Renesas Electronics (hereinafter referred to as "Renesas") released its non GAAP financial report for the third quarter of 2025 (July September) on October 30, 2025. The company's quarterly revenue was 334.2 billion yen, a year-on-year decrease of 3.2%; The gross profit margin was 57.6%, an increase of 1.7 percentage points year-on-year. The operating profit was 103.2 billion yen, a year-on-year increase of 4.8 billion yen, and the operating profit margin increased by 2.4 percentage points to 30.9%; The net profit attributable to the parent company for the current period was 88.2 billion yen, a year-on-year increase of 2.2 billion yen.

1. Expected decline in automotive business, steady recovery in industry

During a briefing, Hideyoshi Shibata, President and CEO of Renesas Electronics, stated that the overall performance for this quarter was in line with expectations, with sales from our own channels meeting expectations and sales from our distribution channels slightly exceeding expectations. Due to the decrease in channel inventory levels, we will strive to expand our inventory scale in the fourth quarter
Regarding the future trend, Shibata pointed out that "overall demand from channels to terminals is expected to remain stable." In terms of the automotive business, sales are expected to slightly decline due to inventory adjustments from some major customers. However, the development of car microcontrollers and fourth generation car SoCs using 28nm technology is progressing smoothly, although the scale is still small. He added that there are specific factors adjusting in the Chinese market, which has not yet entered a high-speed growth stage, but "will steadily expand in the future". The industrial sector is showing more positive signs, with an improved outlook for the fourth quarter and an expected robust recovery in overall industrial business. As demand for AI infrastructure continues to be strong, the company will increase production capacity to cope. "The consumer electronics sector is expected to continue experiencing seasonal fluctuations, but the overall trend is positive.  
In addition, Shibata also mentioned the integration progress of the EDA vendor Altium, which was acquired in August 2024. He stated that as of the first quarter of fiscal year 2025, preliminary cost reduction work has been completed, and the core indicator ARR (annual recurring revenue) of his subscription products has increased by 15% year-on-year, demonstrating healthy organic growth. He unfolding.

It is reported that the company is preparing for the design and lifecycle management software platform "Renesas 365" for electronic devices, with plans to officially launch it within 2025. Regarding Renesas 365, the company stated that 'Microsoft Windows' was also quietly introduced back then, and through continuous updates, it ultimately achieved a leap forward evolution in' Microsoft Windows 95 '. Renesas 365 will also be quietly launched and undergo a similar development process. Please approach it with a moderate level of anticipation in the initial stage

2.Annual performance is expected to decline

Renesas also released its fourth quarter and full year performance forecasts. The fourth quarter sales are expected to increase by 16.2% year-on-year to 340 billion yen, with a 2.1 percentage point increase in gross profit margin to 57.0% and a 1.7 percentage point increase in operating profit margin to 27.5%. The annual sales revenue is expected to decrease by 3.0% year-on-year to 1307.6 billion yen, the gross profit margin is expected to increase by 1.0 percentage point year-on-year to 57.0%, and the operating profit margin is expected to decrease by 1.0 percentage point year-on-year to 28.5%.

3.Industrial sector outperforms expectations due to AI and server demand

Renesas' third quarter performance exceeded the company's expectations in terms of revenue, gross profit margin, and operating profit margin, mainly due to the depreciation of the Japanese yen. The sales revenue of the automotive business is basically in line with expectations, and the terminal sales (Sell through) performance is good. The sales of industrial, infrastructure, and Internet of Things (IoT) related businesses have increased compared to expectations, driven by strong demand for AI and servers.

4.Inventory will be expanded in the fourth quarter

In the third quarter, the company's own inventory increased, mainly due to the expansion of the wafer reserve completed in the previous stage of processing, known as the "Die Bank". Entering the fourth quarter, Renesas plans to continue expanding Die Bank and prepare more finished inventory for shipments at the beginning of the year, with overall inventory expected to further increase.  
In terms of channel inventory, there was a decline due to better than expected terminal sales in the third quarter. It is expected that in the fourth quarter, the shipment volume of the automotive business will be on par with terminal sales, and inventory will remain stable; Industrial, infrastructure, and IoT businesses are expected to continue reducing channel inventory due to increased terminal sales.  
The utilization rate of the wafer front-end production line in the third quarter was about 50%, slightly higher than the original expectation. The main reason is that the company has adjusted its production plan for the year-end and New Year periods, advancing some manufacturing activities to the third quarter. It is expected that the utilization rate will decrease in the fourth quarter due to the impact of earlier production.  
The proportion of capital expenditures to sales in the third quarter was 5.3%.