Renesas Rises After Report Apple May Buy Design Unit Stake

Apr 02, 2014 2:59 am ET

(Updates with closing share price in second paragraph.)

April 2 (Bloomberg) -- Renesas Electronics Corp. gained in Tokyo after a report Apple Inc. is seeking to buy a stake in a unit that designs chips for liquid-crystal displays used in smartphones.

The shares rose 6 percent to 831 yen, the highest close since March 2011. Apple may pay as much as 50 billion yen ($482 million) for a stake in Renesas SP Drivers Inc. the Nikkei newspaper reported today.

Renesas SP designs, develops and sells liquid crystal display drivers and controllers for small- and mid-size panels, according to the company’s website. Renesas Electronics owns a 55 percent stake in the business, while Sharp Corp. has 25 percent and Powerchip holds the rest, the website says.

“Renesas is working to improve panel control function, which may be important for Apple’s next generation products,” said Damian Thong, a Tokyo-based analyst at Macquarie Group Ltd. “Apple has a history of interests in chip makers.”

Taizo Endo, a Tokyo-based spokesman for Renesas Electronics, said the company is considering options and no decision has been made. Takashi Takebayashi, a Tokyo-based spokesman for Apple, didn’t immediately return a call seeking comment on the report. Sharp spokeswoman Miyuki Nakayama declined to comment.

Apple has bought several chip companies, including Passif Semiconductor last year, Intrinsity in 2010 and P.A. Semi in 2008. The company also purchased the Israeli company Anobit in 2012 to acquire flash-memory technology.

Government Fund

Apple gets iPhone LCD chips from Renesas SP, according to the Nikkei. A sale may benefit the government-backed Innovation Network Corp. of Japan which led a 150-billion yen investment in Renesas Electronics in September that included stakes for Toyota Motor Corp. and Nissan Motor Co.

The value of that investment has risen almost seven-fold based on the sale price of 120 yen a share and today’s close.

Renesas Electronics unveiled on Feb. 19 a plan to cut jobs by offering buyouts. The company was talking with unions to cut about 20 percent of its workforce through voluntary buyouts, a person familiar with the matter said in January.

INCJ made a profit last month on an investment in Japan Display Inc. after the company’s initial public offering and plans to use lessons from the deal in restructuring other troubled industries Co-Chief Operating Officer Yoshinori Komiya said last week.

The value of INCJ’s investment in Japan Display swelled to 323 billion yen, a return of 62 percent in less than three years, based on March 28 closing prices. It retains a stake of about 36 percent.

The Japan Display approach can be applied to other companies and industries including Renesas Electronics, Komiya said during the interview.