A consortium of major Japanese companies, along with a government-backed turnaround fund snapped chipmaker Renesas away from what they deemed as certain doom on the hands of the American private equity fund Kohlberg Kravis Roberts (KKR). The Nikkei [sub] reports in a flash message that the consortium that includes all three major Japanese automakers has put together a $13 billion package to block a purchase by KKR.
Why do we write about chipmakers? TTAC readers may remember Renesas from our coverage of the post-tsunami fallout. It turned out that the automakers had survived relatively unscathed. The tsunami did wipe out a fab of Renesas, which supplied nearly all Japanese automakers (and many elsewhere) with specialized ECU chips. The ensuing chip famine nearly wiped out Toyota and Honda. Nissan was said to have taken a large delivery of a previous-gen chip and was relatively unaffected.
According to the Nikkei, having cornered the chip market did not translate into stellar earnings. Renesas has booked seven straight years of losses and appears that it will do the same this year.
Last month, KKR was willing to take over Renesas, but demanded that the entire board steps down and that existing lenders and shareholders come up with new money. Worried about another disruption, and possibly about the brains of their cars being in the hands of unpredictable Americans, the Japanese decided to act. The consortium also includes parts makers Denso, Keihin, and more. Germany’s Bosch may get invited.
Some of the microcontrollers made by Renesas are deemed as hard to replace with those from other manufacturers.