Renesas Electronics (hereinafter referred to as Renesas) released its financial results for the second quarter of 2026 (April to June) on July 31, 2026 (Non-GAAP basis). Revenue increased by 24.8% year-on-year to 405.3 billion yen; gross profit margin improved by 1.3 percentage points year-on-year to 58.1%. Operating profit increased by 40.9 billion yen year-on-year to 132.7 billion yen, and the operating profit margin improved by 4.5 percentage points year-on-year to 32.7%. Net income attributable to owners of the parent increased by 35.5 billion yen year-on-year to 113.3 billion yen.
For the first half (January to June), revenue increased by 22.8% year-on-year to 777.6 billion yen; gross profit margin improved by 1.8 percentage points year-on-year to 58.6%. Operating profit increased by 82.5 billion yen year-on-year to 258.2 billion yen; operating profit margin improved by 5.5 percentage points year-on-year to 33.2%; net income increased by 65.1 billion yen year-on-year to 216.2 billion yen.
In addition, since February 2026, Renesas has excluded the timing device business, which has been decided to be transferred, from its Non-GAAP financial results. Compared with the reference value for the same period last year excluding this business, revenue in the second quarter grew by 27.7%.
Financial Results Overview; Source: Renesas Electronics
01. Impact of the Kumamoto Earthquake on Financial Results is "Limited"
Regarding the earthquake that occurred on July 28, 2026, with Kumamoto Prefecture as the epicenter and a maximum seismic intensity of 7 (the 2026 Kumamoto Earthquake in the 8th year of Reiwa), Hidetoshi Shibata, President and CEO of Renesas, stated, "Overall, the impact on our company's financial results should be limited." It is reported that all employees have been evacuated, and there are no casualties.
The Nishiki Factory (Nishiki Town, Kuma District), which serves as a back-end process base, resumed production on the night of July 29 and has now returned to full-capacity production. The Kawashiri Factory (Minami Ward, Kumamoto City), a front-end process base, is advancing repairs for water leaks in pure water equipment and other facilities, as well as the restoration of some damaged equipment. Production is planned to resume on August 5, with the goal of returning to full-capacity production within about three weeks after resumption.
Renesas has stocked up inventories such as "die banks" for wafers that have completed front-end process processing, so it considers the impact of this earthquake on its own product supply to be limited. Although OSAT (Outsourced Semiconductor Assembly and Test) partner factories located in the Kyushu region were also affected by the disaster, the impact is reportedly limited at this stage. On the other hand, on the customer side, there have been cases of supply chain disruptions caused by the earthquake. Shibata stated that the indirect impact on the automotive sector, in particular, "needs to be carefully assessed."
Kumamoto Prefecture also experienced an earthquake with a maximum seismic intensity of 7 in April 2016. Renesas stated that the impact of this earthquake is smaller compared to 2016. In addition to the shaking of the factory itself being smaller than in 2016, the company has taken preventive measures such as placing some equipment on seismic isolation mounts and securing spare parts and BCP (Business Continuity Plan) inventories. Shibata believes that these countermeasures also contributed to the early resumption of production.
02. Strong Performance in Data Center-Related Businesses, Supply "Tight"
Revenue in the second quarter was 4.5% higher than the median forecast in April. About half of the amount exceeding expectations came from the depreciation of the yen, while the rest was mainly contributed by demand growth in sectors such as automotive, industrial, and infrastructure.
Revenue from the automotive business increased by 15.9% year-on-year to 187.1 billion yen. In addition to the smooth volume ramp-up of the 4th-generation automotive SoC (System on Chip) "R-Car" in Japan, factors such as inventory replenishment by some customers in Japan and China for previously over-reduced inventories led to final demand exceeding expectations.
Revenue from the industrial/infrastructure/IoT (Internet of Things) business increased by 40.0% year-on-year to 216.3 billion yen. In the industrial sector, data center-related businesses and the Chinese market performed strongly. In the infrastructure sector, in addition to GPU-related demand, ASIC-related demand was also strong, reportedly significantly exceeding expectations.
Revenue Trends by Business Segment; Source: Renesas Electronics
In the data center-related field, both memory interface products and digital power products continue to maintain strong demand. When talking about digital power products, Shibata stated that "we are currently in a good position," while emphasizing that since market share can fluctuate significantly depending on the product and generation, ensuring a stable supply is critical.
Regarding the supply system, Shibata explained that "the supply situation remains very tight, and it is tight across all links." Currently, the company is responding by gradually increasing the supply volume. The company plans to further enhance supply capacity between the end of this year and 2027, and expects that revenue will also grow along with the improvement in supply capacity.
In addition, Renesas has adjusted the prices of some products since July 1. Shibata explained that this is not a significant price increase for all products, but rather an adjustment mainly for products that "have to be priced higher" due to factors such as rising costs. It is expected to impact financial results starting from the third quarter.
03. Continued Growth Expected in Q3, Automotive MCU Demand Remains High
The financial results for the third quarter (July to September) are forecasted as follows: revenue will increase by 28.7% year-on-year to 430.0 billion yen (±7.5 billion yen); gross profit margin will decrease by 0.1 percentage points year-on-year to 57.5%; operating profit margin will improve by 1.6 percentage points year-on-year to 32.5%.
Forecast for Q3 FY2026 (Ending December 2026); Source: Renesas Electronics
In the automotive sector, it is expected that microcontrollers (MCU) using 28nm process technology will achieve growth, centered in China, while distribution channel inventories in the Japanese market will also be expanded. Regarding the demand in the automotive sector, Shibata stated, "Year-on-year, demand will continue to remain at a high level."
In the industrial/infrastructure sector, the strong demand seen in the second quarter is expected to continue. In the IoT sector, although the impact of rising memory prices and supply shortages has begun to emerge, sales to customers who have secured memory inventories remain robust, and overall, a slight growth is expected.
04. Expanding Inventories to Prepare for Demand Growth, Capacity Utilization Rate to Rise
In the second quarter, the company's own inventories, mainly work-in-process, increased compared to the previous quarter due to capacity expansion and increased input volume to cope with demand growth. On the other hand, due to revenue growth, inventory days decreased, and distribution channel inventories also increased, but inventory weeks decreased because sales to customers exceeded expectations.
In the third quarter, inventories in the automotive sector and the industrial/infrastructure/IoT sector will both increase. Regarding the company's own inventories, the plan is to expand die banks and finished goods.
The capacity utilization rate for the front-end process in the second quarter was 58%. It is expected to rise slightly further in the third quarter. Capital expenditure in the second quarter was 22.6 billion yen, mainly invested in R&D-related fields.
Inventory Status and Trends in Capacity Utilization Rate and Capital Expenditure; Source: Renesas Electronics
Source: Content compiled by Xinpianlaosiji (ID: xinpianlaosiji) from "EE Times Japan", Author: Ryo Asai