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Electronics Production | December 06, 2010

Renesas: 'Of course we want to keep the staff from Nokia'

Following Renesas’ acquisition of Nokia’s wireless modem business, we wanted to find out more about it. At the electronica show we were able to talk to Dr. Manfred Schlett, Senior Director Mobile Platform Centre at Renesas.

What’s going to happen to the former Nokia staff – are there any plans for restructuring?

Before answering your question in more detail, please let us take a look at why we made this acquisition and what the background to it is. The acquisition of the Nokia wireless modem business unit is very special in that we weren't buying revenues or additional customer relationships. It's mainly an acquisition of expertise, so the major point of the exercise is to keep and develop the expertise and the technology R&D.

In this area, patents and intellectual property (IP) are of major importance. What’s important is having the capability to make products. But we can only do that if we have this very specialized knowledge available to us inside the company.

This is why the new company, Renesas Mobile, will endeavour to keep these people, as far as that’s possible. The same goes for the various offices. This means that we’ll be employing about 600 people in Oulu (Finland), around 200 in India, 150 in the UK and 600 in Tokyo (Japan), so we’re not looking to restructure. Of course, we’ll need to reassign certain tasks, but we’ll be keeping and utilising the expertise.

And how have the staff reacted to the acquisition? Do the former Nokia employees want to stay with Renesas?

We really hope they do, but only Nokia staff can decide whether their preferred employer is Renesas or a competitor. However, we’re very optimistic.

We don’t hear much about market share. How big is Renesas’ market share and – most importantly – what is its target?

I’ll concentrate on the mobile area here. Renesas Electronics has a very high market share for certain components. For example, we have a share of around 20 – 30% in some markets for components like power amplifiers and RF transceivers. In Asian markets we have a market share of up to 100% in a few areas, such as smartphones. However, we’re fairly weak in smartphones on the global level. That’s why we need exactly the type of technology that we’ve acquired from Nokia. We want to become one of the top 3 players in this area.

Renesas currently has sales of about US$ 1.2 billion in the mobile segment. Our goal is to rapidly increase this to $2 billion, then to $4 billion. This would get us into the top 3. As for how things develop after that, beyond 2018, it’s difficult to say exactly. However, we’re hoping to be number one in this segment in 8 years’ time. But we’re talking about a very long timeframe here.

Was the acquisition of Nokia Wireless a long-term strategic goal or did it happen more or less by chance?

A few companies underestimated the dynamics of the market. I think there were initially other plans for licensing the Nokia technology. Whether Nokia had thought about selling this business at some point, I can’t judge. We weren’t originally thinking about an acquisition, it just wasn’t under discussion at that time. In those days other firms, such as Infineon Wireless, weren’t up for sale either.

But over the last few years, market dynamics have developed in such a way that licensing the technology evolved into a real need. Renesas’ learning curve came to a close with the acquisition of the business. But we didn’t really foresee that at the beginning.

Why did you decide to license technology from Nokia and not from, say, Infineon or other companies in this area?

Nokia was one of the few companies whose model was to promote connectivity solutions as a commodity. For whatever reason, they decided that this technology should be licensable. We talked to other companies too and obviously thought about the activities that make us so successful in Asia and how to expand them worldwide.

At that point we could see that we needed to have the modem technology ourselves. It quickly became clear that a partnership would only be possible within limits. So all the other discussions we were having didn’t really have much purpose any more. Nokia’s modem technology was the one that made the most sense to us in our market.

Thank you for talking to us.

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