Renesas Electronics said on June 26, 2025, it is scaling back its power semiconductor business, postponing a key revenue goal by five years, and removing the executive overseeing the unit, following missteps in the electric vehicle segment.
The Japanese chipmaker said during an online strategy briefing that its plan to double annual revenue to US$20 billion will be delayed from 2030 to 2035. It also lowered its target for market capitalization growth, revising a previous goal to reach JPY10 trillion.
The changes come as Renesas faces a shifting environment in embedded semiconductors and mounting competition from Chinese firms. CEO Hidetoshi Shibata cited structural headwinds and strategic challenges in keeping pace with rivals in the power chip market.
EV market misread sparks strategic retreat
Global chipmakers raced to secure silicon carbide materials in 2022 and 2023 amid fears of shortages for electric vehicle applications. But with Western subsidies fading and EV sales in the US and Europe falling short of expectations, demand has softened. At the same time, Chinese manufacturers have ramped up production of silicon carbide wafers and chips, leading to a glut and sharp price declines.
A Renesas executive described the silicon carbide market as a "red ocean," acknowledging intensified competition. The company has cancelled plans to begin silicon carbide production at its Takasaki plant in early 2025 and halted multiple high-voltage silicon power semiconductor projects. The executive overseeing the division will step down by the end of June.
Renesas said it will continue investing in gallium nitride-based power devices and select silicon-based products, but the exit from silicon carbide marks a significant retreat from its earlier EV ambitions.
Renesas CEO Hidetoshi Shibata Credit: Renesas
Wolfspeed fallout deepens financial woes
Renesas previously signed a long-term supply agreement with US-based Wolfspeed, including a large prepayment to secure silicon carbide wafers for the next decade. However, Wolfspeed's financial collapse and subsequent bankruptcy left Renesas unable to recover the deposit, leading to a JPY250 billion impairment in the first half of 2025.
The write-down marks the biggest strategic setback under CEO Hidetoshi Shibata. He signaled a "planned stagnation period" and said the company would cut its operating margin target by 5% to allow for increased research and development spending aimed at supporting future growth.
Refocusing on high-value system solutions
Despite the setback, Shibata outlined a revised strategic vision—shifting away from stand-alone chip sales toward integrated system-level solutions. Renesas will now bundle its core microcontroller products with analog integrated circuits for sensing and power management into full-stack platforms tailored to customer applications.
The company is looking to replicate a strategy adopted by Texas Instruments, which has steered clear of direct competition in China's saturated silicon carbide market by focusing on gallium nitride development and combining it with analog offerings. Shibata said the shift toward packaged solutions could help Renesas generate higher value and reduce exposure to pricing pressures in the discrete power segment.
Article edited by Jerry Chen
