Renesas Experiences a Net Loss in the First Half of the Year for the First Time in Six Years
In a surprising turn of events, Renesas Electronics Corp, a leading Japanese semiconductor manufacturer, reported a net loss of 175.3 billion yen for the first half of its current business year through December 2025 [1]. This marks the first January-June red ink in six years for the company.
The primary reason for this net loss is a substantial one-time loss of 235 billion yen, which Renesas recorded due to the impaired deposited receivables related to Wolfspeed, Inc. This loss followed Wolfspeed’s filing for restructuring under Chapter 11 bankruptcy in the United States [2].
Despite this significant setback, the company's operational performance remains strong. The operating profit for the same period was 61.3 billion yen (9.7% of revenue), and the gross profit margin remained healthy, around 56% [1]. These figures indicate that, operationally, the company remains profitable aside from the major Wolfspeed-related loss.
Regarding the impact of tariffs on Renesas' earnings, there is no direct evidence from the disclosed financial results that tariffs had a material impact on their earnings during the second quarter of FY2025. However, the tariff agreement between Japan and the U.S. was the subject of an online briefing by Renesas President and CEO Hidetoshi Shibata [3].
Mr. Shibata expressed concern over the potential impact of a 15% U.S. tariff rate on Japanese imports on his firm's earnings. He also praised the latest Japan-U.S. tariff agreement, indicating a hope for a more favourable business environment [3].
The decrease in sales is attributed to weaker chip demand from automakers and industrial equipment manufacturers. The half-year consolidated sales dropped by 10.7% to 634.3 billion yen [1].
Renesas made a deposit of 2 billion dollars with Wolfspeed to procure chip substrate, but the failure of the U.S. partner chipmaker has resulted in this substantial impairment loss.
In summary, the net loss for Renesas is largely driven by the impairment loss on Wolfspeed deposit receivables. Operating profit and gross profit margins remain solid excluding this loss. However, the potential impact of tariffs on Renesas' earnings remains a concern, although there is no direct evidence of their impact in the disclosed reports so far.
- Despite the significant impairment loss on the Wolfspeed deposit receivables, Renesas' operational performance, as indicated by the operating profit and gross profit margin, remains robust.
- The decrease in Renesas' sales can be partially attributed to weaker demand for chips from both the automobile and technology industries, mainly due to industrial equipment manufacturers.
