Renesas Looks to Mine AV Gold With IDT Acquisition

Japanese embedded processor company Renesas Electronics is looking toward an automotive silicon bonanza, among other things, with its planned $6.7 billion acquisition of analog mixed-signal chip maker Integrated Device Technologies.

Renesas announced the buyout on September 11, hoping to clear regulatory hurdles and take over San Jose-based IDT in the first half of next year. It’s offering $49 per share, a 29.5% premium over IDT’s August 30 stock price.

Part of the draw for Renesas is the chance to play a bigger role in autonomous vehicles and electric cars, where the company expects “tremendous growth” in the next few years.

Renesas specializes in microcontrollers and system-on-chip products for a range of applications, including big data processing and the Internet of Things. It’s a major player in low-cost, low-power, hardened automotive microcontrollers, the type that have so far dominated in-vehicle electronics, Navigant Research analyst Sam Abuelsamid said. IDT could help Renesas win a place in autonomous cars, the next big opportunity, he added.

IDT, founded in 1980, makes processors that convert analog sensor signals to data for computing, as well as wireless networking chips and other products. Its automotive products include position sensors, actuator and motor controllers for exterior mirrors, and sensor signal conditioners for power steering, emissions control and other applications, according to the company’s website.

Renesas says IDT’s product lines are complementary to its own. It plans to use the company’s technology in all-in-one kits that will include microcontrollers, system-on-chip solutions and analog components.

Sensors play an increasing role in vehicles as automated systems take over from drivers’ own vision in advanced driver assistance systems and ultimately self-driving cars. IDT itself bought into this field last year by acquiring ZMD AG, a German company that is now IDT’s center for automotive development. Increasingly powerful onboard computers are also driving demand for faster networking.

While low power and relatively simple requirements have been the watchwords for in-car silicon until now, autonomous cars require much more capable processors, and Nvidia and Intel’s Mobileye division dominate that space. But driverless vehicles also need additional, redundant systems, which run less complex algorithms but can take a car to a safe state if the main system fails, Navigant’s Abuelsamid said.

Buying IDT would help Renesas fill that niche, he said. Then, as future generations of self-driving cars reach higher volumes, the company may use its expertise in low-power, low-cost silicon to develop the next generation of primary processors.

“For mass production, you want to drive down the cost of all this and make it more efficient,” Abuelsamid said.

In-car electronics is a fast-growing industry. A typical high-end car in 2022 will have about $6,000 worth of electronics, IHS Markit predicted last year, according to EE Times. The research company forecast 7% growth each year in the auto semiconductor business, with the total automotive electronics market reaching $160 billion per year by then.

The demand will grow so fast that it will be necessary for general electronics companies to join the specialists already in the segment, IHS Markit said.

— Stephen Lawson is a freelance writer based in San Francisco. Follow him on Twitter @sdlawsonmedia.