TOKYO (Bloomberg) -- Renesas Electronics Corp., the world's largest maker of microcontrollers used in cars, said its partnership with Taiwan Semiconductor Manufacturing Co. will help the company boost market share and operating margin.
The Japanese supplier to companies including Toyota Motor Corp. aims to raise its share of the microcontroller market to 35 percent in five years from 27 percent last year, targeting customers in emerging countries, said Shinichi Iwamoto, a senior vice president heading the unit.
The alliance with TSMC would help reduce fixed costs and increase the profit margin, Iwamoto said Tuesday.
The alliance with TSMC may also help raise the ratio of products made for it by other companies to about 30 percent in 2016 from 15 percent last fiscal year, Iwamoto said.
TSMC, the world's largest custom chipmaker, will start to ship 40- nanometer chips to Renesas for the devices used in cars including to trigger airbags, the two companies said May 28.
"TSMC has flexible production capacity and technology, which will broaden our business," Iwamoto said.
The two companies will also consider cooperating in developing smaller and more energy-efficient 28-nanometer chips, he said. Kawasaki, Japan-based Renesas, which hasn't posted a profit since it was founded in 2010, was said to be planning to raise capital of 100 billion yen ($1.3 billion) and eliminate at least 10,000 jobs, a person briefed on the matter said May 25.
The job cuts would amount to almost a quarter of the company's 42,800- strong workforce.
"We expect to get more orders from Renesas in the future because of our collaboration on 40 nanometer and beyond," Elizabeth Sun, spokeswoman for Hsinchu, Taiwan-based TSMC said.
Renesas has decided not to build facilities for advanced manufacturing, so it makes sense for its chips at newer technologies to be made at TSMC given the cooperation, she said.
Falling orders for its system chips from consumer electronics makers had worsened Renesas's situation, Iwamoto said, without naming any company.
The semiconductor maker's customers include Sharp Corp., Sony Corp. and Panasonic Corp., which posted a combined 1.6 trillion yen in losses last fiscal year because of slumping demand for their televisions.
Renesas's microcontroller business has operating profit margin of at least 10 percent, said Ryuji Omura, the unit's general manager.
About 60 percent to 70 percent of chips used by Toyota and Nissan Motor Co. are made by Renesas, according to Kunihiko Onuma, head of Hitachi Ltd.'s automotive systems unit.
Hitachi owns 30.6 percent of Renesas, according to data compiled by Bloomberg. Renesas fell 1.2 percent to 320 yen at the close in Tokyo.