Renesas Electronics to Strengthen Supply Chain

Renesas Electronics Corp. plans to establish a new overseas procurement office within its sales subsidiary in China, Renesas Electronics (Shanghai) Co. Ltd, to promote globalization of the material procurement structure to address the company’s aim of expanding its global business. The new structure will be Renesas Electronics’ second overseas procurement office adding to the one in Taiwan, and is scheduled to start operations on April 1, 2011.

Recently, many semiconductor companies are expanding both their own manufacturing facilities and their outsourcing businesses in China, and semiconductor materials suppliers in China and from outside China are increasing their manufacturing capacity. For this reason, China is expected to grow rapidly as a procurement market over the next several years.

To address these changes in the procurement environment, Renesas Electronics is establishing a material procurement base in China to enable more robust material procurement support for overseas manufacturing subsidiaries in China planning to expand their production capacity and to allow cost reduction for all of the company’s manufacturing subsidiaries including the ones in Japan by expanding procurement of materials at lower prices.

In addition, by having the company’s offshore procurement bases place orders with Japanese manufacturers denominated in foreign currency, Renesas Electronics will be able to hedge against exchange risks while increasing sales overseas. Renesas Electronics is targeting to increase its overseas sales in procurement in FY2012 by more than 1.5 times from FY2010, and by strengthening its procurement structure, the company plans to further expand its overseas procurement ratio from the current 18 percent in FY2010 to 30 percent in FY2012.

In addition, Renesas Electronics aims to boost its overseas sales ratio from the current 50 percent in FY2010 to 60 percent in FY2012. As part of this effort, the company has been establishing a structure within its Chinese sales subsidiary, Renesas Electronics (Shanghai) Co. Ltd, to enable rapid decision making in areas from marketing to design, sales, and manufacturing in order to focus on the Chinese market, which continues to experience strong growth both in manufacturing facilities for electronic devices for worldwide markets and as a center of consumption.

To shift its procurement target from Japanese to non-Japanese suppliers, Renesas Electronics will establish a material procurement base in Shanghai and aims to expand its procurement throughout Asia by working in concert with the purchasing base in Taiwan.

Renesas Electronics