March 12, 2024

Renesas Electronics Corporation

Nikkei Newspaper Online reported today the implementation of merit increase delay and headcount reductions by Renesas. The report was not based on Renesas’ announcement and contains factual inaccuracies and contents that could lead to misunderstandings, especially concerning the background and purpose of these measures. Renesas is publishing this statement in response to the media report to clarify the details and background of the merit increase delay and headcount reduction measures. 

(1) Renesas’ Human Resources Practices and Policies

Renesas is a global company which operates in more than 30 countries worldwide. The company’s human resources policies are intended to ensure consistency globally, adjusting for practices specific for each country. Given the dynamic environment of the semiconductor industry, it is common for global companies to undertake certain measures which impact its workforce including merit increase adjustments.

The decision to implement the below measures this time represents the transition from traditional, Japan-centric policies to global ones, and they differ in nature from measures that are passively implemented solely to address financially challenging situations or prioritize cost reduction.

(2) Regarding implementation of merit increase delay

Under the principle of "Pay for Performance," Renesas operates a compensation system linked to both company performance and individual evaluations. This extends to a number of areas within the total compensation package, including an individual's merit increase, short term incentive and stock based compensation.

Renesas has decided to postpone the implementation of merit increase this year by 6 months until October 2024. This applies to all global employees, including the management team. The decision to implement this merit increase delay was made in November 2023 as a precautionary cost containment measure in response to the anticipated softened market conditions impacting the semiconductor industry. Renesas decided that it would be more beneficial for employees to delay the merit increase rather than reducing the value of the increase and conducting the review at the normal time. 

Through these disciplined cost containment efforts, Renesas aims to ensure profitability consistently in any business environment.

(3) Regarding headcount reductions

In November 2023, Renesas conducted thorough reviews of future investments and business priorities, taking into consideration anticipated continuing market softness. As a result, the company made a decision to reduce positions on a limited scale across all regions. 

The number of employees affected was in the low hundreds globally (equivalent to 1-2 percent of the total employees), with Japan accounting for less than 20 percent. This measure was implemented from November 2023, following all local processes, ensuring that employees were treated with the utmost dignity and respect. 

Renesas is actively investing in resources necessary for future growth and continues to strengthen its workforce in areas aligned with its investment policies. This action is a constant necessity in the rapidly changing semiconductor industry in order to ensure consistent growth and competitiveness, and it is not solely aimed at passive cost reduction of labor expenses due to financial requirements.