Renesas exits Flash business

Tokyo (Japan) - Renesas today said that it will exit the development of the 8 Gbit and beyond generation of AG-AND Flash to refocus its resources on its core business (microcontrollers and LCD drivers) as well as its systems solution business (system-on-a-chip products).

Renesas currently manufactures 1 Gbit and 4 Gbit AG-AND flash products, which are comparable to NAND Flash - which is mainly used for Flash memory cards. The firm said that it will continue to supply its customers with its currently existing products. According to a statement, the company believes that it will be increasingly difficult for Flash manufacturers to meet the challenge of low-cost products "mainly due to factors such as the geographical diffusion of digital technology and the growing strength of competitors in Asia."

Renesas’ decision caught analysts by surprise, especially after the company had posted 46.4 percent revenue growth in NAND Flash sales from the second to the third quarter of this year. The company was listed by iSuppli as the fourth largest NAND Flash manufacturer with a market share of 6.9 percent and quarterly revenues of $205 million.

Nam Kim, an analyst with iSuppli, told TG Daily that Renesas’ "does not make sense" as the NAND Flash market has been growing at a fast pace and is expected to continue to grow for the foreseeable time. Kim speculated that it may not have been pricing pressures driven especially by Samsung, but rather the structure of Renesas’ Flash business. "We do not have much more information other than the company is still losing money. But there is clearly something wrong when they are exiting this promising market. It may have been the internal structure of how the business was organized and a lack of marketing that did not allow Renesas to compete well in this market," he said.

In today’s announcement, Renesas mentioned that "the current business climate" sets an "unprecedented need for bold selection and concentration of resources." The company hopes to "achieve a new level of corporate competitiveness by making efficient use of the company’s design and development resources," the statement said.

Related stories :
Micron, Hynix and Toshiba drive nand Flash market in Q3
Apple’s iPod reshapes Flash industry - Intel and micron form joint venture

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