What's Behind the $1.7B Loss and Strategic Delay at This Leading MCU Maker? Renesas, a major player in the automotive semiconductor industry, has recently made a series of notable moves. According to reports, the company is exiting the silicon carbide (SiC) business that it entered relatively recently, and expects to incur a loss of approximately $1.7 billion in the first half of the year.
Additionally, Renesas has officially pushed back the deadline for achieving its three long-term goals, set in 2022, to 2035. These goals were to become a top-three embedded semiconductor solutions provider, reach $20 billion in annual sales and grow its market cap sixfold compared to 2022.
These changes reflect both external and internal challenges, as the company navigates a shifting business environment and performance volatility.
Recent Developments
Renesas made two major announcements in quick succession.
1. It shut down its silicon carbide (SiC) power semiconductor operations for electric vehicles, dissolving the related team at its Takasaki facility.
2. During its recent strategic update, the company announced that it was delaying the timeline for achieving its 2030 goals by five years.
These moves are closely tied to financial difficulties at Wolfspeed, Renesas's key SiC wafer supplier and partner. Wolfspeed, a leading U.S.-based SiC wafer manufacturer, has faced mounting difficulties.
October 2024: Rumours circulated that Wolfspeed was on the verge of bankruptcy. That month, the US government and a consortium provided it with $1.5 billion in financial support.
- 20 May 2025: Reports suggested that the company would file for bankruptcy within weeks.
- 29 May: Renesas was said to have abandoned its silicon carbide (SiC) manufacturing plans.
- 23 June: Wolfspeed officially announced that it would be seeking bankruptcy protection.
- 26 June: Renesas held a strategic briefing and confirmed that it would miss key targets.
The Fallout from Wolfspeed's Collapse and Broader SiC Challenges
Renesas entered the SiC power semiconductor market in 2022, with plans to begin mass production in 2025. In July 2023, Renesas signed a 10-year supply deal with Wolfspeed, paying a deposit of $2.062 billion, which was converted into Wolfspeed's convertible bonds, common stock, and warrants. However, Wolfspeed's subsequent bankruptcy forced Renesas to write down approximately $1.7 billion in the first half of 2025.
However, Wolfspeed's collapse wasn't the only challenge. Weak demand and increased competition also hit the SiC market hard. According to TrendForce, global demand for automotive and industrial SiC applications slowed in 2024. EV subsidies in Europe were scaled back, hurting sales and putting pressure on the upstream supply chain.
Meanwhile, Chinese manufacturers expanded their presence rapidly, intensifying competition and driving down prices. Global revenue for N-type SiC substrates is projected to fall by 9% year on year to reach $1.04 billion in 2024. Other major players, such as ROHM, STMicroelectronics and Infineon, have also been impacted.
Although Renesas has paused direct investment, the company may still be involved in the SiC sector through design and outsourced manufacturing.
Performance Trends and Strategic Realignment
Amid a global auto chip shortage and a series of overseas acquisitions, Renesas saw a sharp rise in revenue in 2021–2022, with revenue hitting 1.5 trillion yen in 2022—a 51% year-on-year increase. However, growth has since slowed.
2023: Revenue fell by 2.2% to 1.4697 trillion yen.
2024: It dropped another 8.2% to 1.3485 trillion yen.
In Q4 of 2023, non-automotive revenue fell by 18.4% year-on-year, primarily due to weak demand for PCs, smartphones and consumer electronics, although the automotive sector remained robust. By Q4 2024, automotive revenue had also declined, by 13.5% year-on-year.
In Q1 2025:
- Total revenue fell by 12.2% to 308.8 billion yen.
- Operating profit dropped by 29.7 billion yen to 83.8 billion yen
- Net income declined by 32.6 billion yen to 73.3 billion yen.
- Automotive revenue fell by 12.8% to 155.3 billion yen.
In January 2025, Renesas announced plans to reduce its global workforce by around 5% (approximately 1,000 employees), and to postpone planned salary increases. On 26 June, the company revealed that it would be refocusing on its core strengths in embedded processing and computing, and increasing investment in these areas.
This decision was influenced by global economic uncertainty, changes to Japan's supply chain landscape and growing competition from Chinese companies. The automotive sector accounts for around 52% of Renesas's revenue, while the industrial, infrastructure and IoT businesses make up the remaining 47%.
Both segments have faced challenges in recent quarters. By Q1 2025, inventory adjustments were almost finished, and capacity utilisation had slightly exceeded expectations. However, Q2 revenue is forecast to decline to 302 billion yen, which is a fall of 15.8% year-on-year and 2.2% sequentially (including the effects of exchange rates).
Both gross margin and operating margin are expected to fall, with Q2 revenue forecast to decline to 302 billion yen, down 15.8% year-on-year and 2.2% sequentially (including exchange rate effects).
Conclusion
Renesas is navigating a critical transition. Although its exit from the SiC business could impact short-term performance, the company has not ruled out returning to the sector through a more asset-light approach. It remains to be seen whether its renewed focus on embedded systems can ease financial pressure and restore growth momentum.