Renesas Slips by Most in More Than Decade After Profit Miss

News Agencies July 25, 2024

(Bloomberg) — Shares of Renesas Electronics Corp. plunged by their biggest intraday decline in more than 12 years, hit by a broader tech selloff and investor disappointment over the Japanese chipmaker’s profit miss.

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Renesas’s stock fell as much as 17%, tumbling by their daily limit and wiping out $6 billion in value. The company, which supplies Toyota Motor Corp. and Honda Motor Co., the previous day reported underwhelming operating profit in its mainstay industrial segment, which includes factory, Internet-of-Things and infrastructure-related chips.

“We were too optimistic in our outlook in the first quarter,” Renesas Chief Executive Officer Hidetoshi Shibata told reporters on Thursday. The company expects sales of its industrial-use chips to fall in the current quarter, as it adjusts inventories, but that will be the bottom, Shibata said. “We have no intention to slow down our spending on R&D.”

The company has been on an acquisition spree as it seeks to expand its customer base beyond automakers. Renesas earlier this year announced a deal to buy Australia-listed software firm Altium Ltd. to move upstream in product development and electronics design. It’s previously bought UK-based Dialog Semiconductor Plc, San Jose-based Integrated Device Technology Inc. and Milpitas, California-based Intersil Corp.

Investors had cheered those deals, lifting the company’s shares to a record high earlier this month. The company’s market value has shrunk by $9 billion since then.

Formed out of the chip arms that originated from NEC Corp., Hitachi Ltd. and Mitsubishi Electric Corp., Renesas has made inroads into embedded semiconductors, or chips designed to work with other processors within systems such as cars and robots. Its ambition was to tap growing demand from customers grappling with increasingly complex and interconnected electronics.

(Updates with background)