[News] Japan’s Renesas Electronics Plans Layoffs as Chip Demand Weakens

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According to a MoneyDJ report, citing Nikkei, Japan’s leading automotive chip manufacturer, Renesas Electronics, is planning to lay off several hundred employees both domestically and internationally, while also reducing factory capacity utilization.

As reported by Nikkei on January 7, Renesas Electronics plans to reduce its global workforce by less than 5%, out of approximately 21,000 employees worldwide. The primary reason cited for this decision is the sluggish demand for semiconductors in key sectors such as automotive, industrial machinery, and consumer products. To address this situation, the company aims to manage personnel costs and prepare for the potential of prolonged weak demand. Renesas has already informed its employees about the layoff plan at end of 2024, as the report notes.

In addition to the layoffs, Renesas also plans to postpone its annual wage increases, which are usually introduced in the spring. The report mentions that in 2024, the company had already carried out layoffs affecting 1-2% of its workforce and postponed annual wage increases. This marks the second consecutive year that the company has implemented these cost-cutting measures.

The report also notes that Renesas’ revenue for 2024 is projected to decline by 9% year-over-year to approximately JPY 1.33 trillion, with its operating margin expected to drop by 5 percentage points to 28.9%. Due to weak chip demand, the factory utilization rate in the last quarter (October to December 2024) fell to around 30%, down from 40% in the previous quarter (July to September 2024), as indicated by the report.

Renesas initially planned to commence mass production of power semiconductors for automotive and industrial machinery at its Kofu plant in early 2025. However, this production plan has now been shelved. The report, citing industry sources, states that the semiconductor market is not expected to recover until the second half of 2025.

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(Photo credit: Renesas Electronics)