Renesas buying Intersil for $3.2 billion is the latest reminder of how the new growth markets like automotive, industrial, and the Internet of Things (IoT) are driving new industry alignments in a highly competitive chip market.
In other words, it's not about mere consolidation for reaping the benefits of lower operating costs.
Renesas, a leading MCU supplier, is aligning with analog and mixed-signal chip firm, Intersil, that is known for strengths in power management and precision analog in markets such as automotive, industrial, and infrastructure. Renesas CEO Bunsei Kure, while announcing the deal, has outlined his vision for integrating Renesas MCUs with Intersil power management ICs for automotive, industrial, and IoT products.
Analog and power are vital ingredients in automotive chip recipe. Image courtesy of Renesas.
The Demand for More Powerful MCUs
Take the case of automotive, the market that Renesas has been focusing for the past couple of years; Renesas draws nearly half of its revenues from this market and its customers include Ford, Nissan, and Toyota. Automakers used to sprinkle in tiny microcontrollers for control functions related to power steering, dashboard displays, etc.
However, now the drive behind undertakings such as electric and hybrid vehicles and autonomous cars is irreversible—and that is putting a lot of pressure on humble MCUs. That, in turn, is leading to their evolution toward more powerful system-on-chips (SoCs) that can perform battery management in electric and hybrid vehicles and operate sensors and cameras in autonomous cars.
Take, for instance, the chip that controls a car's windshield wipers. There is also need for a separate chip to control the power supply of the windshield wipers. So utilizing a single chip instead of two creates a highly integrated solution for embedded systems design.
Renesas' Automotive Gambit
It's worth noting that Renesas was the world's largest automotive chipmaker when the 'connected car' gold rush started a few years ago. But then Infineon grabbed International Rectifier and NXP acquired Freescale, and Renesas fell to lower automotive chip industry rankings.
Renesas, created through the merger of chip divisions of three Japanese conglomerates—Hitachi, Mitsubishi and NEC—has been striving to transform itself into a more nimble player over the recent years. Apart from a major restructuring effort and a renewed focus on automotive and industrial markets, Renesas has been beefing up strengths in analog and power portfolios and pairing them with its microcontrollers.
Intersil's power management ICs are a major consideration in the Renesas deal. Image courtesy of Intersil.
Intersil, which offers analog components like amplifiers, data converters, voltage regulators, and interface and timing chips, also boasts strength in automotive and industrial markets. So the acquisition of Milpitas, California–based Intersil will allow Renesas to buy its way into the analog and power devices.
Renesas CEO Kure is calling the acquisition a once-in-a-lifetime opportunity. Besides automotive and industrial, a diverse array of IoT devices is creating new market opportunities for MCU players with analog and mixed-signal expertise.
Microcontrollers perform the control tasks while analog parts on SoCs handle sensor data and display interfaces and manage power consumption for MCUs. That also sums up the evolution of MCUs in the IoT age.