For its new fiscal year beginning in April, Renesas projected a 3-percent drop in sales and a whopping 60- percent decline in its operating profit.

The chip maker forecast that the global semiconductor market, excluding DRAMs, would shrink by 3 percent to about $185 billion in fiscal 2005 from the previous-year level of about $191 billion. "The market will grow on a volume basis, but quite severe on a value basis," said Satoru Ito, president and CEO of Renesas.

While some analysts project the IC market will decline further in 2006, Renesas said it expects the market to bottom out by this fall and grow in 2006.

With the market projected to shrink and price erosion continuing, Renesas said it expected a sales decline of 3.2 percent to about $9.2 billion, with operating profits dropping by 60.9 percent to $190 million over the previous year.

Renesas added that it expects the first half of its fiscal year to be especially harsh, with almost no operating profit. It expects to make most of its operating profit of ¥20 billion (about $190 million) in the second half. "We are going to end this term in the black," said Ito.

Renesas is the top supplier of microcontrollers, with a 22- percent market share in 2004, according to marktet researchers Gartner. Positioning the MCU business as its mainstay, Renesas said intends to reinforce its flash business by focusing on 4-Gbit devices based on a 90-nm process introduced this year.

Renesas also said it plans to invest a total of ¥80 billion (about $760 million) in facilities during the current fiscal year.

By: DocMemory
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