LOS ANGELES -- It often takes a crisis to make a corporation deal with its demons.
For semiconductor giant Renesas Electronics Corp., that crisis was Japan's devastating 2011 earthquake. The company had a dominant 40 percent market share for automotive microcontrollers, the chips that manage most of a vehicle's basic functions, but it had too many factories, employees and product lines.
Few auto executives knew of Renesas, which mainly sold its semiconductors to Tier 1 suppliers for use in computing modules, until the earthquake struck, knocking out a key factory and forcing Renesas to ration its chips to customers.
Four years later, having finished a restructuring plan, Renesas is no longer bleeding red ink, but it faces stiffer competition than ever. So the company has embarked on a new strategy around back-end software that has historically been a headache, betting that automakers will finally learn its name -- this time, for the right reasons.
"The only way we can increase our sales is if our end customers increase their demand for us," Ali Sebt, president of Renesas Electronics America, said in October at the company's developer conference here. "There's really no other way. What we need to do is adopt platforms. We have entered the era of platforms."
"Platform" has become a buzzword, yet it reflects a crucial challenge facing the auto industry in its quest for automated, connected cars.
Car companies want to build features and interfaces to set themselves apart, yet most of the dollars spent developing computers for autonomous cars -- 60 to 70 percent -- are spent on back-end software a customer never sees, said Josh Hartung, CEO of Harbrick, an Idaho startup that specializes in autonomous driving software.
Renesas is betting that by delivering the back-end software, it can sell more silicon. It is working with Harbrick on an operating system, called PolySync, that allows sensors to be added or moved without requiring all of that expensive back-end code to be rewritten.
"A platform allows you to do what you do best and get a lot of the other challenges out of the way," Hartung said. If car companies had to build the back-end software needed for a self-driving car, he added, "it would be like building their own cellular network just so they can put telematics into a car."
This fall, Renesas unveiled a prototype Cadillac SRX with two lidar sensors from Velodyne, five radar sensors from Delphi, a six-sensor lidar system from Ibeo, three cameras and the suite of sensors built into the stock SRX. It was integrated in months, not years, using Harbrick's software.
"We've worked with a number of the largest semiconductor companies," Hartung said, "and we feel that because of their capitalization and their focus on software, Renesas is in a strong position to capture market share."
Renesas' position was not always strong. Formed from a succession of mergers among Hitachi, Mitsubishi Electric Corp. and NEC Electronics, Renesas gained a reputation for quality, reliability and low prices, but also for wasteful duplication.
"We started as three companies, and from a cultural standpoint, once we made a product for a customer we needed to maintain it," Amrit Vivekanand, who leads Renesas' automotive business in the Americas, said in an interview. "End-of-line discussions are never easy. So we just kept carrying more and more product."
After taking a $1.8 billion bailout in late 2012, funded by customers such as Toyota, Nissan and Panasonic, Renesas trimmed the fat. In microcontrollers, Renesas settled on two families of chips, down from more than a dozen just a few years prior.
Aided by a weak yen, Renesas turned a profit of ¥104.4 billion, or about $850 million, for the fiscal year ended March 31. But rivals treated Renesas' former weakness as a chance to advance. In March, Dutch chipmaker NXP Semiconductors NV announced it would buy Texas-based Freescale Semiconductor for $11.8 billion to pass Renesas as the largest supplier of automotive silicon.
Renesas is also fending off Nvidia Corp., which has partnered with another microcontroller specialist, Infineon, on automated driving computers. Still, Renesas is betting that its long track record of automotive-grade quality will help it protect its turf.
"We are maybe not the fastest," said Jean-Francois Chouteau, head of Renesas' driver assistance group, "but we're the one that people will rely upon for the long run."
