Hello, this is Shin Shibata. Last week, after the earnings call, once again, thank you very much for giving us your time today. There was a sudden change in the speakers. We're so sorry for this. Today, originally, Mr. Yamamoto of Automotive Business Unit, he was supposed to speak today, but due to private reasons, he is going to be away from the company for a short period of time. During this period, as we have introduced, Mr. Maoka and Mr. Kataoka will be leading the Automotive Solution Business Unit, and today's presentation will be delivered by these two gentlemen for the automotive strategy update. We appreciate your understanding. Now, I would like to begin from my part. In the first half of my presentation, the medium-term strategy that we introduced in February, we will talk about the progress ever since.
That is going to be the update to be provided in the first half, and then in the second half of the presentation, in the last six months, and it's only six months, but the environment surrounding us has changed dramatically, so I'll talk about the strategy adjustment or the directions that we are going to make going forward due to the impact that we have seen in the last six months, so I'll briefly talk about that in the second half of the presentation, so first of all, as you can see here, this is the result of the first half, which was already covered last week, so this is just a reminder, then more important is the indicators for the future, which is the design-in, the progress of the design-in, the deals that we have been winning.
What you see here is the design-in actuals for last fiscal year. Automotive, over 4,000 oku, and for non-automotive, slightly less than 6,000 was the actual, but after last year, the rules or criteria by which we record the design-in has changed compared to before. It has been made more precise, so based on the new criteria, especially the industrial infrastructure and IoT, I think the actual for last fiscal year would have been smaller in reality, so based on that, but even so, this fiscal year, we set a larger target for this fiscal year compared to last year, and vis-à-vis the target in the first half alone, the actuals for the first half, as you see, which is represented by the light blue and the light pink part. I think this is self-explanatory for automotive already compared against the target.
Close to 80% was already achieved in the first half. And for non-automotive, by and large, roughly half of the target has been achieved in the first half already. Again, at the risk of repeating myself, for good or bad, from around February, March, the environment surrounding has changed dramatically, and face-to-face meetings with clients have suddenly become difficult. And all of a sudden, people are not coming to the offices any longer. So this is a major change in the environment. But despite this change, compared against the target, we have achieved a very favorable progress in design-in, which I believe is a very good development for us. But there's just one point that I want you to note here for the design-in of automotive, because of the nature of the deals.
There are limited numbers of deals, and the single size of a single deal is quite considerably large. So whether we are able to acquire those deals, and depending on the timing of winning these deals, it's not going to be a linear increase. There's a great probability of fluctuation for the automotive. So even though I said that 80% was achieved in the first half, it doesn't indicate that if things stay on course, we are going to achieve 1.6 times of the target for the full year. So please be advised of that when you look at these numbers. But by and large, I would say, given the environment, the first half results were quite favorable for us.
Then from here, I would like to talk about a little bit of the specific measures that we have been implementing in order to drive revenues and win in the market. Let me give you some actual examples to explain to you what kind of progress that we have achieved so that you can have a tangible understanding. First, in automotive, I'll be using these two slides to explain the automotive initiatives. For the first thing, in digital scalability would be the central piece of activity in order for us to win Winning Combos on the right-hand side. That's how we call it. This is the combination of original Renesas digital devices combined with the analog technology that we have acquired through the acquisition of Intersil and IDT, which will be offered as a solution. I think you recall that we have discussed that scenario before.
For the digital area, these numbers are already included in the design-ins, but we have successfully acquired a large deal, an ADAS deal from a major Tier 1 or OEM in the world. On top of that, although the size will be somewhat smaller, but some will have a size of more than JPY 100 billion or tens of billion yen, we have a handful of sizable opportunities in SoC and MCU. Around a few opportunities are in the funnel, and we are pursuing this, and we hope that these will manifest themselves as orders in the second half of the year. On the right-hand Winning Combo solutions. With these solutions, as we have aimed, we have successfully got a deal from the Great Wall Motor of China and another major OEM of India. In India and China, OEMs are directly involved in the device selection.
Although they are both OEMs, not, as opposed to Tier 1s, we were able to acquire this deal, a quite sizable one from these OEMs. Winning Combo approach, eliminating the hassle of designing on the part of customers, are well received by those emerging market clients and has led to the acquisition of orders from these clients, which I believe is a major development for us. Another slide for automotive. In Winning Combos, in the second quarter of this year, for sensor signal conditioner, a Winning Combo using sensor signal conditioner was released in the market. The next generation sensor signal conditioner is currently underway in its development. Once this becomes available in the market, Winning Combo itself will have higher accuracy and enhanced capability. That version will become available in the future.
The bottom left, I'll come back to this topic later, but especially given the changes in the environment, from the driver's viewpoint, easier to understand a value added is now drawing attention, and that's what we are focusing as well. In that context, the wireless charger inside the vehicles, similar to the approach of Winning Combo, combining digital and analog, we are providing reference designs and promoting these reference designs. Even in the automotive, we already have achieved a track record of design-ins, but with these turnkey reference designs, we would like to further accelerate this momentum. On the right-hand side, LiDAR collaboration is progressing at a favorable pace.
If you look at the bottom right, positioning sensors as well, the development is also underway at a favorable pace, and the industrial version was released in June, and the automotive version is also planned for release before the end of the year. So next, using the next two slides, I will talk about Industrial, Infra, and IoT, the strategy thereof. In the industrial area, digital products, just like automotive, scalability will be the centerpiece of our lineup for us to differentiate from the market. Again, like automotive, in the first half, even despite the harsh environment, design- in has made good progress, and the RZ/A series at the bottom. The previous embedded AI was the main promotion that we have promoted significantly in the past, if you recall it.
So we talked about the 10 times, 100 times, and 1,000 times performance compared to the first version in our roadmap. And the bottom one is the 10 times version. We have acquired lots of design-in for this series. And the 100 times version, this performance device was also completed recently. So with this, the first design of this product was acquired. So using these devices, the endpoint becomes possible. So integrated with camera, without interaction with the cloud, inside the camera alone, the AI-enabled solutions and processing will become possible. So as you can see there, the thermal camera, true recognition, cloud monitoring, all these applications are likely to adopt this technology going forward, and especially for the first case. One of the very important customers for us, Caspar.AI. We have engaged in a different collaboration with them.
So as a design partner, we are going after solutions jointly, and we have successfully moved along with that path. So not only that, we are making good progress in design-ins. We are now exploring a new approach with our partnership with customers, and that's delivering quite good results. So I just wanted to give you an example for this new approach to you today. On the right-hand side, the HMI solutions. I'll come back to this topic again, but contactless applications are now seeing a rising demand significantly. In this environment, of course, in addition to the touch solutions that we have been providing from before, the voice user interface solutions have been enriched, and that's what it talks about here. Of course, naturally, we are going to further enrich the offerings going forward in a scalable manner.
Starting from the very simple solutions, VUI, all the way to a very complex solution that can handle natural language communications, we are going to offer a wide range of reference devices and designs going forward. For the nearer term, revenue, especially in the infrastructure, 5G, as we have explained during the earnings call last week in the first half, this is about the revenue, the sales. The first half revenue was 80% higher compared to the same period of last fiscal year. The data center, again, on a year-on-year basis, we have achieved a 20% growth, a significant growth. For the right-hand side, IoT, many different initiatives were concurrently promoted. Especially in November last year, we introduced and released our first Arm-based microcontroller.
Of course, as a matter of fact, in this first half, compared against the same period of last fiscal year, eight times the number of design-ins have been acquired. So this is a very fast takeoff. I think Sailesh will give some additional comments later on in his presentation. The low pin count MCU, the release to the market, has been making very favorable progress. In the third box there, connectivity and cloud partnership, these are also making very good progress, including the collaboration with Microsoft Azure. Software-centered out-of-the-box solutions are now being promoted. Also with an Australian company, NFC-based collaboration is also underway. With 3db, UWB solutions are also making very good progress. That's what I wanted to introduce in this box here.
So with that, with those developments and the preparation of solutions, and some of them have gone to the design-in stage, and again, in the first half, despite the changes in the environment, we achieved very favorable progress. I just wanted you to share this information with you. And then next is the synergy with IDT. I just thought that I should give you some more updates. So that's the reason why I prepared this slide. As you may recall, in February, the actual for last fiscal year was $85 million in savings. That's represented in a gray bar there. And the target for this year is 80. But since 85 was achieved last year, we thought that we should seek a higher number. And the actual turned out for the first half, $62 million was the actual saving already achieved in the first half.
Based on that, we made an estimate for the full year and gave an update here. 120 is the current estimate. We are making very favorable progress. More important is the top line and the synergies that are making contributions to the revenues. Let me talk about that here. What you see here on the screen is the exact same picture that I have shown you in February last year. Based Winning Combos, design-ins amounted to $129 million, and the number of new customers amounted to over 11,000. In the first half of this year, the actual turned out to be. This is not the cumulative number since last year. This is only the actual for the first half alone for this fiscal year. The design-in amounted to $357 million, and the number of new customers amounted to over 20,000.
In this regard too, we are also making very favorable progress. And now, the details, what kind of progress have we made? This is also another slide that illustrates so that you can give you a more tangible understanding of the progress that we are making. What you see here, this slide here, of course, we reshuffle the order of presentation, but basically, the information listed here is unchanged from February. Winning Combos have been prepared. That's what we have shown you in February. And now today, as of today, the number has risen, as you can see on the top left, over Winning Combos have been developed. And in particular, automotive takes time for the development. And of course, Maoka will explain during his presentation. But on a cumulative basis, 19 different solutions have been developed already.
This is a very solid growth, and we would like to further accelerate this momentum going forward and try to deliver results as quickly as possible. With that, I said the design-in is making favorable progress. The development is also making good progress. As a result, the target model, of course, Shinkai-san will give more further color during his presentation. But as a matter of fact, because it's only six months since we released this information, we don't have any intention of changing the target model. That's what I wanted to convey here. But the target itself, I just wanted to give you an update of the current state of progress vis-à-vis the target. If you refresh your memory, the target was set vis-à-vis the market growth. That's how we set the target originally.
And compared against that, what you see here in the slide shows the metric. The metric is the absolute growth level compared against what we had projected before. So that is the comparison compared to before. And naturally, because of the dampening of the automotive market, the automotive market has been plunging. So I think it's going to take time for recovery, I would say two years. So in terms of absolute growth, the automotive is likely to grow slower than earlier projected. On the other hand, industrial infra and IoT, in the absolute growth level, we believe the growth will be faster compared to what we have predicted before. Then what is most important is our target of growth vis-à-vis the same as market, relative growth vis-à-vis the market. For automotive, this remains unchanged. It's the same.
And for industrial infra and IoT, we are expecting faster growth compared to the market. That's the recent assessment so compared to what we had explained during February, as of today, we have, I think, a better leeway for the attainability of the targets, but of course, this is subject to fluctuation after all, so the model, therefore, remains unchanged from what we have presented before. Okay. Now, I'll go into the second part of the presentation. From here, I'll talk about the strategic adjustments for the future. Due to COVID-19, I think it's very easy to understand, but those changes that we had anticipated from before, those are accelerating and happening before than what we had earlier projected. The most typical examples would be contactless and digital transformation, and of course, there will be implications later.
But within the industry or between industries, the winners and losers will be more conspicuous, even more than before. So with that, the structural change will occur within industries, and the power balance between industries might change. And in automotive and for non-automotive, what kind of implications will this have? That's illustrated in this slide. And as I mentioned earlier, in automotive, the ADAS and autonomous driving, not only that, but driver-appealing features will receive more attention. And I think that is going to be increasingly the case going forward. And of course, EVs will increase in number. And of course, this might be contradictory to the first point, but as we become more articulate, the traditional technology may survive and be used for a longer period of time in some areas. Then on the industrial and infra and IoT side, of course, this is very easy to understand.
The enablers of remote activities, i.e., the applications, the VRs and handheld devices and sensors, those will see increased demands, and the contactless applications will proliferate further. And the third point may be an ongoing trend, but compute and communication infrastructure will see continued increase in demands. From here, I'll use two slides each for automotive and industrial and talk about our strategic implications that we are currently foreseeing to give you some additional information. So for automotive, what's written on the top here is the areas that will accelerate due to COVID-19. So within our customer universe, there are some customers who opt for more technology integration to be done by themselves. But on the contrary, there are some other groups of people who would like to leave all these technology integrations to the suppliers. So that demarcation will become more conspicuous going forward.
That's how we wanted to illustrate. The darker ones show those groups of clients who like to have a tighter control of technical integration by themselves, and the light gray part shows the kind of clients who like to incorporate those technologies off the shelf. So for those customers, as we have discussed, Winning Combos were the centerpiece of solutions that we are going to provide to those customers who would like to use the solutions provided by solutions. We'll be appealing to those customers. And here, the direction remains unchanged because there's a conspicuous trend, especially in the case of digital. Kataoka San will explain later in more detail, especially for those customers who would seek tighter technology integration. For those groups of customers, more than ever, scalability will be promoted strongly as we offer devices in the future.
From that context, the last time we said that we'll be using applications in order to show our strength, and we were not really sure about IVI and decided to reshuffle and move our resources to ADAS. In the last six months, we have implemented many different initiatives and the R&D allocation and the cost control. I think we have reassured you with the cost allocations, but I think we are now more agile than before and skillfully operating our business. Therefore, in terms of device, we can have enhanced scalability in our offerings. We have that clearly passed and compared to before. We have decided to once again include IVI again with SoC and MCU and have a complete set of scalability offerings to our customers. That's how we adjusted our strategy.
So then with that, what kind of picture are we going to explore in the future? I think this helps you understand the direction for our future. So that's the reason why we have prepared this picture. I don't intend to preach on the Buddha, but the horizontal line at the top shows in the computer world, the vertical integrated world was there. But of course, due to Microsoft and Intel, a horizontal slicing structure has emerged as a result of Microsoft and Intel. And then also in the smartphone industry, the same thing applies. Google, Android, and Qualcomm, with these players, the horizontal slicing structure has emerged. But there's one exception within that environment, which is Apple. In the PC world, in the PC, they are going to prepare their own silicon, but also for smartphones, the silicon included.
Apple is now seeking a vertical model and have engaged in platform business, but what is going to happen in the automotive world? We have made an analysis ourselves. I believe an Apple-like model may occur in the automotive sector as well because the industry is much larger in scale and the complexity is also very complex, so it's not going to be only just one player, so in order to compare with Apple, we have given a fruit icon, and there will be several players, so an Apple comparable player will be pursued by a limited number of multiple companies, so centered on these customers, the scalability solutions that we are going to provide that we have illustrated in the previous slide, in the vertical platform business, we are going to offer these products.
That is the model that we are going to go after from the capacity as a semiconductor player. In the automotive industry, I think there are semiconductor suppliers who are making recent announcements on the right-hand side, as you see there. Of course, these players will have a different approach. They are going to seek an approach similar to Intel, Qualcomm in the PC and the smartphone business, and of course, there are customers who will seek those approaches, but of course, there are other customers with a certain scale and continue to grow according to our forecast, so our focus will be on the latter. We will attach a focus on the latter vertical platformers, but still, it doesn't mean that we are not going to address the needs of horizontal platformers. We are going to provide solutions to them as well.
So long as there is a need for us and demand for us, we would like to provide our device and solutions to all customers. But the strategic focus will be attached on the vertical platformers. That is going to be the transition that we are going to make. Now, as for industrial infra and IoT strategy, there's no major change in the direction due to COVID-19. All these familiar applications will enjoy a stronger tailwind due to COVID-19. That's how we view it. Of course, there are some specific and concrete examples, especially for the near-term data center, DDR5 and 5G applications. Those will be explained by Sailesh later in his presentation, and more recently, the recent trends will be also introduced by Sailesh in his presentation. So therefore, it's not going to be a directional change.
All these applications that we had anticipated will enjoy even a stronger tailwind compared to before, so as a result of that, for all these areas, by and large, all these areas are going to enjoy a tailwind. So the middle column shows the speed of growth that we had anticipated before COVID-19 in a symbolic manner, but by and large, these will further accelerate going forward, with one exception, which is a smartphone. Because this is affected by the design and cycle of a major customer, and also in the first half, the smartphone market has seen a contraction in demand, so this area will show a different behavior, but other than that, I think all these sectors will enjoy a tailwind generally, and a very interesting trend is the surveillance and VUI opportunity and also the satellite communication. The demand for satellite communication is going to increase.
And therefore, the RadHard technology is now seeing a very strong increase in demand, which is a very interesting trend that we had not anticipated before. So in the interest of time, I would like to summarize and wrap up my presentation. What you see on the left-hand side, these three statements is what we had informed to you the last time in February. We have a very good portfolio. And with this portfolio, we are ready to address the high-growth market, and we will emphasize on delivering results. That's what we have informed you back in February. The technology portfolio is still valid. Our technology portfolio, I think in the new world, will enjoy a very strong need. We have a good portfolio to be ready to address the needs in the new world.
The markets that we are going to approach remain unchanged in automotive, infrastructure, IoT. That remains unchanged. But still, within the automotive, we are going to address the applications that are easier to appeal to drivers. And for IoT, the new sectors that I mentioned, the handheld, Satcom, those new applications, we will attach a stronger focus on those new applications. And at least for the last six months, although that's a very short period of time, we have been able to execute on track. So as I mentioned during the last time, we would like to make our users and customers and ourselves' lives easier. That's our ambition. With this, I would like to finish my presentation. I would now like to hand the button to Mr. Shinkai.
I am Shinkai, the CFO, in the finance part.
In the Analyst Day in February, we unveiled our target financial model. I would like to give you the updates after six months and the initiatives that we have undertaken. The target financial model, first of all, as Mr. Shibata mentioned, this is underway, with target intact. We are going to keep this unchanged. To give you a reminder, this model is based on the actual fiscal 2019, adjusted with the forex and the discontinued business. The 2019 adjusted, the left-hand side, this is the launchpad, the starting point, and based on which the automotive is going to achieve a same growth level as the SAM, industrial infrastructure, and IoT, a relatively higher growth level. Therefore, overall combined for corporate, we are going to aim for a higher-than-SAM growth rate.
The growth margin at the middle, 50% for the corporate, and operating profit margin, 20% for the corporate. In the last six months, despite the changes due to COVID-19, even this change is taken into consideration. We believe the target model can be reasonably maintained, especially the top-ranked growth. I will leave the BU heads to talk about the details for the revenue, the top line. So I would like to talk about the factors that will affect the growth margin and operating profit, i.e., the SG&A. And also, the objective of the target model is to shareholder value and enhancement. So therefore, I would like to also talk about the delivery activities. First, about the growth margin. The left-hand side shows the plan as of February, and the right-hand side shows the prospects as of today.
The left-hand side, this waterfall chart is based on the 2019 actual converted into run rate, and 45% is the growth margin, the starting point, and with the four major basic building blocks, we would like to achieve the 50% target, and the right-hand side shows the current prospects. The timeframe that we had anticipated in February is the criteria based on which we have made prospects, so the timing of emerging defects, if it's going to be happening before or after, depending on that, defects could be larger or smaller, so that's how you should see this table. Starting with the bottom block, which is depreciation, this is on schedule, this is likely to happen on schedule. Structural reform. In May this year, we decided to withdraw from the compound business and decided to shut down the compound line.
Because of the suspension of the production line, fixed costs will come down, and therefore, the structural reform is going to happen earlier than expected. Therefore, this box is assessed as pull-in. The two boxes on the top, due to COVID-19, the market itself, the automotive market, is going to slow down. The impacts of the automotive slowdown are divided into these two boxes here. First, the product mix. For automotive and industrial infrastructure and IoT, the absolute growth will be different between the two. That's how we see it. So for industrial infrastructure and IoT, the faster-than-market growth is currently estimated. And therefore, as we said in February, the Renesas overall portfolio transformation is going to make progress faster than expected, and that is going to have a positive impact on our growth margin. And therefore, in terms of product mix, this is a pull-in. And finally, volume, scale.
In order for us to achieve the target model, operating leverage, we wanted to have a plan that is not dependent on the operating leverage. And naturally, because the automotive market is growing slower than expected, the profit growth due to the scale expansion is going to slow down. Therefore, this box is going to be pushed out. But overall, this push-up will be offset through the product mix and the structural reform pull-in. And therefore, that's the reason why we believe the 50% target is still valid and achievable. Now, about the SG&A outlook. The left-hand side is the plan number as of February, and the right-hand side is the outlook as of today. The plan as of February, this is just based on the adjusted for 2019. And on the accrual basis, the SG&A will be improved.
And then after that, regardless of the revenue growth, we are going to maintain the actual level. And therefore, we plan, and thereby, we would like to maintain and dilute the percentage of the SG&A vis-à-vis the revenues. And the current outlook is illustrated on the right-hand side, the logistics costs. Due to COVID-19, we have seen a significant increase in logistics costs for the short term, and this is going to be a headwind for the time being. For the medium term, we would like to simplify the logistics flows, reducing the number of stock points and reduce the cost of maintaining inventory. And by doing so, we would like to catch up with this delay. But on the other hand, due to COVID-19 and geopolitical reasons, customers' supply chain will be diversified and becoming more redundant. We cannot rule out that possibility.
And therefore, overall, this block is expected to be a push-out compared to our initial assumption. Then, the IT spend. Renesas, Intersil, and IDT, all these former three companies' ERP will be integrated to achieve cost benefits. And this is going to be a medium-term cost synergy. And as of this point, in addition to the ERP system, the peripheral systems will also be integrated. And by doing so, we are expecting larger-than-expected cost reductions, and this is therefore a pull-in. And other SG&A spend. Due to COVID-19, the new normal is going to accelerate. People are now working from home and have new options of work styles. And that trend is accelerating around the world. And therefore, Renesas is also going to review how to use the office spaces. And we will reduce the office space.
For the important locations, we will upgrade the locations so that we can provide an optimal environment for our employees in the new age. As a result of that, this will allow us to save costs, and this is going to pull in due to COVID-19. Therefore, this block is considered to be a pull-in for us. Overall, we are going to improve the actual cost, and the cost reduction is going to happen earlier than expected. Therefore, for operating profit margin, this will have a positive impact. That's how we see it. Next, delivery target. Again, the left-hand side, the chart there is the plan as of February. First of all, if you look at the red circle there, this is the target for December 2020, 2.5 times of net debt, which we believe is a very tough target to achieve.
But beyond that, by December 2022, less than one times of net debt level. Because the SG&A growth is going to slow down, we believe we should maintain this target unchanged. For the actual initiatives, for the bottom line, SG&A is going to be reduced and the work through inventory improvement, the working capital, and also discipline capital expenditures. Through these initiatives, we would like to achieve this target. That's our aspiration. Especially, the absolute amount is very important. So revenue growth is going to be a very important lever. From that perspective, the second point, the working capital management. Further improvement is currently underway. Specifically, Die Bank and Order Link is expanded. In other words, the inventory will be kept at a chip level without being assembled, and we will just assemble it after the order is placed.
We are going to increase the number of products that will be covered under this approach. Financially, this will allow us to reduce and curb the inventory level at the monetary basis, but be able to increase the inventory on hand in terms of quantity, minimizing the opportunity loss for sale. At the end of the day, we believe, although this is challenging, we are quite cautiously positive about the attainability of the target of the net debt level for 2022. Finally, for the summary, revenue remains unchanged. Overall, Renesas, we would like to achieve a higher than SAM growth. Gross margin remains unchanged. The impact of the slowdown of the automotive market will be offset by the solid prospects of other businesses.
Operating margin, because of the SG&A, is going to come down at an accelerated pace, so that will have a positive impact on the operating margin delever aging, this remains unchanged. The target, although it is a stretched target, we would like to maintain this target intact. The COVID-19 impact has had a very big repercussion on Renesas business, and that will continue to be the case. But financially, COVID-19 is not only about negative impacts. This has also brought about positive impacts as well. So taking the opportunity of this change, as we have mentioned during February, I hope that you will change how you view the company. Industrial, Infra, and IoT is quite powerful, and we have a relatively stronger company than before. And I hope that you will change your views on the company.
For us to achieve the target model, we would like to deliver results in a step-by-step approach, and I hope that you keep high hopes on the company. Thank you very much for your attention. Now, we would like to move on to the Q&A session. If you have a question, let me explain how you raise your question. If you have a question, please select the raise hand icon on your screen. We will call your name and your company name in the order of the hands raised. If your name is called by the moderator, please unmute your microphone button and begin your question. We would like to limit the number of questions to three per one person. Now, we would like to begin the Q&A session. The first question is from Citigroup. Mr. Fujiwara, please begin your question.
Please unmute your microphone first and begin your question.
Hello, this is Fujiwara from Citigroup. Can you hear me?
Yes, I hear you.
I have three questions. First of all, regarding the industrial infra and IoT, I have a question. You decided not to change your medium-term model, but in the second quarter results, the gross margin and the operating profit margin is already achieved by and large. So over the medium term, I was wondering if you have any upsides in mind going forward. The profit margin improvement, is that going to be a focus of business management? Or rather, because you already have a very good margin already, are you going to make R&D investment and go after scale while maintaining a certain level of profit margin? Is that your priority? So can you comment on which approach are you going to take going forward?
This is Shibata. I would like to answer your question. For IIBU, a more balanced approach is what we are going to pursue. We will maintain the margin, and the spend will be tightly controlled. And 6%-8% growth is what we were going to aim for. We don't have any plans to change anything. As we mentioned during my part, the design-in for the next five years or so, so long as we secure JPY 6 billion worth of design-in per annum, this growth rate is likely to be obtainable. So that's what, that is, the model of fall-through from design into revenue. So the JPY 6 billion for this year's target, as long as we are able to constantly achieve that number, the margin will be maintained and be able to achieve a top-line growth. That's how we see it.
For automotive, I think Maoka-san and Kataoka-san will explain later. We don't have any intention of sacrificing the margin at all. Of course, margin will be a priority going forward. But relatively speaking, top-line growth is more emphasized. That's how we see it. And from that perspective, the gross margin and profit margin is different depending on the device. So previously, it was difficult to focus with power discrete. For those products also, in the new management team since July of last year, this is now a priority area for us. So we would like to achieve a profit margin and achieve absolute amount of profits. But as far as gross margin is concerned, we are now taking a more balanced approach. So the growth is the focus. That's all for myself. Thank you.
Thank you. The second question regarding the Automotive business.
In Shibata-san's presentation at the outset, you said that in the first half, you are making good progress in design-in and the applications also very important. But in the first half, the design-in activities, can you explain the reason why the design-in is making so much progress in the first half? Because the automotive sector, due to COVID-19, the release of new car release is now getting delayed. So despite that environment, how have you been able to achieve this good progress in design-in?
I thought I made an explanation during my presentation, but one big business, if that happens, the numbers appear in this way. So it's not that we have seen a major sea change in the market environment. It just happened to be so that a major client and a big opportunity, this just coincided to happen at this timing.
When you look at the other opportunities, as you rightly pointed out, the push-out has happened in some cases. So it's not that we have taken something structurally different and achieved this number. But on the other hand, the acceleration of designing, high-quality designing, designing to be accelerated. For that purpose, we have already started taking internal measures. Up until last year, we focused on the quality of designing, and that was a major focus of the company up until last year. But starting this year, we are now taking a more balanced approach. So we are also trying to take in the quantity of these designing that's already included in one of the KPIs. And we are monitoring the designings and deploying them horizontally. So we are trying to build up all these successful cases.
We have established a central team for that purpose, which is led by a non-Japanese employee, and with this, all these opportunities that are not focused by the sales reps. If you go after MCUs, there could be some power opportunities, and those could be horizontally deployed. By running this cycle on a weekly basis, we shall be able to achieve followers. It's not a big sizable opportunity, but these small opportunities are accumulating in number, and so these wins are now accumulating. The single opportunity is not that large like in the billions of yen, so the accumulation for the six months is not going to be that sizable, but the pace of accumulation is quite favorable, so in one year's time or two years' time from now, I think this may appear as a structural change. That's the expectations for the company right now. Thank you.
The third question is about your financial model, the SG&A. You are seeing great opportunities for upside in SG&A savings. I'm not really sure if you can comment on the specific numbers, but how much exactly in absolute amount of reduction of SG&A? What is the target that you're seeking? And that can be explained by Mr. Shinkai-san.
Okay. In terms of absolute amount, I think the size would be good enough for us to achieve the target for this fiscal year. Originally, in the improved level there, with that level, we were aiming to improve the SG&A level to slightly over 10%. And then, as revenue grows, we wanted to reduce further SG&A ratio to less than 10%. So in terms of size, that is the size that we are expecting. I think you should take it that way. Thank you.
All right. Thank you very much. I understood.
That's all for myself. Thank you.
The next is from UBS Securities. Yasui-san, can you begin your question? Please begin your question after you unmute your microphone. Yasui-san, please unmute your microphone. Well, then we'll go to the next questioner first. Merrill Lynch, Japan. Hirakawa-san, please begin your question. Please unmute and begin your question.
Hi. Can you hear me? Hello? Can you hear me? Hello. This is Hirakawa from Merrill Lynch. I think I was able to unmute my microphone. Can you hear me?
Yes, we hear you.
I have two questions. Today, you talked about your design-in. My first question relates to the design-in. You said that you are making favorable progress in the first half design-in that you acquired this fiscal year. What was the percentage Winning Combos among the total design-ins?
Can you give us the breakdown for the automotive and IIBU, the contribution of Winning Combos? my second question is also related to the first question. In your automotive strategy, you said that you are going to focus on scalability products for the automotive, especially for the vertical platformers, but you're also going to go after the horizontal platformers as well. But the focus is the vertical platformers. Winning Combos are also making successful results in the new opportunities. So what is your view regarding the roles of Winning Combos in the automotive opportunities? That's my second question.
As we presented in the previous Winning Combos are making very favorable progress, and we would like to, of course, promote this further. But still, at a stage, this is only at an early stage. In the first half, roughly JPY 350 million is the number.
And in the first half, the design-ins, as I said, for the IIBU, it's about JPY 3 billion. And for automotive, JPY 4 billion, slightly over JPY 4 billion, so JPY 7 billion altogether. In light of that, it's only about 5% all combined. So it's very small still at this stage. And also, for ABU, automotive, Winning Combos are quite small in scale. So the percentage of design-ins in Winning Combos is very limited in terms of the total percentage. Of course, naturally, automotive takes longer time for the lead time. So we cannot help this. But the curve of taking off is not really bad at all. That's how we see it. And Winning Combo and the vertical platformers and scalability, I'm not really sure what was the right expression. So that's the reason why we chose this expression, bidimensional.
So that means we are going to address both the required talents and the way we sell products are different between the two. There's no problem addressing both opportunities in that regard. To step in further, Winning Combo solutions does not cost that so much either compared against the digital scalability opportunities. It's a very light investment opportunity, Winning Combos. so in that regard, there are not so many restrictions for that matter. But what is most important is raising a priority in our behavior and the mechanisms and tools that will make us easier to sell Winning Combos. Maoka-san will explain later. Previously, people talked about that Renesas is good devices, but. I hope that Maoka-san's presentation will explain this very well.
But I think we would like to make people realize that Renesas is now at last delivering all these solutions and mechanisms, and we are now at last providing all these mechanisms. So we would like to attach proper attention and make it easier for customers to use. We would like to increase Winning Combos. that's the emphasis that we are currently promoting right now. This relates to the improvement of the Winning Combos. so those are weak points of Renesas. At last, the companies are now taking serious attention for these matters and implementing initiatives so that we can move forward. That's all. Thank you.
Thank you.
The next question is Everlyne E. from Toyo Securities. Please unmute your microphone and begin your question.
Hi, gentlemen. Can you hear me?
Yes, I can.
Okay. Great. Shibata-san, good morning. So I have three questions on my hand.
The first two are related to your product and technology because it sounds like you're progressing really well in design, but it really doesn't come as clear as I would have expected. With what products are you winning the design- in? As you have said before, Winning Combos still are small portions. I wonder, what are the major products are you winning design- in for? For example, is it SOC or is it your traditional MCU product? And also, do you have any visibility regarding your market share, say, two to three years later based on your current design- in? That's the first question. Thank you.
Should I answer in Japanese? Okay. Then I'll try to answer in Japanese.
Yes. Sorry. I cannot speak in Japanese. Sorry for that.
[Foreign Language] answer in Japanese. Sorry.
The status of design-in and market share, that's quite different between automotive and non-automotive. So I'll try to differentiate the two. That's very important that you separate the two. And I hope that you also deepen your understanding on the non-automotive. So I'll start with the non-automotive. Winning Combos are still limited, but Analog has made the biggest progress in terms of design-in. In terms of application, I think you'll be convinced, but the data center, power management, chip solutions, and also the—and I think Sailesh will cover this later—but in relation to data centers, the memory interface is also enjoying a high growth, and 5G-related, also enjoying a very strong growth. So Analog accounts for the biggest bulk. Next is, in terms of the pace of growth, the fast growth came from IIBU, Auto SoC.
Compared to before, it's different in that it's more like an MPU focus. MPU standard products are being promoted so that we can sell them in quantities. Also, for ASIC-related products, the decision is made on a case-by-case basis. Long as we are making a profit, we will sell them. This is also a bidimensional approach. We articulated the approach. With this, we have been able to secure a lot of design-ins, which resulted in a significant leap in the first half. As far as analog is concerned, I think they account for one-third or one-quarter of the total design-ins. What lies in the middle is the microcomputers, MCUs. MCUs still limited in scale, but the Arm-based RA at last have started to take off. Even in this environment, compared against last year, design-in is growing.
In the second half, this momentum is likely to continue. So on a four-year basis, I would say roughly 150 billion JPY or so, or slightly over that, is the estimated size of design-in. That's our expectation. So overall, across many different areas, I think we are making very good progress overall for non-auto. For automotive, again, at the risk of repeating myself, we've already achieved 80% in the first half. But please do not take it as is because otherwise, the view could be distorted. So we have to be careful here. But SOC, we talked about over 1 billion JPY already. But those, we had a very big one-shot order. And the MCU, also large-scale prospects are also coming in one after another. So compared against digital, the analog is quite limited. So SOC is predominant there and followed by MCU.
And the analog power, all the areas that we are going to further increase going forward. That is the picture for automotive. For market share in the IIBU part, they will talk about MCU and in the automotive presentation, not the share itself, but ASP discussion will be covered. So I'll leave the answers to those presentations that will be following after this.
Great. Thank you very much. And the second part is regarding if you're winning share or you're winning big orders for your SoC products. I feel that's to say that the value add for SoC, actually, in our understanding, is quite higher than MCUs. I wonder, what is the reason behind it?
Is there any technology breakthrough you have there or some kind of solution you have there that makes you stand out versus your competitors, especially when you have many internet players in the SoC field, like NVIDIA and Intel? Just how do you compare yourself in terms of technology solutions with them?
This will be explained during Kataoka-san's presentation in more detail. So I'll just give you a very brief introduction. Roughly speaking, it's about how old the software is and how old software can you use. And of course, there are so many applications out there, IVI, ADAS, and Gateway. There are so many applications. So within that, the fundamental part of the software is quite common across different applications. So do we have a device lineup that allows the reuse of these things? And of course, the device itself, power consumption and performance, and of course, prices.
The balance thereof will be the area that we would like to achieve as differentiation. And I think we have been able to achieve a differentiation. Kataoka-san will explain later in more detail.
Great. And my final question is regarding your production in the inventory. I feel inventory is always a thing hanging around our Renesas. So I wonder, can you just quantify what kind of targets you have regarding those in-house inventory and channel inventory? What approaches have you taken, or have you communicated with your dealers to achieve that target?
Thank you. That will be explained by Shinkai-san.
First of all, the on-hand inventory, the target for that, roughly, is as of the number for last fiscal year. That's the baseline. The channel inventory has to be divided between automotive and non-automotive because the numbers are likely to behave differently.
By and large, 10 weeks or so is the base that we are looking at. Of course, depending on our relationship with the supply chain and the channel in the future, especially for Automotive business, a more careful study will be needed. That's all for myself. Thank you.
Okay. Thanks.
Thank you. In the interest of time, we would like to finish the first Q&A session with one final question. The next question would be from Mr. Itaya of JP Morgan. Please begin your question after unmuting your microphone.
Can you hear me?
Yes, we hear you.
Thank you. I just have one question regarding your design- in amount. In reality, what percentage of those design- in will lead to actual orders and sales for non-auto and infrastructure and IoT? Based on your historical level, what is the percentage of achieving sales out of the design- in?
Based on the 2016 actuals, the auto design-in was about 7,000 oku according to your disclosure. Compared to before, the current design-in—is that now currently based on a different criteria? How much will this lead to actual sales in the future? Can you share that information with us?
Depending on the content and detail, the situation varies. It's just a rule of thumb. Of course, this changes over time. As of this point, according to our current internal rule of thumb, it's about 60%. 60% of these numbers will translate actually into revenues. That's how we see it. That is our projection. For industrial infra and IoT and automotive, the criteria of calculation are different between the two.
For automotive, as I mentioned earlier, and as you pointed out, historically, very bullish and strong numbers were the central criteria for us to see things in the past, as we have discussed previously. And it just could be so that we are once bitten and twice shy. But for automotive, this is quite a discounted number. From design-in all the way to revenue, the yield of that is about 60% according to what we see. But the design-in numbers that you see here in itself, at the end of the day, could potentially be larger than what's written here. So we have made a very haircut projection here according to what you see on this chart. So the haircut is a very careful observation, which is different from before.
Previously, although nobody was wrong, in cases, we have been providing design wins to multiple Tier 1s, but they were after only one single OEM. Even though the design-in for three companies were actually linked to only just one prospect, so therefore, we decided not to repeat that mistake. We have to look all the way beyond the Tier 1s and calculate the numbers. That's how we are doing things right now. Not only from the perspective of numbers, we are taking a conservative approach in the haircut. Also, we are looking into the actual context of the project in calculating the numbers. That's the major difference compared to before. Going into detail, relatively speaking, the Japanese clients, customers, historically speaking, have a higher reliability in delivering the numbers.
But the mega-Tier 1s, especially in Europe, because they aim for global deployment, the numbers come out very strong in the beginning. But as it turns out, the numbers come down to a smaller number. So we have to apply a different rate of discount between those potential clients. But in any event, we look into the actual details and apply a conservative bias. So maybe in one year's time or two years' time, we may have to change the way we present the numbers after looking at the bias. So please understand that these numbers here are somewhat conservative.
All right. Thank you very much.
Thank you. Since we ran out of time, the next presentation will be from Kataoka and Maoka for the ABU strategy update. Please begin the presentation.
Hello. I am Kataoka Automotive Business Unit. next page, please.
First of all, I would like to talk about the industry transformation. On the left-hand side, there are two bullet points. We are seeing a major change in the structure of industry. The first point is the geopolitical changes and the post-COVID-19 supply chain localization. Due to these two factors, we are foreseeing a fragmentation, decoupling. And therefore, the industry ecosystem is likely to reconfigure itself. That's how we see things. Secondly, within the semiconductor, the non-auto areas such as PCs, mobile, there will be newcomers from these areas coming into the automotive sector. And the platformers are also going to make a foray into the Automotive business. And therefore, the competitive environment and the value change are likely to change significantly going forward. So the competition, therefore, is likely to intensify. And despite those changes, Renesas is willing to survive in the market.
And for that, I would like to give you more details on how we are going to survive. The automotive growth strategy is illustrated here. There are three bullet points there. Basically, there's no change in our strategy. We are making a steadfast progress so far. First point is the market growth driver. Due to COVID-19, the automotive industry overall has shown a slowdown in the growth rate. But the CASE and EE architecture amid this environment remains a key driver even after COVID-19. And we would like to pursue this going forward. But there's just one point of difference. That is, we have to attach a stronger focus on driver-appealing features such as user experience and rich IVIs. And as Mr. Shibata mentioned earlier, wireless charging. Those, for the short term, are likely to grow. And we would like to attach a stronger focus on those driver-appealing features.
The second is Winning Combo. as we have explained so far, MCU, SOC, and analog power, through the combinations of these, we would like to offer products that have higher value, and for customers, faster lead time for mass production, especially for the emerging players and emerging markets. By addressing these emerging players and markets, we would like to further expand the size of our business. That's the second strategy, and the third one is scalability. As it was mentioned many times during today's presentation, the vertical platformer, the major OEMs, the software platform of these OEMs, we would like to provide proper support for that and thereby increase our business, and the assets that we have developed and accumulated as a result of that will be applied to follower customers, and by doing so, we would like to further drive growth.
That is the basic strategy for us to grow going forward. This is the same slide as the slide presented by Shibata-san. Winning Combos and scalability on these two dimensions, we would like to grow the Automotive business, and I would like to go into more detail. For scalability, even when we say scalability, those are inside the application scalability and the scalability in between applications and scalability between different generations. The vertical platformers, major Tier 1s, they are strongly demanding the inter-application scalability. That is a strong request of the OEMs, and therefore, in the last strategy update we have presented, compared to that time, the IVI was also included in the scope so that the SoC applications could cover ADAS, gateway, and IVI. These will be the three focuses and the axes whereby we are going to appeal our value to customers.
But the software upgrade, upgradability of software is also becoming very important. So for that matter, the inter-generation scalability is going to be very important. One way to look at it is that those very high-performance LSI is already there. And increasing the software upgrade is one approach to do so. But still, the simple computing capability is not only the question. The memory bandwidth and also the Ethernet speed, megabits going to gigabits and multi-gigabits, 10 gigabits, 20 gigabits. In that evolution, a single hardware, even though the computing power is increased, whether we can continue to use that is not really possible. So definitely, there will be a replacement of generations. So amid the change of generations, we would like to allow customers to utilize the software. And also, the functional safety and security will be very important.
We have to ensure scalability there and make the development burden of customers easier and shorten the lead time. That is the contribution that we would like to make going forward. This is the design-in progress. This was already covered by Shibata-san. For automotive, the first half, the lead customers, the major customers, and followers. For both of them, compared against the target, we overachieved the target for both sectors, especially on the right-hand side. The camera opportunity from a major OEM, this platform was secured by us, which amounted to more than $1 billion. Besides that, tens of billions of yen or 100 billion yen, those kinds of sizable opportunities are in the funnel. We would like to secure these orders in a steadfast manner.
Just yesterday, as a hot topic on the MCU side, a certain major customer, a Tier 1 customer, the chassis platform business in the order of tens of billions of yen was finalized last night in reality. And the next page, this is what was presented by Shibata-san earlier, relates to this slide. He talked about that the automotive growth will be on par with SAM. But even amid that, the quantity is changing. That's what I wanted to explain using this slide here. So this is about the ASP, the average selling price. This shows the average selling price trend. On the selling price, as far as the SoC is concerned, compared against the market, we are overachieving the growth rate in SoC in terms of ASP, especially for ADAS. In the area of ADAS, we are increasing the quantity and increasing the market share.
And the selling price of ASP is quite large. That's the reason why we have achieved a very strong growth in the ASP for SoCs. Also for MCUs, the conventional low-end body microcomputers previously accounted for the bulk of the quantity. But going forward, domain controller and zone controller, those higher value-added products will be the focus. By making this transition, we would like to overperform the growth rate of the market and achieve a growth in ASP. For power, compared against the legacy products, we are going to make a transition to IGBT and increase the selling price. In this way, by reshuffling the portfolio and increasing the quality of our products, we would like to strengthen the foundation of our business.
In reality, just last month, as of the end of last month, the second quarter results were analyzed, were presented. The automotive had a 23% year-on-year decline, a major revenue decrease due to COVID-19. Despite that, the automotive secured a more than 10% operating profit margin. Of course, we are taking in profits earlier than for some of the opportunities. Despite COVID-19, we have been able to secure a good level of profit because of the change of the quality of the product mix. That result is manifesting itself. From now, I would like to relay to Mr. Maoka-san and ask him to continue with the rest of the presentation. The remaining automotive presentation will be presented by myself, Maoka.
In Kataoka-san's part, one of the drivers of growth was CASE and plus EE. That was explained by Kataoka-san.
CASE is the leading trend of automotive. This is a very important driver. The EE architecture transition is a very new demand that we are seeing. This is going to be a major factor that will shape the demand in the future. We believe there could be two different paths for growth in the future, the avenue for growth, where there will be two different avenues. One is the service vehicles that you see on the left-hand side. The other one is the owner vehicle that you see on the right-hand side. There will be two different paths for evolution. The service vehicle on the left, mostly, this is adding value for transportation. That is one path of evolution. In this area, fully autonomous and more EV platforms will be adopted. That is the major trend that we foresee for the service vehicles.
For the owned vehicles, user-centric comfort is the focus of the value. That is how we see how things will unfold in the future, so therefore, the ADAS for user support and human-machine interface and the driver-appealing features will be the focus. That is how this path will evolve in the future according to our analysis. Renesas is willing to offer products and solutions for both opportunities. No matter what evolution path takes place, we are ready to cover both opportunities. Next page. I talked about the driver-appealing features, the features that will directly appeal to drivers. I use that expression. One example of that, which was covered already by Shibata-san's presentation, is the wireless charger. We have this product in our portfolio. Originally, this was developed by the industrial infrastructure and IoT business unit.
But we would like to apply this to automotive applications. We have already started selling them for the automotive and achieved a track record already for automotive applications. We have a fine-tuned product already. Our products, in terms of efficiency, we have a better efficiency. For power management ICs and with MCUs, we would like to combine them with this technology so that we can offer Winning Combo that is user-friendly to customers. The next page. The next, this is Winning Combo, track record. In the first half of fiscal 2020, in the February analyst day, we planned to release Winning Combos. as it turned out, in the first half already, Winning Combos were released. For design-ins, as of February, compared against the plan back in February. I'm sorry. We are very sorry for this interruption.
For design-ins, compared against the plan as of February, we actually achieved double the numbers in the first half. The specific cases were already introduced by Mr. Shibata-san in his presentation: the Great Wall Motor of China and a major OEM in India. The Winning Combo, combining MCUs and power management IC, this solution was adopted by these OEMs. These new clients have a tendency of preferring turnkey solutions. They are quite responsive to these turnkey solutions. And compared against those customers in the leading nations, the lead time from development to mass production is quite short. So in this case too, as an automotive application, this realized in a very short timing. And therefore, the mass production is likely to start in 2021, which is a very fast pace of development. The next page.
This is the Winning Combo roadmap, how we have prepared and delivered the results. This is shown as a roadmap, and for Winning Combo boxes, which is indicated by blue, red, and white circles, this represents the original Renesas products and the former Intersil products. The white circle shows the former IDT products. So Winning Combos, if you look at Winning Combo, it shows the construction of the products of the former companies. In this way, all the assets previously owned by the former three companies are now combined Winning Combo solutions and be rolled out to the customers. Up until the second quarter, 15 Winning Combos have been released. For the future, as you can see there, we have a roadmap in place, and we'll prepare them and properly execute them and release them in the market one after another.
The next page. As it was already mentioned by Shibata-san, this is a point that was already covered by Shibata-san, especially for analog products. We have a plan to further expand the sales of analog. And it's not just only about releasing solutions and products. In addition to that, how to make it easier to sell these products so that these can be chosen by customers. From that perspective, the peripheral areas, including infrastructure and their tools, we have decided to enrich and revamp those tools and the infrastructure. And some of the examples are shown here. On the left-hand side, the headcounts have been increased. The sales and FAEs have been reinforced. Due to COVID-19, the uncertainties are rising. But still, we thought that this is very strategically important. So we constantly reinforce the hiring of the sales and FAEs with the analog headcounts.
We now have a stronger structure in place to support the analog opportunities. And we have also organized the regional activities, learning from the successful cases from other markets and deploying the successful cases to various regions. And the headquarters will provide the proper support. So this positive loop for reinforcement has been put in place. And also, the support infrastructure for promotion has also been enhanced, including documents and training. We prepared these documentation and training. And especially during the COVID-19 lockdown period, people were not able to go out in some regions. So we utilized this lockdown period in a very skillful manner and provided training on a global scale to improve the skill level of our people. And the right-hand side, we also enriched our web content, the analog products that we would like to promote, and Winning Combos. we presented them in our web page.
Winning Combos that have been posted on the web page induced some direct contacts from some customers. The next page. This is the summary of the automotive presentation, the last page of this presentation. After COVID-19, the market, the total addressable market, will be. We are going to adjust the timeline because some of the opportunities will be postponed. Decoupling due to geopolitical and supply chain decentralization and localization, we are foreseeing some impacts from this in terms of decoupling and the new entrants and the cloud players. All these platformers that have new technologies will come into play in the automotive space. Therefore, a new competitive environment will emerge. That is the environment that we foresee in the post-COVID-19 era.
Our strategy, as we have repeatedly mentioned, scalability, our intrinsic strength, and also Winning Combo that we have acquired through the acquisition of Intersil and IDT will be provided so that we can take a bi-dimensional approach. By making use of in order for us to achieve a scalability advantage, we would like to focus on the vertical platformers and also focus on the driver-appealing features. We would like to strengthen these capabilities going forward. And so far, we have achieved a very steadfast progress, especially in terms of ASP, the prices. We have seen a healthy development. And we have overachieved the original target. And if I may add one more comment, in the automotive area, of course, a large-scale deal is quite conspicuous and outstanding. But of course, there are so many other customers. And we have such customers.
In the first half, when we analyze the design achieved in the first half, compared to our earlier projections, the followers are expanding quite significantly. For our portfolio development, we believe the follower expansion is a very favorable development for us. Winning Combo releases are making a steadfast progress. We have led them to successful cases. For the analog promotion, we will continue to reinforce the promotion measures for analog. That was all for the automotive presentation. The next will be the presentation for industrial infrastructure and IoT. All right. The next presentation is from Industrial Infrastructure and IoT Strategy, IoT and Infrastructure Business Unit. Mr. Sailesh Chittipeddi will make a presentation. Please begin the presentation.
Thank you, everyone, and good morning. I'm going to provide an update, a strategy update on the business today.
If you look at the megatrends for the business that we discussed in February of last year, of this year, sorry, the big megatrends continue to be intact. As a matter of fact, on the data center front, we're starting to see some massive tailwinds, as Shibata-san mentioned, because of the rise of bandwidth demands. Moving to the next one. On the 5G ramp, in addition to the growth in the Sub-6 GHz infrastructure space, there is the additional space of Satcom where we're seeing good market expansion driven on the back of things like rural telemedicine, which are an impact of the COVID-19 virus. Moving to the next piece of it, we had talked about intelligence moving to the endpoint. Shibata-san highlighted a few devices, and I'm going to be talking about a few more.
So the megatrends for our business are largely unchanged, except we're seeing some good tailwinds for our businesses, which I'll talk about next. Next slide, please. So what are the major post-COVID trends? Some of these were highlighted during Shibata-san's presentation. But let me talk about the reason why some of these are happening. On the data center side, the memory interface timing and core power is doing exceptionally well, driven by bandwidth needs. On the consumer side, the smartphone business during the first half of the year, as you might have heard from several of the phone manufacturers, was kind of weak. What we're seeing now is a pickup in the 5G phone market. And we are in a good position with some of the leading Android suppliers in that market.
But it will not recover to the original expectations for the year, obviously, given the decline in the first half of the year. Interestingly enough, the laptop and the tablet market is where we're seeing very good growth driven on the basis of telecommuting, both in the workplace as well as for children in schools. So the back-to-school demand is very, very strong as the major suppliers put in bids for winning in school systems. Healthcare and environment continues to be an important area of growth. And this is where we see our sensor signal conditioning ICs, flow sensors, and again, power management getting a good tailwind. Surveillance and voice interfaces, we have our MPUs and MCUs, which are suitable for that opportunity. And increasingly, because of the contactless factor that Shibata-san mentioned, people are moving more from touch into contactless things like voice, gesture recognition, and so on.
Last but not the least, the RadHard and Satcom is an area where we're seeing growth. There are two reasons why that's happening. One is planetary exploration is continuing to grow. And the other one is focus on rural telemedicine. Moving to the next slide. I'm going to talk about the major SAM expansion opportunities. We had highlighted during our previous presentation the opportunity in the DIMM modules. So the DIMM modules to refresh your memory are the traffic management devices between the memory and the CPU. So one of the things is the CPU performance is no longer the limiting performance, nor is memory performance. But how the data is handled between the two is an important factor.
In moving from DDR4, which is the older generation, to the DDR5, which is shown on the top of these figures, which is the new generation, we gained for the two DIMM module configurations. One is the registered DIMM, which is the RDIMM. The other one is the LRDIMM, which is basically the load-reduced DIMM module. So if you look between the bottom and the top, in the LRDIMM module, you'll find that we have nine data buffers, a temp sensor, and a temp sensor in place. If you look at the top, we have 10 data buffers, two temp sensors, a PMIC, and an SPD hub. So massive content expansion. If you go to the middle of the slide, you'll see that SCM refers to storage class memories. So an example of that would be phase change memories, or 3D XPoint would be an example.
But if you look at it, at the bottom, it shows you what we would have had in the DDR4 generation. And you go to the top, it shows you what we gain by way of content moving to the DDR5 generation. The SODIMM refers to the small outline DIM packages, where, in the DDR4 generation, we had no content. But moving up to the DDR5 generation, we have two devices. So Renesas gained significant content from a migration, which has just begun. And it's early in the cycle. So we expect by the second half of next year, we should start to see significant acceleration and growth because of this move to DDR5. Next slide, please. Not only are we winning, you might be thinking, hey, the major CPU vendor is losing market share to the others.
This slide talks to our position in the market, regardless of who the CPU provider is. So on DDR3, DDR4, and DDR5, we are very well positioned in terms of being well along the qualification process for each of these products. So clicking, if you do one more click on it, Renesas Memory Interface Solutions are CPU architecture agnostic. So our solutions work with everybody's. So regardless of the move from DDR4 to DDR5, and regardless of the solution provider for the CPU or the memory provider, in the case of memories, we are extremely well positioned to take advantage of growth in this marketplace. And you would have already seen it in our second quarter revenue and our third quarter revenue, which has been talked about previously. Moving to the next slide, which is about 5G.
One of the major trends that's occurring in this business is the move from proprietary networks like the companies like Ericsson, Nokia, and so on provide. That figure on the left shows you the architectures that are currently used in 4G. On the right-hand side, it shows you the new vision, which is the Open RAN vision or Open Radio Access Networks that's pioneered by several companies and the TIP vision that companies like Facebook are pushing. The whole idea there is to make hardware and software completely unrelated the way it was before. By unrelated, I mean decoupling the two, not really unrelated, but decoupling hardware and software, much as occurred in the PC arena.
So in addition to the traditional providers of 5G networks, we're going to see an array of new companies like Parallel Wireless, Mavenir, and so on coming into play in this area. So for us, next click, please, if you do the next two clicks. Renesas has power products both on conventional networks as well as RF power and timing and optical and conventional. But in addition, when you move to the open RAN type structure, we have memory interface products with very good ASPs in this area as well as rapid I/O products. So Renesas has solutions to address both the traditional telecom providers as well as a new class of emerging open RAN solution for the 5G market. We're seeing solid growth opportunities in this area.
As Shibata-san mentioned, this has been one of our most promising growth areas in the near term, although it is coming off a fairly small base. We expect the growth to continue very nicely. Primarily, just a refresher, 5G networks today are in Sub-6 GHz. We're very well positioned as we make the move to millimeter wave to take advantage of that particular situation as well. Next slide, please. Moving then to industrial power expansion. This is our roadmap that I'm sharing with you. As you can see, this year, we launched a slew of new products at various cost points to get us to be much more competitive in this marketplace. If you look, between 2020 and 2021, we'll have a host of products that are very cost competitive and very good technology base.
So if you click on it a couple of times more, we are able to now address markets in the industrial area that we weren't able to do, such as appliances, smart meters, home automation, as well as test equipment, 5G cloud infrastructure, and factory automation, power tools, and amusement. So a massive expansion of our portfolio allows us to address a $3 billion market that we were not able to address before with the product portfolio that we had. Moving to the next slide. I'm going to dig in a little bit on the MCU, MPU, and RadHard market. If you look at the chart on the left-hand side, you will see this is Gartner data. We're gaining share on the 16-bit MCU market, where we were hitherto losing share before.
The reason for it is we're launching several new products and aggressively attacking the low pin count market that we weren't able to before. If you look at the two plots on the right-hand side, it shows you for products that were introduced in November and December of last year, we're already getting not only new opportunities, but also design-ins. Our share, we're starting to see gains. On the new LPC and next generation products, we're starting to see early signs of traction in the marketplace. This is with the RL78 Family. Moving to the next slide. If you look at the 32-bit-based microcontroller, our share erosion has slowed significantly. The reason for that is very clear. Late last year, we introduced our first set of 32-bit Arm-based microcontrollers.
If you can look at the two charts, you can see the RA Family, the amount of opportunities, as well as design-in and momentum that we're seeing. Stay tuned to this space because you're going to see us gain much more share in the RA arena in the second half of the year and beyond. We are aggressively taking steps to widen our portfolio in this market and go after new applications that we did not do before. Please remember, on the 32-bit, where we only had proprietary solutions, we now have Arm-based solutions, and we're making them more user-friendly. The share erosion has slowed significantly. Renesas' new products are seeing significant traction in the marketplace. Moving to the next slide.
On the MPU side of the business, the left shows you our move in terms of motion control devices from RZT1 to RZT2, which allows us not only to address the server market, but also the AC drive market. The RZN family is primarily for networking MPUs, and you're going to see some exciting new products on the industrial automation front come out the second half of this year and early into next year. Shibata-san talked a little about the general purpose MPU, but we're very excited. We're not going to cede ground in any ASP category in this market, but most importantly, the RZ /V2M, which we just launched, has already got design-in status at Casio, and this allows us to do endpoint AI at very leading customers. Moving then to the RE Family, which is the energy harvesting family.
You already probably know that we're in the Casio G-Shock watch with the RE Family. But we're expanding the scope to drive it with connectivity and put it in touch with all the sensors that we have in our portfolio. So stay tuned to the MPU area to see us diversify our portfolio quite aggressively while we continue to grow our SoC business with opportunities in the ASIC space as well. Next slide, please. Renesas, and you can click on all of them, please. So the Renesas RadHard products are critical to Satcom. We started working in this planetary exploration in 2018. And we've worked with most major governments to help their programs. If you look at the bottom, we're involved with the JAXA Hayabusa project. And we're also involved with the European Space Agency for ExoMars. And we work with the Indian government on the moon missions.
Next click, please. For the Mars 2020 Explorer, which launched last week, Renesas had over 20 unique parts on the Perseverance rover, which is exploring signs of life on Mars. And the reason for all these Mars explorations is because Earth is closest to Mars over the next six months. So we've seen a good bit of traction for the products in this particular area. Next slide, please. Last but not the least, I want to talk about the Winning Combinations and some exciting new products that we've launched. On the top left-hand side, we have a sensor board with BLE and machine learning built into it. Yesterday, we announced a camera module together with our own sensors, ISP, and power management. We're doing IEEE 1588 solutions for synchronization of timing networks. Why is this important? As you move to 5G, you need the networks to be synchronized locally.
The way to do that is to use the synchronization solutions that we offer. We're also going to be providing UWB-based social distancing bands. On the top right-hand side, you'll see the 48-volt scooter. I'm going to show you a very quick video as to the reasons why we're excited about it. If you'll click on it, please.
[Video Narrator] Today, we are going to demonstrate Renesas' new mobility solution in the form of a 48-volt electric scooter, which can reach up to 5,000 RPM. It has a 1,600-watt power inverter and 16-cell lithium-ion battery pack. It's a modular solution where different functional blocks are assembled together in a single design. The design comes with a mobile phone app with two-way communication over Bluetooth for control, monitoring, and diagnosis, as well as a wireless charging option with maximum power capability of 60 watts.
The system is made of two main boards, one with battery management and control functions and the other with a motor control and inverter block. The two optional boards are for wireless charging and Bluetooth connectivity. All the key components used in this design are Renesas products, so it is a one-stop solution for designing a complete electrical system for an e-scooter. Now, let's see this e-scooter in operation using the Renesas design. Firstly, we connect a mobile phone app to the board. We can see that the board begins to send system data to the phone. The charging status shows that the scooter is idle. So next, we will demonstrate charging the scooter battery. When the power supply is connected to the board, it immediately recognizes the connection and begins charging.
This can be seen in the charging status on the app, which shows a current of approximately 1.2 amps. Finally, when we attempt to turn the throttle on the scooter, the motor does not start because for this system, the mobile app must initiate a request to power on the system. As you can see, after turning the power on in the app, we can spin the motor.
So I wanted to give you a demo of the kind of Winning Combinations we're putting in the marketplace. We're very excited about this turnkey solution. Since the start of April 2019, we've launched 146 new Winning Combinations and achieved over $390 million design-ins , cross-selling, and combo sales. To put it in perspective, Renesas has leveraged the portfolio of its acquisitions, whether it be Intersil or IDT, to drive tremendous design and growth.
We're excited as this being one of the vectors, in addition to our core products, to drive growth in the IoT and the infrastructure business. Next slide, please. To summarize, the growth drivers for IIBU are largely intact post-COVID-19. We're seeing certain areas with increased needs for telecommuting, remote healthcare, environmental awareness, and endpoint AI is leading to demand growth for our product, coupled with the bandwidth growth. We're continuing our design-in momentum. As a matter of fact, Shibata-san mentioned this. To achieve a 6%-8% growth, we need about a $6 billion target. We're well on our way to achieve these numbers. Traction for the Winning Combinations continues to be solid. We have revamped the MCU and the MPU roadmaps. We're starting to see early success. You'll see much more success by next year. We're regaining our share in the 16-bit market.
And as can be, and the RA Family continues to get traction. We should see growth in the 32-bit area as well. And last but not the least, for those who are concerned, the Shiga closure does not materially impact our offerings in the area of 400G and 800G optical markets. We still produce the silicon-based ICs, both the HX and the GX family. And we continue to see traction for those. Thank you very much.
Move on to the next questioner. SMBC Nikko Securities, Mr. Watanabe, please begin your question. This is Watanabe. Can you hear me?
Yes. Okay. I'll begin my question. First of all, regarding automotive, I have a question. In relation to ADAS, you said you secured a big deal. Mobileye is quite strong in this business. Why have you been able to achieve and receive orders? That's my first question.
This is Kataoka.
And let me answer your question. Previously, as it was mentioned during the presentation, the major Tier 1s have this tendency of developing and building their own software platform on their own. In light of this, ADAS and autonomous driving, in the case of Mobileye, it's a black box. And it's difficult for these OEMs to develop their own software. They have to use the off-the-shelf software. So in that case, the vertical platformers, they have a tendency of building their own software and the entire systems on their own. And for that reason, I believe they have chosen Renesas and ordered their business to us. A follow-up question to that. If that is the case, then Mobileye approach. They are providing standard products to multiple OEMs. And I think that will generate a gross margin on their part.
But for those Tier 1s and OEMs who like to have their own control in this business, unless you're able to secure followers, there is a risk that your gross margin will be diluted. So in terms of profitability of this business, what is your view on that? As I said earlier, our customers for the vertical integration model, our customers are quite large. So with a single company, the lifetime value is quite large and significant. And therefore, of course, we have to be very careful about the profitability. But with the performance of the product, we strike a good balance with the cost and make a proper proposal to customers. By doing so, we believe we are able to secure profitability, of course. In order for us to further improve the operating margin, we have to deploy the products to followers.
But at least the first major OEM, even with that single customer alone, we secure profits. We have been able to do so.
Thank you. The second question is also related to automotive. The IVI opportunity, previously NVIDIA and graphics, those were the areas that the Renesas was not really good at. And you are not really successful there. But what's the reason why you have decided to go on to the IVI opportunities?
Well, Navi Core and SH- Navi, we have been very good at navigation-related opportunities. But as far as the high-end part is concerned, the quantity was limited so far. So up until the generation three, the mid-market, mid-sector was the focus of the IVI business. However, this time around, for the next generation, not only the middle segment, the high-end customers' demands are rising.
Therefore, this time around, from middle-end to the high-end premium market, we have decided to cover those opportunities, so we have a proper portfolio in place, and I think that is aligned with the scalability demand for customers, so that's the reason why we have decided to expand on this business, and if I may add one more comment, for driver's monitor and the map brief configuration, those ADAS-related functions are also incorporated inside the IVIs recently, so the high-end products on the IVI side are likely to expand further, so we have decided to plan products, including this opportunity, and make proposals to customers.
So the drive computer included, you're going after all these larger opportunities?
Yes, definitely, of course. This depends on our future decision, but ADAS and IVI, the IPs are quite similar to each other and common to each other.
Therefore, that's the reason why we have decided to attach more focus on the IVI side of the business. In terms of development efficiency, the efficiency is quite high there already. And of course, customers, the usability of the software is also an important demand for customers. And I think there's a good usability and also the network as well. So therefore, we have decided to go after this IVI opportunity. And finally, about DDR5.
Thank you very much for your update. And we have high expectations for the DDR5. In these smartphones, low-power DDR are going to be adopted going forward. On the smartphone side, in the mobile devices, the DDR expansion, do you see an opportunity for your company?
Yeah. For the smartphone DDR activity, we don't participate in. We are primarily focused on the enterprise servers.
So our focus is really on that market, which we think is fairly large, without entering into a price war on the smartphone side of the business. So we stick to our core competency in that particular area of enterprise servers.
Does it mean are you focusing on the more high-gross margin business rather than volume chasing?
Correct. Absolutely. And no, no. To be fair, server growth is fairly strong.
Yes, of course.
So I wouldn't call it. It's a decent volume at good margins. Yeah.
Okay. Thank you very much. That's clear.
Thank you. The next question from Macquarie Capital Securities, Damian Thong. Please begin your question. And please unmute before you begin your question.
Thank you. I just have one question on the memory interface and on DDR5, actually, in general. Could you actually talk about because you talk about content growth here.
Is it possible to quantify this?
Sure.
And then also the pace around because Intel and AMD have committed to DDR5 use now. So it looks like a very interesting market going forward.
Right. Thank you. If you look at it, right, I've quantified it actually in terms of the RCD opportunity and the, excuse me, the RDIMM opportunity and the LRDIMM, right? In the case of the RDIMM opportunity, the little blue things that you see at the bottom, which says DB, wouldn't exist. So we would gain share there primarily on the RCD, the hub, the PMIC, and the temp sensor. That would be the growth. In the LRDIMM, which is the configuration shown in this picture, we would gain one additional data buffer and all the other parts. So that would be the growth on the RDIMM and the LRDIMM respectively.
As I shared last time, right, it is quite a significant growth by a multiplicative factor. I mean, it's almost like a 2x increase in terms of the value creation for Renesas moving from one generation to the next.
Okay. Got it. In terms of the current market size, how large is it? And so is it 2x versus what will be the base number for that?
Yeah. So I mean, broadly, I won't talk to specifics about our market in this area. But expect the overall market to grow by about, I'd say, between 50% and 75% from the baseline that it is today.
Got it. Thank you. Since we are running out of time, this will be the last question for today. To your advisor, Everlyne E., please begin your question.
Hi. Can you hear me? Hi. So yeah, you guys can hear me, right?
So thank you so much for the great update. I have a question for Kataoka. So I wonder, when you are speaking, when you are looking at your design wins in the new higher-end automotive MCUs, what will it impact on your large-quantity low-end MCUs? I wonder, is that more of structural growth, like the high-end part will be pure incremental, or there is cannibalization for the lower-end or large-quantity MCUs from your side, especially from the technology point of view?
That's a very good question. We are changing our portfolio, and we are focusing relatively on the high-end side. But as you rightly pointed out in the question, the MCU quantity will still come from the low-end. The body products will account for the bulk. Therefore, we have to secure this business in a proper manner.
The low-end products, especially Winning Combos with the combination of analog, those controllers account for a very large quantity, so of course, new products will be released to the market with a regular interval, but rather than deploying lots of MCUs, we would rather focus on Winning Combos so that we can increase the total numbers. That is a strategy of the company, of course. Within the low-end, the security features are strongly requested to be updated, so we will accommodate those requirements going forward. On the other hand, the performance itself, some people say it's already sufficient, and the ROM capacity is also there, and the low-end for customers, they are rather satisfied, so that's not going to increase significantly. The central LSI, the high-compute LSI, are the areas where their programs are shifted to.
So the memory capacity and the performance for the low-end side is not going to grow significantly because the current capacity is already sufficient. But we have to address the new security features. And the main driver will come from Winning Combos. that's our approach.
Great. Thank you. And then I have a question regarding the competition dynamics in the high-end. I think it's a very helpful comment. And you said the Tier 1 OEMs are shifting from choosing the black box offering to their own software. So they choose you. But I wonder, if you look again, do you think that's the mainstream trend for OEMs to go for that way, which will put you actually in a better competitive dynamics, especially in comparison with the big players like NVIDIA or Intel, or it's just some occasional things?
Just how do you compare yourself with the internet players and also with your traditional peer players in this field in terms of the higher-end applications?
Again, that's another good question. Certainly. The players from outside are likely to become a very formidable competitor for us, of course. The computing power, software development. With these alone, it's very difficult to compete on these factors only, and some competitors have a very strong capital base. They have a very strong development capability with lots of money available, so in order for us to compete against them and win over them, all the strengths that we have accumulated over time, especially the quality in the Automotive business and the ability to offer products in a proper manner based in accordance with the development span of customers, these basic capabilities will have to continue to be offered to customers.
And on top of that, against the new competitors coming from outside, we have to overwhelm them in terms of performance, functions, and also the product lineup and the development tools and environment. We have to be at least on par with them. So in totality, we can get selected from customers. That is the, as a semiconductor manufacturer in the automotive sector, that's how we try to survive in the market.
I see. My final question is regarding your regional focus. So if you look at your new design wins or the market share you aim to take, is there a regional focus? For example, is it still going to be those Japanese players or European players or Chinese players? Is there any increasing emphasis on any specific region for your further development?
Of course. Primarily, we will target the major OEMs.
But on the other hand, we have to expand the followers, especially when it comes Winning Combo solutions, China, and other emerging markets. Mainly addressing these markets, we would like to expand the sales of our products. So China will be one of the main markets that we will be looking at to drive the quantity growth. And for that purpose, as Mr. Macquarie mentioned, a proper mechanism is needed. The mechanism for expanding sales is now prepared, such as the improvement of the web contents, the sample software, and also the local partners. We are having a collaboration with them so that we can directly approach the OEMs and provide support to them and assist their mass production. Through these approaches, we hope to expand the sales of our products, especially in the emerging markets.
Those are the approaches that we are taking in order to gain market share in these markets.
Thank you very much.
Thank you. We would like to now finish the Q&A session. Finally, our CEO, Mr. Shibata, will have a closing remark.
Ladies and gentlemen, so sorry for participating for extended time. If I try to summarize, in the last six months, the world has changed dramatically, but the impact on our business is not a major sea change. To some extent, we are enjoying tailwind, and to some other extent, there are different impacts that we see. I hope you were able to understand this message through our presentations, and depending on the changes in the environment, our strategic directions are adjusted in a timely manner. I hope that I was able to convey that message to as many people as possible.
The most important message is that despite the changes in the environment, our execution is making steadfast progress. I hope that you received that message, and from now, I believe the COVID-19 virus is going to stay with us for such a long time. We cannot foresee all the changes, but we would like to flexibly adjust ourselves to the changes in the environment. Our focus will be changed. The way we work will be changed, and so we will never get delayed in our execution. That is our approach, and we would like to constantly hold this kind of occasions going forward, and if you have any questions or need clarification, please don't hesitate to contact our IR team. We would like to respond as much as possible. With this, I would like to finish my remark.
Thank you very much for staying with us for such a long time, and we look forward to future collaboration. Thank you.
With this, we would like to finish the strategy update session. We are so sorry that the English translation was somewhat difficult to hear in some part of the presentation. We are so sorry for any inconvenience. The documents and the recorded data will be made available in the investor relations page on our homepage. So please review them as adequate. Thank you very much once again for your participation.