% to ¥1.32 trillion, and operating profit declined 10% to ¥201.1 billion. 

The company recorded a loss of ¥236.6 billion due to its U.S. power semiconductor partner, Wolfspeed, filing for bankruptcy protection in June.

Renesas' business plans

Renesas Electronics also announced on Thursday plans to sell its timing components business to US semiconductor design company SiTime for $3 billion. Timing components are essential for the proper functioning of electronic circuits. The proceeds will be used for growth investments and shareholder returns.

Rensas Electronics President Hidetoshi Shibata stated, "We will change our perspective on AI-related businesses and invest heavily as needed." He hinted at potential acquisitions of companies specializing in power semiconductor devices for AI servers and increased R&D investment.

According to Mr. Shibata, the timing components business generated 30.4 billion yen in revenue, boasted an operating profit margin of 52%, and "still has growth potential." However, Renesas Electronics is pushing forward with this sale to raise funds to revitalize its core semiconductor business, whose sales growth momentum is waning.

Despite record-high global semiconductor shipments, Renesas Electronics' operating profit margin remains below its peak of approximately 39% in 2022. The company's market capitalization will be surpassed by Japanese memory maker Kioxia Holdings in October 2025, losing its crown as Japan's leading chipmaker.

Rensas Electronics' predicament stems from its failure to leverage the AI boom as effectively as its peers. Artificial intelligence-related products, including server power semiconductors and memory, account for only about 10% of its revenue.

The company is striving to shift its focus from electric vehicle chips to artificial intelligence, for example, planning to launch AI server power semiconductors using the novel material gallium nitride in July 2025. However, these initiatives are still insufficient to offset the overall decline in performance.

Renesas Electronics in the development of advanced driver assistance and autonomous driving processors

Since beginning joint development with Honda in January 2025, Renesas Electronics has not announced any new customer acquisitions in the field of advanced driver assistance and autonomous driving processor development.

A semiconductor consultant stated, "Major domestic automakers have already begun discussing next-generation semiconductors with overseas manufacturers like Qualcomm, and Renesas Electronics seems to be lagging behind."

In January of this year, Renesas Electronics replaced its chief sales officer, a position that had only been held for a year; simultaneously, Renesas also replaced its head of microcontroller business, indicating a sense of urgency within the company.

Demand for automotive semiconductors, which accounts for half of the company's revenue, bottomed out at the end of 2024, but the rebound has been weak. The focus going forward will be on how rising memory prices and supply issues will affect the automotive market.

Greg Basich of Counterpoint Research in Hong Kong stated that capacity for memory and power semiconductors is being shifted to AI data centers, which could further extend delivery cycles for automotive semiconductors.

"This impact will become apparent in the automotive industry in the second half of 2026," Shibata said.

Source: Compiled from Nikkei

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