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This means a 7x increase from 2019, I think. That's the reason why I have decided to use this 3x number, because this is the most evident track record that we have achieved. Market cap in parallel, compared to 2022, we have an aspiration to increase by six times. Compared with 2019, Friday last week, it was already 8.7x . 2019 is the year that I took office as Chief Executive Officer, and I think this is a so-so good number. It's not so bad. Of course, we can aspire for higher numbers, but I think this is so-so good. There are bad times and good times, of course, but throughout this period, in these seven years, this is the progress that we have achieved. For all of you, I just want you to remember these numbers.
When we take actions, if there's anything surprising, I want you to consider that we have done and achieved certain results, and this time around, we should be safe. That's the reason why I prepared this slide. Now, the middle 25%, this is the catch-up part. What are we going to do here? What's going to happen with the ROI? When are we going to finish this effort? It's difficult to give you a proper explanation. We have to provide a good explanation, but it's very difficult for me to come up with a good idea as to what would be the good explanation. I just decided to present with you that this is what we are trying to do, what we have been doing, so that we can reassure you. That's the reason why I prepared this slide.
The first element here, I talk about this once in a while. Beyond hardware. Qualcomm announced its ambition to acquire Modular, but hardware alone is not sufficient. AI and software performance, these cannot be delivered by hardware alone. How can we maximize the power of hardware and deliver the maximum value on the part of the users? It's about how to utilize those hardwares. For that purpose, UX. UX covers a broad area in terms of its meaning. UX, we are undertaking many good efforts, and Ivo is here, so I want you to talk with him if you have the opportunity. With AI, the UX importance is going to be increasing significantly, exponentially. We would like to double down on the UX efforts going forward. Altium, the acquisition that we made two years ago.
We also hear a lot of questions regarding the progress of Altium acquisition. Shinkai-san will talk about that after in his session. We are making this pivot from a product company to a platform company. We are tracking some numbers in order to track the progress. This will be explained by Shinkai-san later. Renesas 365. Lim is here. He is the person who have devised this initiative from scratch, and there is a demo afterwards. I would hope that you will take a look at it. Once you see it, I hope that you will be able to have an idea what we are talking about, what this is about, what Renesas 365 is about. Renesas 365 demo itself, that makes me very proud. The robot hand that you see at the back, this is connected with Renesas 365.
I want you to see that and see the potential of what can be enabled with this in the future. If you can conjure up that imagination, that will be very good for me. It may take time, but so far, I think things are progressing quite favorably. I hope that you will share the same understanding. If that is the case, that will be very pleasant for me. The middle one, the foundational technology. These are the things that we are going to do. These are a matter of fact. We are going to accelerate these efforts, be it software or be it the IT infrastructure or ERP integration. Those were the main tasks for our internal company because we have made a series of acquisitions. Now we have to roll out the AI infrastructure for us to utilize ourselves.
We are particular about the equipment and of course, the methodology for building semiconductors, producing semiconductors. Previously, we were relying on our own efforts. Rather than that, we would like to utilize technology and be more smooth in these manufacturing processes because this will have a direct repercussions on our competitiveness. These are the areas that we are making investments. It is not that we are going to spend JPY 80 billion altogether at one time. JPY 10 million, JPY 20 million, we would like to accelerate investment in a phased approach. That will be explained by Shinkai-san in his part, that you can see the overall picture. Lastly, the organization capability. This is something that we have to work on from here onwards. We have to reinforce the capability of our organization.
This is a must. The collaboration environment, the leadership development, and also the organizations to work organically. We have to revise the mechanism, the structure, and make necessary investments. Those are the things that we have been communicating to you so far. This year, the San Jose office, we made a sizable investment, about JPY 15 billion, and we remodeled the office completely. The office is very easy to use now, quite comfortable. The next is the Kokubunji Musashi R&D site. We would like to modernize that facility, make it easier for the residents to use that we can stimulate the innovation and the imagination of the engineers. Now, from here, I would like to talk about the future. This is only a prelude. My speech is only a prelude, and the details will follow by each leader in their respective presentation after this.
I just want to give you an introduction. First of all, in the next several years, our growth will be driven predominantly by AI and IT infrastructure. In three years, four years from now, if things go smoothly, 40% of our total revenues will perhaps come from AI and infrastructure-related businesses, according to our analysis. AI enabler. These are the devices and solutions that will enable AI. We are going to provide the devices and solutions for that. That's the first engine of our growth. We'll go to the second market. This is the physical AI, a buzzword recently. In our case, this includes software-defined vehicles, but physical AI will be the second stage of our rocket, and then this will boost the growth from 2030 onwards. The first one was the AI enablement. The second one is the AI deployment.
We are going to deploy AI in areas close to our everyday life, that will be driving the second stage of our growth. The third piece is about 2035, the digitalization vision that we have set the target for 2035. This remains unchanged from before. One thing that is changing in this space is the role played by AI. Previously, utilizing AI, we said that human work will maybe be made easier. From that perspective, we thought about how to utilize AI. Given the enormous speed of evolution of AI agents, rather than that previous concept, we believe that the AI agent will replace human work quite considerably. We made that change of consideration. We are not just simply using AI in a light way and provide them for human beings. Rather, AI will be the user of our digital.
We've made this change in the way of thinking. We would like to use AI as a companion, as a complement. With that mindset, we are going to further enrich our platform going forward. Now, the first and second and third rocket that I just explained, for each of them, what are the opportunities and what are the approaches to be taken by Renesas? I'll just give you a prelude, the details will be provided and explained by the respective sections after myself. That is how I plan to continue my story today. AI infrastructure, up until now, up until the previous earnings, we have been centering around power delivery. We have been saying power, power. Right at that point, Intel's earnings results came out, the market started to shift, our engagement with the customers also started to shift.
We're not just talking about GPU and power anymore. It's not as simple as that. We need to become heterogeneous. We are faced with a complex environment in which parameters are growing rapidly. Even in such models, how can we decrease the latency and compute? Regardless of the power involved, how can we swiftly deliver computational results? That is the major shift. MPU-related devices are on the rise in terms of demand. The flip side of this coin is that the board control or workload optimization and the power consumption optimization becomes economically important because the model itself is growing. Unless we take care of this aspect, the model will not function. Control plane is something that we started to hear a lot about. The demand for this is growing rapidly. That is how we see the current market. All in all, in the coming five years, the semiconductor market as a whole could grow five-fold.
That is how I see it based on third-party research results, which we have analyzed, and customer forecasts are also included in our analysis. We have been triangulating the various types of information and came up with our own estimate. We came to the conclusion that this could reach five-fold, very honestly speaking. Towards this end, this five-fold growth, power delivery should grow even further. NPU and NPU related products, including the memory interface, started to grow rather late, so it has potential to grow even further. That is why I have put plus plus here. Control plane, also expected to grow. Compared to the overall semiconductor, maybe this is going to be a slower growth. All in all, the applications to which we provide our solutions, all these related segments should grow by five-fold, more or less.
The opportunity in the three, four, or five years will become five-fold in our assumption. Where do we stand? Regarding power and memory interface, I think we have a relatively strong foothold. Leveraging this, we will venture into other areas. In terms of technology, I think it's in the corridor, that we have our modules put on exhibition. As of last year, when I talked about module, people would go, "Why module? Why Renesas?" I think that was the reaction. Now we have a solid product. Please take a look and discover that we were able to live up to our own words. Moving on. We have a positioning. We have our ways of winning and utilizing this. How are we going to utilize the opportunity for growth?
Not just market potential or opportunity, but how is growth going to look like for Renesas is written on the right-hand side. Fortunately, we have a lot of embedded devices. Control demand is going to be increasing, and that is going to be favorable for us. As a simple example, we have a configurable mixed signal device and other MCUs that are traditional lineup of our product. AI workload power optimization related SSP and SD and others are included as well. On the left, I talked about five-fold growth. In that future, control related technology will be needed, and that is where we want to provide our products into. At the bottom, we are talking about grid to core. From the grid level, we are getting closer to the left end.
We used to be on the board, a core power, but we are moving more towards racks. Going forward, energy storage and solid state transformers, because of the discrete elements and battery management elements, there are many strong competitors. It's not that we can just make a lump sum investment for IGBT and update our technology. That's not the kind of approach we are looking at now. Control device, analog device will be necessary. These peripheral segments and moving towards the grid more than now is what we are thinking about. Regarding physical AI, similar story. Market will grow significantly. This will be covered by Vivek on SDV, and Ivo and Pete will talk about robotics. 2035 seems like a long way ahead, so 15-fold increase might not mean much at this point.
The overall direction is that in the five years to come, I think our automotive industry would be the growth driver. Beyond that, robots will come into the picture in full scale. In this world, especially in automotive segment, MCU, although there are some fluctuations, we are among the top three in the market. This I have been repeatedly saying that from the low end to 2,000 TOPS high end compute, this end-to-end scalability is offered only by us. We were only targeting the automotive industry, but now we are going to shift to robots and humanoids. That is going to be the direction in which we will grow. Our car demo is made available at the back of this venue. What can you do with a Renesas device, especially ADAS and infotainment?
Well, this level of high-performance delivery that can be done by Renesas products is something that I expect you to react in. The customers and users are reacting very strongly, and until last week, our teams were in Germany negotiating a significant deal. Here, in terms of us, growth direction, this is where we want to gain market share. Regarding MCU, there was an opposite trend in the previous several years, not just us, that one company would grow significantly, and others would lag behind. That had been the situation. Unfortunately, automotive industry changes only slowly. This trend will not become a significant shift starting from next year or so, but we have a plan ahead as Renesas. Rest assured, we are not concerned. I'm not sure if it's going to be 2027 or 2028, but our preparation should bear fruit at some point.
It's just a matter of time. Intelligence at the edge. As I have mentioned earlier, we need to complement AI agent's performance as a companion and partner. On the left-hand side, you know very well, but AI is evolving at a rapid speed, as you can see in this chart. Yes, it's a speedy development, but Transformer came about in 2017, and in the world of embedded products, applications using Transformers are increasingly being developed right now. It's not like LLM in the internet world. It has taken 10 years. In the physical world, deployment of embedded takes time. R2-D2 is currently on the rise, and world model should eventually emerge. Whether that's going to be deployed on robots and humanoids, this should take more time. I think that's a realistic view.
Let's assume that five years from the introduction of ChatGPT in 2022, will that be the point in which this will actually be deployed? I don't think so. I think it's going to be 2030 onwards, realistically speaking, that we will see the world shift in that direction. We are planning ahead. Utilizing a platform, we are going to have a wide range of portfolio and a digital thread, something that can make full use of AI. We will be focusing our resources in this area. Unless we do that, when AI comes to a platform and plays around, that is all good, but AI can only work on probability. It can say something that is probable, but from the user's perspective, validation is necessary. If we have a solid digital thread, we can allow AI to make deterministic proposals.
Those are usable proposals, and I see a huge gap here. We need to invest in a meaningful way so that we are well-prepared. Next, how are we going to win in this area? AI infrastructure, physical AI, intelligence at the edge. We have three slides covering those topics. AI infrastructure. In this segment, we're positioned well. We're not going to do something drastically new. I think we should be strengthening what we already have. We have been enabling ramp-up of customers in a relatively good speed. Some customer says it's a combination of American speed and Japanese quality, so we pride ourselves in the speed of deployment. Regarding technology, I talked about Moduler earlier, but going forward, we have the interconnect technology it fosters through a memory interface. Using Control Plane, we can achieve connectivity within the racks. That is where we tend to win.
On the far right, digital and UX. In the corridor, you will be able to see the actual emulators of ours. Please take a look. Using these, our users, before assembling their products, power and thermal simulation can be done. Time to market of our customers can be shortened rapidly or significantly. It might look slightly different, but outside of the silicon, we see opportunity and bottleneck. You will be able to build that for yourself. Regarding physical AI, this is something that should happen in the longer term. Near term, the targets will be explained by Vivek. This is not something we are capable of doing now, but something we intend to go into. We will be investing in the foundation, enhancing our competitiveness in this area. That is the key topic for us.
One key phrase you should be looking at is the combination of, or the advanced design of hardware and software. AI models are advancing and hardware processes also. Some hardware does not have the necessary performance, and Moduler has been acquired by Qualcomm because of this. We are taking our own approach. Our hardware performance will show true value through our customers' usage. That is something that we would like to show. Intelligence at the edge, this is something that we expect to happen down the road. Many things are in the future. On the left, I'm talking about the contents that we will enrich. Our platform, although being vertical, will be open horizontally. Our competitors and passive users can actively use our platform. It's not just us, but going forward, utilizing this platform, the market itself can democratize or free platforms.
That is something that we want to realize. To sum up, a big topic for our growth is AI. AI will appear in the three-stage rocket that we envision. Not just five years down the road, but in 10 years' time and beyond, this is going to lead the way in terms of growth. This is going to be the backbone. In addition, I talked about control in terms of AI infrastructure, but SDV, physical AI, even Pete will talk about this later. But in the world of physical AI, we have a lot of ingredients to realize this. Many of our solutions will be offered so that we can have a sum plus growth. Lastly, in 10 years' time, we want to utilize a digital platform so that AI-friendly environment will be created by our platform. Our purpose remains the same.
With the introduction of AI and physical AI becoming more real than ever, we want to make our lives easier, that can be realized in this world. With that, I would like to wrap up my part, I will hand it over to Shinkai-san. He's going to talk about more solid numbers.
Thank you very much. Now, we want to invite Shuhei Shinkai, Senior Vice President and Chief Financial Officer. Good morning.
This is Shinkai from Chief Financial Officer. In my finance part, this is the regular format. Towards the 2035 aspiration, we want to talk about the progress and also the model. A recap on the past. This is the normal, regular format. Since the past, you can see the trend of our numbers, just like we usually go on a constant currency basis, looking at JPY 100- $1, JPY 120- EUR 1. In 2025, revenue for the full year declined year-on-year. As you know, for the quarter basis, the revenue hit the bottom in 2024 Q4 was the bottom. In 2025 Q1 onwards, including forecast and for six quarters in a row, we continue to post positive numbers, that is the current situation.
In 2026, for the full year, we expect to see a full-scale steady result to come. In income statement for 2025, the second from the top, gross margin. The revenue year-on-year declined, gross margin stayed solid. As expected in the model, we ended up achieving 55%, our operating margin at the very bottom, the model showed 25%-30%, we ended up being at 24%. As you can see at the right bottom for the operating margin, as we explained by updating the model, we mentioned adjustment to make a change to the model. The purpose of this change is that currently we are looking through the plateau condition with an intention when we will make the solid investment for the future growth. That's what we want to have at this point around this adjustment happened.
R&D and SG&A is something that we did to make this adjustment where it says foundational investment. It was important, but we weren't really addressing enough and we were behind, but we decided to go ahead and make more investment in these areas. Also, this is what we are seeing and where in the past we said we're catching up, but this is what we are starting to see. The R&D is 19%, within a scope of model. We were going through the selection and focus process for R&D since 2024, and we saw the lower baseline. SG&A, we will take actions to lower the baseline as part of improving productivity. This is expected to improve the operating margin. Margin improvement is expected and this will be the driver. What is this foundational investment?
I think we've briefly went through the items, but now I'm showing more numbers. 2025 is compared to 2022, three years ago. In 2022, not just top line, but operating margin was also highest in 2022. I'm sure there is a difference in definition, but this is the perspective that we took to show. We call this as foundational investment, the investment into the businesses, comparing 2022 and 2025. The amount increased by 1.5x . Ratio was 11%- 14%, so we increased the percentage. What's included in this investment? As you can see on the right-hand side, the common IP platform, so software, R&D development, and the design document improved to improve the efficiency of designing and enterprise infrastructure, including AI and employee wellbeing improvements, so investing into office.
R&D, SG&A, so many different areas where we are investing right now, and we are trying to also promote the future growth of the business. As we move forward with this investment, what is the revenue breakdown we expect to get and the signs we hope to get to? In 2035, this is the revenue portfolio we are looking at. The midterm is around five years ahead, and long term is like 10 years ahead, in 2035 or something like that. The left-hand side is the size and which segment that we expect to see the growth. AI infrastructure will be the main driver and physical AI, SDV, and lastly, intelligence and edge. Those are the three areas. Those are the three steps to see the growth. Looking at the height of the bar, in 2025, we look at that as one.
In midterm, we want to double first. In long term, we want to triple this 2025. I know it's quite ambitious, but this is what we are looking at to see a top-line growth. We break down by segment on the right-hand side. Our reporting segment, automotive, industrial, infra, IoT, and also software digitization. We also want to grow this. This is not current segment, but we want to grow this. 35% for automotive, infrastructure, infra, IoT, 50%, and software digitization, 15%. This is the breakdown we are trying to accomplish in our revenue. I also touched on this in evaluation in past. Software digitization sales percentage within sales by growing this to a certain level, the overall corporate valuation to be increased, valuation to be increased so we can increase our overall corporate value. That's how we have calculated this portfolio.
Next, on the margin, left is the gross margin, right-hand side, operating margin, timeline is starting from 2025, in midterm, roughly around five years is shown on this slide. Overall, the gross margin would be 55%, around 55%. It's almost flat. Operating margin at 25%-30% range to be. Expanding in this range. Starting with the gross margin on the left, enhance capacity expansion through the investment. That increases depreciation. We see very tight supply. There is a component cost increase is expected, price increase mix improvement to offset the negative impact, utilization improvement to offset the negative impact to end up being flat in total. Operating margin, the foundational investment, as I mentioned earlier, looking at earnings, we need to make the right balance to control the investment, we'll continue to make investments.
Just like component cost increases, under the current situation, we expect to see the cost increases in many different elements and utilize technologies, including AI, to improve the productivity to offset the cost increases. Top line growth to enjoy operating leverage. In this model, it's not taking place by timeline. This model is actual sectional view of the layers of the time. We're not talking about going down and going up by that sequentially. Looking at the time 2026 operating margin level, the scale portion will be seen, investment is taking place. That's what we see for 2026. Depending on the time we see, this movement could happen differently from what we see on the screen. We're not talking about the margin will be coming down from now onwards.
Depending on the top-line growth and the earnings growth, we will control the spending amount. Talking about capital allocation, the allocation framework hasn't changed. De-leverage, dividend, and strategic investment, this will be the order of our capital allocation. Recently on the CapEx, as I mentioned, we are increasing CapEx to reinforce our in-house capability. The embedded area where we want to focus more on, the mature node technology will be unified. The capacity for this is quite tight globally. We want to have an in-house capacity reinforcement. The leverage portion, there's a dollar bond which comes to maturity, we redeemed them we can accelerate the de-leverage. Divestitures, the timing business allocation process, we're making good progress so far. We are accomplishing the condition needed for the closing. We are expecting to come to closing in the near future.
The proceeds coming from this transfer will be utilized for the growth investment, at the same time, the return to shareholders. This timing transfer, the use of proceeds, we don't try to decide as quickly. We want to take some time to think with caution. Capital cash need to be secured under the current environment to stay flexible. I think that is one way to go. I'm sure different players trying to raise the funds that they can increase the balance sheet. Of course, we remain the same policy, when deciding, making decision to start spending, we want to shift the timing. We are not making decision too fast or not immediately. Regarding our term, I know this is quite busy, right? Summer busy. In 2024, we completed acquisition for 2025 beyond for three years.
These are the stages we're looking at: reform, pivot, and perform. Those are the three years that we have segmented here. We are in pivot phase. Desktop application product over to SaaS product platform. We are shifting and changing the offerings. By the end of this year, we should be through with that shift, this transition to be completed. From next year onward, we will go into perform stage by increasing volume, and we will convert them into values. That is what we are preparing right now. What are the actual numbers and KPIs we're looking at, which are shown at the bottom half, starting with the left bottom. For the past one year, looking at the progress of the past year, ARR, this is the KPI linked to the revenue.
It's growing at 8% per annum right now compared to historical numbers. The sales growth, ARR growth, has slowed down, but as you see at the bottom, MAU, monthly active user, has been growing by 24%. Intentionally, we shifted our marketing methodology to grow the scale. First, we focus on the scale to grow, and this is the result of such effort. In the pivot section where we are in right now, the theme is to expand the scale. As a KPI to accomplish this, we're looking at CRR, customer retention rate, maintaining existing business, also conversion rate. This is the shift to the new platform and new platform customers, expansion of new customers. Those are what we are looking at to move on this pivot phase. When this is completed, next, the expanded volume to be converted into volume.
In this triangle, we will increase the maturity level of the pyramid while ensuring the scale, but moving up the pyramid by utilizing the upper platform so we can raise the unit price. We can convert the scale into value, and that is expected to come in next year onward in the perform phase. The final goal is set over here. There's no change since from the last year. Mid to long-term, looking at JPY 1 billion- JPY 1.5 billion. Here's a summary. This is the sixfold breakdown image that we always show, the size 2x and valuation 3x . Just like Shibata's slide, we are taking a stock price from the end of the week. We're talking about 6x . We still have a big upside from there. What we need to do is summarize on the right-hand side.
These are pretty much the same as what we explained last year. We are basically executing what we explained last year, and we'll continue to do so. In A section, back to basics. We will invest in foundational area to ensure the future growth. In valuation gap fill, portfolio is reviewed and capital allocation to be implemented in a disciplined manner. Software digitization to increase the valuation, improve the valuation, and expand furthermore by making investments until we can fill in this 6x tabled chart. Lastly, one more comment. The model results and constant currency basis are shown on the same slide here, just for your reference. This concludes my presentation.
Thank you. Now we'd like to move on to the next session. We would like to invite Vice President and Chief Sales Officer, Stephen Limoges, to make the presentation. Steve, the floor is yours.
Good morning. My name is Stephen Limoges, and I'm the Chief Sales Officer for Renesas. Today, I will present Renesas' sales strategy and discuss our plans to accelerate growth within our existing customer base and the mass market for future growth. For the last few years, Renesas has been consistent with our high-level sales strategy. Our strategy is to go deeper and drive more revenue out of our existing customer base. To go broader and expand into a new customer base. While the high-level strategy stays the same, we've made some key strategic shifts to accelerate our growth faster than the market. First, we increase our penetration into the fastest-growing markets by investing our direct resources in secular growth markets. As Shibata-san mentioned, these are AI infrastructure and compute, physical AI, and software-defined vehicles, and intelligence at the edge.
Second, we diversify our revenue through dedicated mass market deployment focused on new customer acquisition. We centralize to scale, deploying highly technical centralized support using Renesas AI tools to respond to customer needs quickly anywhere in the globe in 24 hours. I'd like to add a little more depth into what broader and deeper means to the sales team. Deeper means our sales teams are intensely focused on gaining share within our known revenue-generating customers. Our mentality is how to continuously increase our relationship within these customers, and our sales metrics are aligned with this focus. Design and manufacturing is global, and we are leveraging Renesas' scale and global sales footprint to gain share at our largest customers. Having a constant curiosity and ambition to find and create more opportunities to maximize Renesas success on every customer product.
For broader, this is Renesas' next frontier for growth, gaining access to the thousands of customers we currently do not interact with. It's about increasing Renesas mind share by leveraging our extensive distribution relationships and partnerships to amplify our solutions in all major markets. Searching for the next big customer or end equipment, which will drive future growth for Renesas. The most valuable resource in sales is our people. How and where they are deployed is a key factor in driving growth. In 2026, the keyword is focus. All customers have access to Renesas. However, our sales teams will focus their proactive engagement on two areas, growth accounts and mass market.
The teams will operate separately within each region, focusing on gaining share growth accounts, which are revenue-generating accounts within our secular growth markets, and dedicated mass market teams in all major regions, focusing on new customer acquisition and cultivating those markets to find the next generation of growth accounts for Renesas. The new deployment will increase our time spent without drastically increasing our resources in markets providing explosive growth for Renesas. What differentiates Renesas in the market is a high level of customer intimacy, as well as the proven track record of manufacturing expertise. The feedback that I get directly from customers is Renesas is a technology leader and a partner who helps them innovate and accelerate their time to market. Using our differentiation to outgrow the market, it requires focus, investing our resources in the fastest-growing segments, and partnering with industry-leading customers.
It also requires some patience, as the technology adoption and speed of these markets varies widely. This is why we like to visualize the revenue contributions of our secular growth markets as three-stage rockets. By heavily investing in the three-stage rocket, we are accelerating and diversifying our revenue to grow faster than the market. Beginning in 2026 with our AI infrastructure leadership, we will achieve this consistently throughout the mid and long term. Our growth expectations include significant mass market acceleration. In the mass market, margins are healthy. The next generation of engineers are being developed, and the next big revenue-generating customers are born. In 2026, we have already implemented an ecosystem to accelerate our mass market growth. We will be achieving this through five pillars.
Dedicated mass market teams solely focused on developing large semiconductor markets, leveraging our distribution and e-commerce partners to gain access to every customer in those regions. Industry-leading technical support. Customers want efficient experiences with fast, thorough technical answers. We are going to deploy our Renesas AI ATHENA support tool to our sales teams and our distribution partners. This will enhance our ability to scale quickly and maintain our technical support leadership. Finally, finding who is next. Many customers who are large revenue drivers for Renesas had small beginnings. Our teams will search the market and place bets to seed the long-term growth for Renesas. What is ATHENA? If we want to go broad, we must evolve our support strategy to scale and support the entire market quickly and efficiently. ATHENA is helping us to achieve this scale.
It is a super augmented AI design and technical support tool that is enabling support for all customers in a fraction of the amount of time it has taken in the past. Much like well-known AI tools, the answer to your question is right at your fingertips in seconds. What differentiates ATHENA is its ability to use all Renesas internal resources, fine-tuned, internally tested, and quality controlled to be fast and accurate. Deployed to both Renesas sales, our distribution partners, and in the future, our growth customers. The tool improves scale significantly, accelerating customer support and new acquisition. As I mentioned previously, our mass market strategy hinges on our dedicated sales team and our extensive distribution network, both center around people making connections with customers. Proper guidance and focus is needed to know where to invest and place those bets.
This is where our Renesas user experience journey is utilized to generate, and most importantly, qualify customer leads. Customer activity, which might begin at a sample, a download, a tool use, or a new design on Renesas 365, generates intelligent leads, not just leads, intelligent leads, growing our sales funnel and guiding our sales teams to focus their engagement on the next big revenue drivers for Renesas. The good news is our sales strategy is already yielding results in new customer acquisition. For the first half of 2026, our new customer acquisition results are tracking to 8% growth overall, with consistent results across all regions. Our long-term goal is to double the number of new customers using Renesas. In closing, we're going to go deeper into our existing customer base. We're going to go broader by developing an expanded customer base.
We will sharpen our focus and deploy to secular growth markets and the mass market. We'll broaden our customer base through a targeted new customer acquisition strategy. With that, I'll close my presentation. I sincerely thank you all. I appreciate your time. Thank you.
Thank you very much. We will hear from Vivek Bhan, a Senior Vice President and the General Manager of high performance computing, to talk about software-defined vehicles. The floor is yours.
Good morning and good afternoon. I am Vivek Bhan, Senior Vice President and General Manager of the high performance computing business at Renesas. Today, I will walk you through Renesas' strategic direction for software-defined vehicles. I will also outline how our compute and power portfolio are positioning us for sustained growth and long-term value delivery for our customers. The automotive industry is fundamentally shifting from static machines to dynamic, upgradable technology platforms. As vehicles become software defined, new features will be continuously enhanced, also driving architectures that lead to increase in semiconductor content per vehicle. Hopefully, through this presentation, we will explain how Renesas delivers the brains, the distributed thinking, and the power nervous system of the software-defined vehicle of the future, thereby positioning us to address system-level challenges and customer pain points that will define the SDV era.
SDV architectures are expected to dominate new vehicle sales, with projections showing that over 75% of the new cars built on SDV principles by 2035. Every major global automaker is now increasing their investments in SDV programs. While it increases value through software, silicon also becomes very mission-critical, driving a step change in compute power management and overall semiconductor content per vehicle, potentially more than doubling over time. OEMs are very interested to expand beyond closed proprietary SDV ecosystems and are actively seeking partners to reduce risk and preserve control. This is a clear opportunity for Renesas to emerge as a top-tier SDV supplier, offering an open, collaborative, and flexible platform with the key OEM partners. Today, together, SDV and AI are transforming vehicles into intelligent, continuously evolving platforms.
AI-enabled software-defined vehicles increase volume and complexity of automotive software from ADAS L2/L 4 transition stacks, to GenAI integration with LLMs and VLLMs, to over-the-air updates, along with complex supporting toolchains and frameworks. Cornerstone of AI-enabled SDV are high-performance computing hardware, which is addressed by our R-Car SoC portfolio, and multiple zonal controllers, which are addressed through Renesas MCU portfolio, all combined with our advanced power solutions. Renesas platform vision are also extendable beyond automotive into adjacent markets such as robotics, physical AI, as market adopts those technologies in those new areas. Let me start by outlining the products Renesas offers in the SDV market space. We are uniquely positioned in automotive via differentiated MCU to SoC portfolio, powered by advanced chiplets and leading-edge process technologies.
We offer scalable, heterogeneous compute that has neural processors, graphic processors, compute engines, and industry leadership in real-time performance, latency, safety, and power efficiency, delivered all through Renesas' open-access SDV platform to enable software reuse, portability, and a common architecture for our customers. In addition to compute, we offer a wide range of analog and power products targeted for better automotive system performance. SDV is accelerating revenue growth from today into the mid to long term. The foundational forces behind the growth are E/Architecture centralization, structurally increasing silicon and software content per vehicle, ADAS L2/L3 adoption, driving step-function demand for scalable, high-performance, safety-certified compute platforms. The platformization or transition from component sales to software-enabled platforms expands value capture and lifecycle scalability. Finally, partnering with ecosystems enables us to deliver optimized solutions and accelerate customer adoption.
Specifically, we, as Renesas, are focusing on a select group of OEMs that are seeking differentiation, building deep platform-level partnerships while working very closely with those OEMs. OEMs also are moving at different speeds and adopting different architecture models. Some are quickly moving to heavily centralized designs, while others are adopting hybrid and zonal approaches. This diversity is exactly where Renesas differentiates and is positioned well to offer and address full range of OEM compute strategies, offering scalability and flexibility rather than forcing a single architecture. OEMs want choice and control, and Renesas enables both. We bring one of the industry's broadest MCU portfolios, spanning low-end to high-end real-time control, zonal control, as well as crossover MCUs with both proprietary as well as standard cores.
Our scalable SoC portfolio extends from dozens of TOPS to thousands of TOPS and is further enhanced through chiplet architecture, addressing the growing needs for AI-enabled high-performance central compute with built-in functional safety, security, and power efficiency. We complement all this with core software, framework, tools, and a development ecosystem. All this enables faster development, validation, and deployment for our OEMs going forward. Taken together, Renesas MCU to SoC continuum is well-aligned to serving AI-enabled SDV evolution. Let me briefly zoom into our R-Car SoC business and what it talks about our SDV activities. We are seeing strong traction across OEMs, Tier 1s, and the software ecosystem. Today, R-Car Gen 4 is already in production. Gen5 is gaining momentum across next-generation SDV programs with announced design-ins and multiple active RFQs.
On the Tier 1 side, we have over a dozen active engagements, including proof of concept and platform collaborations. We now have more than 15 active software and technology partners. This collaboration shortens integration cycles and reduces deployment risk for our customers. We are also, as Renesas, further aligning to how OEMs are actually adopting SDV architectures. This positions Renesas not just as an SoC supplier, but as a long-term SDV platform partner with OEMs seeking this differentiation. OEMs are adopting different architectures, I mentioned that, from central compute to zonal. We are uniquely positioned to offer a true MCU to SoC roadmap combined with power on an architecturally open platform, which is not a black box. With our approach, OEMs have flexibility, control, and optimal embedded performance across the whole fleet of vehicles they make.
While other competitors focus on a limited range of compute sockets or some other competitors are very closed and have a very rigid ecosystem to work with, Renesas participates across multiple vehicle segments through a flexible partnership and realizable differentiation for our customers. Let me also talk about the transformation pivot that we are making happen at Renesas. Today, vehicle silicon cycles are lengthy from early engagement to start of production. Auto SDVs are pushing for integrated hardware, software story. They want end-to-end systems, which can be better realized with SoC supplier building foundational investments, that Shibata-san also talked about, to enable this SDV acceleration. Through this pivot that we are executing on, Renesas wants to further accelerate time to production and number of products that we can release into the market.
We want to enable our customers to have a faster time to market. They be able to upgrade their solution over the years. Let me also touch briefly on how AI is evolving inside the vehicle and why this is strategically important for the Renesas transformation. Automotive AI, beyond raw TOPS, is around how AI evolves safely and predictably over a long vehicle life cycle. The systems are no longer just single functions like perception, but also a combination of multiple specialized AI agents that all have to be orchestrated together to work correctly in a vehicle. This is why AI-enabled SDV must go beyond raw compute. It requires heterogeneous architectures, which Renesas offers, integrating compute processing, graphics processing, AI processing, all working together while delivering automotive-grade safety and real-time performance.
Our R-Car scalable architecture is designed to integrate the AI evolution, combining heterogeneous compute, offering built-in safety, enable virtualization of different systems, and deliver it at efficient power so that OEMs can continuously evolve these AI capabilities without having to redesign their platform over a longer life cycle. This Renesas journey continues the transformation of the company from a semiconductor supplier into a true system solution provider. SDV requires guaranteed performance with built-in rails. Customers need predictability, and they need trust as software takes on more safety-critical functions. Customers want portability. They want reuse. They want faster development cycles. They want to have longer product cycles while also moving towards these AI compute architectures. Renesas, through this journey, is moving to a vertical integration from hardware with new differentiated IP to core software and tools to eventually application stacks and ultimately system solutions.
This will be the heart of our platform transformation. Our vision as Renesas is to deliver integrated platforms that reduce customer complexity, accelerate deployment, and de-risk system adoption. In doing so, Renesas moves up the value stack, capturing differentiation better for the market. Renesas' focus is to scale SDV/AV and growth with predictability and discipline through better foundations within the company. As automotive systems become more complex, it is about delivering repeatable, high-quality platforms both across SoCs and MCUs. We are building foundations that span architecture, organization, validation, hardware, software, and system solutions. Early performance modeling, system emulation, automated verification are all part of these foundations. We want to build more differentiated in-house IP to ensure consistency, scale, and capital efficiency. These results will be measurable over time. We will see early defect discovery, faster regression cycles, and improvements in development efficiency while enabling maximum reuse across programs.
Step changes to build this foundation is what will allow Renesas to grow faster in the future with higher confidence as SDV adoption accelerates. Further talking about the foundations behind how we scale Renesas for SDV growth. We are building capabilities continuously spread over time, focused on fundamentals, global talent, strong domain leadership, disciplined foundry strategy, and an early system-level modeling and emulation to shift risk left. We expand that with Level 2, moving into system-driven validation, use case-based KPIs, automated verification, AI-assisted tools, and ecosystem-based reference designs. Our next Level 3, is where value scales, ownership of critical software stacks, system validation with CI/CD, and differentiated in-house IP running on our hardware. These foundations that we are investing in will help Renesas build technology leadership and execution into a durable, long-term value creation. Let me also talk about our MCU roadmap.
Our strategy on MCUs is to broaden the portfolio with full scalable compute running through various core options, deepening our ecosystem, and translate that into accelerating market gains over the next five, six years. We are extending our general purpose leadership from mid-range down into low-end and forward into next generation families. We are expanding our Arm-based lineup in addition to our proprietary offerings. We are building MCUs that are purpose-built for EV and SDV Zone, eventually evolving to a fully Zone and SDV optimized generation of those products. For IP, we are getting ready for the RISC-V adoption in the future. The result of these activities that we are executing on will provide us a full vehicle coverage for automotive, and eventually taking those products and technologies and IP into adjacent areas like robotics. New product launches have started to generate design-in acceleration.
Eventually, that will turn into OEM production in the later years, followed by revenue ramp. Over the next five years, MCU portfolio should see a wide range of products and families being introduced into the market, followed by customer adoption as well as customer ramp sometime later. I will also quickly touch on EVs, where we are growing today and positioned to win tomorrow. We are expanding our EV portfolio across the full system, integrating BMS, inverters, DC-DC, onboard chargers with our R-Car U5x family and RH850/U2x family. They are already driving the industry shift to 28-nanometer, and some of these products are already adopted by top OEMs worldwide, including some of the leading players in China.
Looking ahead, our next-gen EV platform will enable further scalable X-in-1 integration with about 50% more faster control, optimized to unlock power technologies that will be integrated through these faster cores, faster ADCs, and a next-gen AI/ML accelerator. We are executing early through deep local system partnerships to enable our products into quick adoption by our customers. Let me summarize and close by summarizing the Renesas story, which is about offering a compelling roadmap that is built on market realities and decisive strategic execution. First, software-defined vehicles adoption is accelerating around centralized compute software and AI. Renesas' journey is directly aligned to the market trends and is focused on addressing the system needs of the future. Second, we are expanding from a leading semiconductor supplier to a true vertical partner for our OEMs.
By moving towards fully integrated systems, combining hardware, software, tools, and know-how, we deepen and strengthen our customer relationships and increase long-term value capture for us and for our customers. Third, we will work and increase our SDV investments across software, tools, stacks, and expertise over the coming years. This strengthens our automotive journey and also positions Renesas to expand into adjacent growth markets such as physical AI, robotics, and intelligence systems over time. Taken together, Renesas is uniquely positioned at the intersection of compute, power, and software, enabling the SDV transition from end to end. This is how we are building a sustainable growth engine for the next decade, by aligning with secular trends, expanding our role in customer systems, and executing with discipline. Thank you for your time and your continued interest in Renesas.
Thank you. After this, we would like to move on to the Q&A session. We have to prepare the stage, so please give us a few minutes. Thank you. In the Q&A session. This Q&A session will be participated by Shibata-san, Shinkai-san, Stephen, and Vivek. Speakers, please come up to the stage. Please be seated. Now we'd like to move on to the Q&A session. Those of you at the venue, please indicate by a raise of hand. Those of you participating online, please give us your question in text using the Q&A function. In the interest of time, we would like to limit the number of questions to two questions per one questioner. We would now like to receive the questions from analysts and investors. We would like to first receive questions from the floor at the venue. UBS, Mr. Yasui, please. Thank you very much.
My name is Yasui from UBS Securities. My first question this time around, I think you have highlighted the AI, in particular in this capital market day presentation. I think you are convinced that this growth in the AI market is quite stable. Are there anything that you have not presented last year? I have felt your aspirations. The previously timing PMIC and those interface has been the case, but are there any new applications that will be broadening going forward? That's my first question.
Well, I think I can give you more details sometime later. In my presentation, I talked about the control plane and the interconnect related. In these areas, product definition and product design or development is already in progress. I'm not really sure if that's going to be significant, I think quite a good pace of growth will be driven by these product lines. Something new, we're not going to begin something totally that we have not touched. Rather, we would like to accelerate the efforts that we have been undertaking so far or give more resource to them. That, I think, will be the basic activities that we are going to focus this year. AI, it's a common thread. I think hardware was quite splendid already, as I mentioned during my part.
The performance of the hardware is not delivered. In order to deliver those performance, time and labor more than anticipated is needed in order to deliver the performance of hardware. We wanted to address that. That effort is going to be more sizable compared to before.
I'm sorry that I'm going back and forth, AI is going to be utilized in order to realize AI. That is the situation that is happening today. According to our activities, AI model will have to be mapped with the hardware in order to do the computation, previously, these were manual work. The human-coded software were needed in order to do this can be replaced by AI, this is what we are working on right now. The preliminary result shows a very promising outcome. This is an area that we would like to further enrich going forward. We will of course work on the hardware, maybe this is too exaggerated, I think the software proportion is going to become much larger compared to before, especially in our R&D efforts. That's what I'm thinking about. Thank you.
My second question To the three of you talked about the potential for growth. Last fiscal year, you mentioned that the Chinese market is going to be important, that will have a downside pressure on margin because you're going to make investments in China. China, physical AI included, I think China is a central market for AI, and mass market, I think as an approach, is quite reasonable in order to deliver synergy. At last, I think you are achieving an expansion in customer acquisition. Including AI compared to last year, what is the potential you're looking at for the mass market expansion? If you can just give us a hint.
The mass market overall, Stephen's part, and also after this, in Gaurang's part, we would like to talk about the mass market expansion potential. Compared to last year, Stephen, who can talk about the mass market, and of course, for the China market opportunity, we would like to talk about that during this Q&A session. Maybe later in Gaurang's session, I think you can listen to him present then, or you can ask a question directly to him maybe. Stephen, can you go ahead?
Sure. Yeah. Investments in the mass market in China, there's quite a few end markets that are always developing in China, right? Industrial has been growing in China, new customers popping up to serve the market consistently the last couple of years. Now, on the AI infrastructure side, you have many new players in every region, but also in China. Our expectation is that we will start to penetrate these customers, and catch them very early so that we can grow with them. Okay? China is behind the U.S. maybe by a couple of years in AI. The good news is that the products that we're developing for the leading customers now will serve that market very, very well. It's just a matter of making sure that our teams are focused on developing the AI infrastructure market.
Thank you.
Takayama-san from Goldman Sachs, please.
Thank you for the opportunity. This is Takayama from Goldman Sachs. I have a question for Shibata-san and also Shinkai-san, so two questions in total. First, when listening to your presentation today, Shibata-san had a tone of confidence. It is not just about the current demand being strong, but the competitiveness and positioning in years to come. I think you have confidence in them. First of all, whether this is an accurate understanding or not is part of my question. When it comes to software-defined vehicles and infrastructure, focusing more on control, and the CPU and NPU, in addition to your strong position there, you are well prepared, I guess, and you are ready to deploy. You think that your competitiveness and positioning will be better going forward.
I just wanted to know if my understanding of your confidence was correct or not. When creating value, you need to be able to deliver. Supply. The power to supply is key. You mentioned this previously in the call, but you need to move quickly, especially for automotive. But when it comes to your supply capacity, have you overcome your bottleneck? Some updates there would be appreciated.
When it comes to power of supply, if needed, Steve will supplement, but this is a challenging task. In our case, and Zaher will explain this later today, but fortunately, we are fab-light, or maybe hybrid is a better term right now. Our own production capacity combined with our partner's capacity is something that we are working with. Of course, it goes without saying that our production capacity is for ourselves to use, so there is a limitation.
The hunger onsets and foundries, they have more partners, so they tend to have more accommodation capability in terms of capacity. If we want to expand in a short period of time, we need to pay more. That could mean that if we pay, we can launch in a speedy manner. When you see a short-term demand increase, this hybrid is more suitable. Down the road, we need to enhance our own in-house capacity, as Shinkai-san mentioned. We won't increase just in a single year and then decrease. We will enhance CapEx so that we have enough in-house capability. That is regarding your question on our power to supply. Regarding my confidence, the fact that our confidence is building up is supported by our clear visibility on our future.
If I were to try to explain this more thoroughly, we have the one-stage rocket and the three-stage rocket, but for the three-stage , we do have a lot of tools, and if we continue on this path, we will see a bright future. The confidence comes from the fact that we can go as planned in this direction. For two-stage , physical AI, this is something that we need to focus more on because we have strong competitors. As Vivek mentioned, against our existing strengths, we need to build up more to compete. Whether I have the confidence that we have a winning strategy, that is not the case yet, but I now have a clear vision on what needs to be done. In that sense, maybe I am being optimistic overall. That is how I feel. Steve can talk about the supply factor, maybe more specifically.
Sure. I think on the 1st stage rocket on the infrastructure side is the most critical right now and the most aggressive growth. I do want to point out that with the investments that we've already made in the hybrid model, you can see in our results the significant growth of our AI revenue. That comes through hard work, investment, and strategic partnerships. That will continue. While we may not catch up to the unprecedented demand in infrastructure until 2027, we will continually increase, and our output will be significantly more. Like Shibata-san mentioned, our ability to use a hybrid model will help us to hold our suppliers accountable so that we can sustain an aggressive cost structure to ship into the market as well. With our plans, I am confident that in the next year, we will catch up to demand.
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Another question for Shinkai-san. You have a broader definition of AI this time around. When listening to your presentation, I had thought about how much in numeric terms are you going to see a growth? Time-wise, you talked about fivefold, but maybe you are looking at more growth. I just want to know how is your company structured towards that growth. Regarding the Forex, if it becomes JPY 150 per dollar, there is going to be a five-point difference. Now you've reached the JPY 160 per dollar. What kind of range should we foresee going forward?
Regarding the AI revenue definition, we previously focused on digital power. That memory interface for core AI, that was the focus and the timing business. We reviewed this, and we have a new definition, which is wider and broader. AI plus data center. GPU and CPU, digital power, and memory interface. It's a wider definition or coverage. Regarding the timing business, which was divested, this will be excluded.
That's the overall definition change. Regarding our growth rate, each company has its own ways of looking at this, but as I showed you in my slides, in the diagram, that was based on the understanding that the market, in five years' time, will grow at about 40%. Towards that end, we will grow even faster than the market. Some plus is based on that understanding. The second one, Forex. You have rightly understood our assumption. The sensitivity range is as you spelled out, it would have an impact on the operating margin. Mike, please.
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I don't have the numbers off the top of my head, but probably twofold, 1.5x more or two times more in the current situation. Thank you.
Moving on to the next question. Bank of America, Hirakawa-san.
Thank you. Hirakawa-san, Bank of America Securities. My first question regarding R-Car. Recently, Volvo adopted this and other OEMs, you have a pipeline for them. I think the business is quite favorable. Today you talked about the business model. You have MCU and SoC. That is the strength of your business model, including the time to market advantage. Once again, I would like to ask this question. In Volvo, when you were adopted, Renesas R-Car, what was the functional benefit from the viewpoint of customers that became the reason for them to adopt? Is it the superior power consumption? What is the strength from the customer viewpoint regarding R-Car? Regarding the chart, the R-Car revenue in 2025, the start year, the revenue, how much was it as a result of R-Car? That's my first question.
Vivek, can you answer the question?
Thank you. I think you had two questions or more. I'll answer it. Thank you for asking the question. As far as R-Car benefits are concerned, Gen 4 and Gen 5, as we go from one generation to the next, we try to add more and more benefits to our features and performance. At a high level, where we differentiate is power consumption, number one. Number two is because we are a MCU supplier also, we have intrinsic information and knowledge about real-time performance, low latency performance. We are able to take those concepts and also implement that on the SoC side. Power consumption, one, low latency, better real-time performance, and then executing to the other specifications the customer asking for. All these come together to why a customer would adopt our product for Gen 4.
On Gen 5, it is a broader product for centralized compute for SDVs. It has a significant amount of compute capabilities on CPUs, on AI processing, NPUs, on graphic processing. It is done in 3 nanometers. It's designed to integrate a lot of features in a smaller monolithic die, as well as provide low power consumption in terms of when you look at frames per watt and AI TOPS per watt, we can get to lower performance. As I mentioned, we don't need, in our SoCs, an external MCU, safety MCU, because we know how to do safety islands. We bring it into our SoCs itself. That allows us to do many things, how we get a workload and distribute it to our application processor versus our real-time processor, because done within the same chip.
We're able to show a lot of different improvements in performance and educate the customers on what we can do by having that kind of integration. We also have IP in the next generation, what is called freedom from interference, which allows ASIL B islands, ASIL D islands, different type of safety and security levels to be integrated without them interfering with each other. That becomes important in the future of SDVs because you will see a lot of ADAS/IVI coming together, and their safety, security, real-time performance is not the same, but we are able to handle that with the architectures we are bringing out to address some of these trends that are coming into the market. Those are high level. I hope I answered your question. On the revenue side, we just started with R-Car Gen 4.
Revenue is small in the first year, but it will grow as more and more adoption happens in the subsequent years. We also expect, in the next three quarters, Gen 4 to be adopted outside Japan with another leading OEM. That would also help increase the revenue. We are building more OEMs behind Gen 4, but revenue is small in tens of millions JPY in the first year, but it grows over time.
Thank you very much. My follow-up question for the second part. The reason I ask that question is I'd like to have a sense how big the sales in 2030. If they're JPY 1 million, JPY 5 million, that makes a lot of difference.
2030 specifically is your question. We will see continuous ramp of Gen 4. It started now, and it will grow as more vehicles adopt it and more OEMs adopt it. Also we expect the beginning of our Gen 5 launch also to happen around 2030. That doesn't mean we will ramp very quickly, but we'll have customers, and then they will ramp in the subsequent years with more and more volume. We see a transition from Gen 3. Gen 3 is actually getting used more than we expected. Gen 4 is ramping up, and by 2030, Gen 5 will start kicking in, but it will also take time to ramp up.
Okay.
Any other questions? Yamasaki-san from Nomura Securities.
Thank you very much. Yamasaki from Nomura. I have two questions. First is regarding gross margin target. You saw a chart and talked about product mix and price. Those are the two upside factors you explained. Regardless of the exact figures, I just want to understand your way of thinking. What kind of a product mix shift would result in a margin increase? Regarding your pricing strategy, if there is a tight supply situation that is factored in or foundry cost is going to go up, are you going to pass that through or maybe change of product mix would directly lead to your price increase? What is your take?
Shinkai-san will talk about the product mix, regarding the pricing strategy, Steve will take that. If supplementary explanation is needed, I will jump in. Shinkai-san, please.
Regarding gross margin and bridge, it has been an illustrative chart and mix and price has been dealt with together. Regarding product mix, analog products will be at the core. Segment-wise, physical AI to intelligence at the edge. These are the segments covered. These are expected to grow, the product mix will improve. As a result. In other words, within the infrastructure, digital power, automotive will be less comparatively speaking, and physical AI and others will be higher. Data center related infrastructure will be high, but power related segments will be low. That is how I think about the situation.
On the pricing strategy, I would take a look at the market, almost every semiconductor company is experiencing increases in raw materials all the way through fab and assembly and test. You see many semiconductor companies who have increased price one or two times in the last year. Renesas will do the same in some areas, but we're going to do it strategically. Okay? When I say that is, we will work with our customers to make sure that we don't lose share and that we continue to grow. We do it in areas where maybe there are older legacy products that become a bit more expensive, but also make sure that we are balancing where we increase price to be competitive with our competitors as well. It's not as simple as just increasing pricing because of cost.
We evaluate all those factors, at the end of the day, that is absolutely something that we will do and continue to evaluate moving forward.
In the short term, because of this demand and supply balance, this could trigger the price adjustment. In terms of cost, similarly, we need to make adjustments. When it comes to figures, mass market and digital alike, ASP needs to go up. This is the main way stream, or this is the most effective way. Large sockets and large customers in the vertical, these deals can go up and down. This is the tendency. Trend wise, we will improve our mix ASP and margin. That can be done by changing the engagement model with the customers, deal with more customers, that means. In terms of engagement, I think that is the way to go. This will take time. Shinkai-san chart reflected this kind of mindset.
Thank you. Second point. This is regarding the core of MCU. Your own IP to Arm and RISC-V you are expanding. How are you going to use core? By application, or what kind of mindset is behind the changing way of usage for core? Arm is entering the CPU market. How do you see this move?
Okay, Vivek.
Again, thank you for your question. I think your question about how do we deploy our cores because we will have multiple cores into the market. A great question. We have been very thoughtful about our core strategy. We had proprietary cores based on RH850 that were highly power efficient, had great latency and real-time performance. A lot of our customers have developed software and systems around them, and they want to continue using the RH850 core. For those customers, and where we see RH850 benefits in performance, we will continue to expand that family. Having said that, there is a decent group of OEMs and customers coming up. They want to stay with standard cores and not adopt proprietary cores, partly because of multi-sourcing also.
If you have Arm-based cores, and they want to have at least two leading suppliers, and use Arm cores, unify their software capability to integrate with these suppliers, those customers prefer standard cores, and that's where we are introducing strongly our Arm-based families across the scale of products. The other important thing is when you introduce a family, you have to make sure customers get a range of products, not just a high-end product or just a middle-end.
They are expecting to have a full-scale portfolio to adopt. Core strategy is one, making sure it is a scalable strategy so that a customer adopting a certain core, proprietary or standard, has a full set of solutions in play. RISC-V is being monitored and opportunistically looked at. There are different market sentiments and interests right now, we do believe at a certain time it will have a role to play in this whole MCU architecture, of course, we'll be very well prepared to address that also.
Regarding CPU chip manufacturing by Arm, what is your take on that, the development by Arm?
It is well known that Arm, who used to be our IP supplier, is also making products, and some subsystems that may eventually compete with their customers today. That is what it looks like is happening. We are not seeing a significant element of that in the automotive side. Doesn't mean that it may not happen, but they are focusing on non-auto applications. Maybe eventually they will look at auto also, but we don't see a lot of that activity happening today. Number two is in the automotive space Besides the Arm cores, there is a lot of what is called routing latency requirements that are coming in zonal. There's a lot of reliability and temperature requirements that are coming in auto. The safety requirements are also increasing.
The solution is just not the core itself, but your capability to deliver reliably functional safety, right temperature, routers, and AI performance latency to the edge. We need to continue to make sure we differentiate on those levels. Competition will also try to proceed. Arm could be one of the competitors in the future. In auto, we don't see them as active today.
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We are receiving other questions. We have almost overrun the expected time to finish, we would like to finish the Q&A session at this juncture. We will take an eight-minute break. We will resume the session at 11:00 A.M. . Thank you.
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We are starting momentarily. Please take your seats.
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It is 11:00 A.M. . We will resume the session soon.
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Okay, we are starting the session.
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The first presentation is the Vice President and General Manager of Embedded Processing. Also, the Vice President of R&D and Digital Industry, Software and Digitalization, Leigh Gawn will give us a demonstration. Thank you.
Thank you for joining. My name is Gaurang Shah, General Manager of Embedded Processing at Renesas. Today I'll walk you through our digitalization journey. Fundamentally, we are changing the way we go to the market and unlock the next phase of revenue growth. The embedded market is at an inflection point. Demand is accelerating with edge AI and connected devices, but the traditional field support model doesn't scale. This clearly creates an opportunity, and whoever scales the engagement digitally and with the least friction will win. Our response to this challenge is a platform-driven model that expands reach and deepens engagement with our customers. The goal is 4x the customers and 3x the revenue for the business by 2035, powered by platform economics and recurring growth.
As I go through the presentation, please keep in mind what Shibata mentioned in his presentation, beyond hardware, and how do we grow into mass market. This is the scale, this is the embedded processing business and the scale and balance behind our business. We operate across three silicon pillars, microcontrollers, microprocessors, and connectivity. Our MCUs are clearly tiered. RL78 family is for cost-sensitive application, it's 16-bit. RX for industrial and real-time control. RA, our new fastest-growing platform is driving edge AI. On the next compute class, our RZM microprocessors extend us into the higher compute zone for applications like vision and robotics. Our connectivity portfolio enables complete integrated connected solutions. Underneath these silicon platforms, we differentiate with deep application-level technology. Artificial intelligence, machine learning, motor drive, HMI, safety, security, and energy efficiency are driving very strong design wins.
The result is a very well-balanced business across products and end markets. It gives us the resilience and the multiple growth vectors and really forms the foundation for our platform strategy. What are the market forces that are really making this the right time for launching a platform? There are four trends that make it the right moment. First, edge and physical AI. It's driving local compute and expanding our addressable market into robotics, humanoids, and autonomous platforms. Second, post-COVID, governments are mandating localization of semiconductor ecosystem. That localization drives regional ecosystems that requires faster innovation. That's the new growth vector for us. Third, rising regulation. Safety and security are no longer an optional requirement. They are mandatory, where we need to add those components and those technologies to our core compute platform. Fourth, edge AI is increasing system complexity.
As systems become more intelligent, integration becomes harder and products become more software-centric. All four of these forces collide into one massive bottleneck, rising developer complexity or user complexity. The company that simplifies development experience will win market share, and that's exactly what Renesas 365 delivers. I'm going to walk you through the developer's pain point. When you have a user trying to design with an embedded system, what are some of the pain points? This slide shows where the value is lost today and how Renesas 365 unlocks it. The first phase is ideation. This is where the engineer comes or the user comes, looks at the data sheets, and that process is extremely manual today. The tools, the data sheets, the reference designs are all on disconnected systems.
The user is trying to make that decision using incomplete information with gaps, and that can create missed design wins. The next is the development is extremely slow. Engineers are spending a lot of time in low-value tasks, such as trying to figure out how to use low-level software stack onto our devices. This delays products and delays revenues. The last bit is after the product, the value stops. We sell the product, we deliver it to the customer, and that's where the journey ends. The product ship and disconnect, and there is very little ongoing engagement or lifecycle management or recurring revenue. The core problem through these three development cycles is there is no continuous digital connection across the lifecycle. Renesas 365 fixes this. It connects every step from idea to deployment, driving faster growth, higher productivity, and recurring revenue. What is Renesas 365?
It's a turning point in how we make money in embedded systems. Today, the tool market is large, about JPY 15 billion, super fragmented. No company owns the full workflow, and that's our opportunity to capture platform-level value. We do that across three steps. We first AI-assisted ideation. We make that manual process work with AI, where project starts, and it makes the user's journey a lot easier at the beginning and helps us win more designs. The next is model-based realization. It speeds up development, improves efficiency, and increases customer lock-in. The last bit, which is untapped, is cloud-based realization or lifecycle management. It enables ongoing services and recurring revenue. What makes this powerful is throughout these three steps, there is a digital thread. It connects every step from idea to deployment.
Once customers build, validate, and deploy on the platform, switching becomes very hard, moving us from one-time chip sale to a recurring platform revenue. That's the idea behind 365. Now let me walk you through the first phase of the first pillar of Renesas 365, it's the main driver for customer acquisition and customer growth. Today, the design starts manually. If the developer doesn't know our products or doesn't know the product family, the wrong product family gets chosen, or we don't get considered at all. That's a massive lost opportunity for us. We change that. Developers describe what they need in the electronic system designer, which is at the heart of Renesas 365. The platform quickly generates a validated design using relevant Renesas products. Instead of choosing from hundreds of products, it narrows it down.
This makes it much easier for developer to start with us and grow with us over time. Two things make it sticky. It's a multi-domain view across hardware and software, it's a digital context that carries the decision forward. The result, we drive towards our vision of 4x the customers with much greater efficiency. This is the heart of Renesas 365. It's model-based realization, this is where the strongest lock-in for our customers happens. We turn the design intent into a working system much faster at scale and with a lot higher efficiency. Today, the workflows are very fragmented across hardware, software, and tools. 365 brings this together into one platform. The user defines the intent of the system, the platform automates lots of key decisions, reducing manual work and speeding development. There are two key points. This is the strongest lock-in.
Validated design choices are built over time makes it very difficult for users and customers to switch out of our system. It's a very scalable model. We don't have to scale people to be able to gain more customers, that's what enables mass market. We can grow our customer base without needing to scale FAEs or marketeers, that's a very big plus. This is already alive in our RA product family. It was launched at Embedded World in March 2026, it'll be expanding across the product portfolio. The last bit or the last pillar, which is the cloud-based utilization, this is where higher margin recurring revenue comes from. In the past, our relationship ended when the product shipped. Now it continues across the full life cycle.
Capabilities like OTA update, fleet management, security, and traceability are becoming essential, driven by connected devices and regulation. Customers will get today these services from third-party vendors or other companies. Since we have the digital context throughout the journey of the customer, we can deliver these services with a lot more efficiency, that's what we intend to do as their partner. The impact is very clear as a result of this. It's recurring revenue from the installed customer base. It's a much stronger customer lock-in throughout the journey, we also collect real-world data from our customers so that we can improve our next products. This execution is also underway. We've already launched OTA solutions on the RA platform, we'll be expanding across all of the platforms and the devices that I talked about.
Now we've covered the strategy, what is Renesas 365 what the platform enables. Let's turn our attention to execution. The next section shows how we scale 365 through our roadmap, through our go-to market, through our organization, through the organization at Renesas, the power of the organization that we have. As you go through it, please focus on three questions. Is the roadmap credible? Is the go-to market targeted for growth? Are we built to execute? Let's first talk about the evolution of the roadmap. Today, we already offer a strong developer platform. AI-assisted design, model-based workflows, cloud development is already in play on our RA platform. We are already in the market we are getting early traction. Next, we want to move up with pre-built, validated subsystems and blocks. This makes the digitalization beyond component to a subsystem level.
That makes it much easier from selling components to enabling subsystems. Long-term, this is our long-term vision, we want to build an open ecosystem. Partners, third parties, maybe even competitors can add IP and solutions to our platform, that creates a massive network effect. At each step, our market expands and the platform gets stronger. Our goal is to make Renesas 365 the platform of choice for the embedded industry. What kind of customers are we trying to target with this platform? These are the three different personas of customers that we want to focus on. We first have the traditional OEMs, our current customers. Their challenge is agility. They're focused on speed and competitiveness, and we help them move faster with our model-based design, with our electronic design, with our digitalization, increasing our share and content per system.
There are the new-age companies, where for them, they're trying to compete with the traditional OEMs and where the speed to market is critical. There we want to act as the virtual Tier 1, using AI to win the designs quickly. Last but not the least is our emerging markets. I mentioned about localization post-COVID, that's driven by growth, localization, and regulation. We want to enable these local players from turnkey solutions to customization, expanding our reach. In essence, we want the three segments that drive growth, it's one platform. We deepen our engagement with our current customers, we acquire new customers, and we expand our geo-presence. This is an eye chart, I'm not intending to go through every block, this is the execution of our roadmap through 2028 across four layers: solutions, workflows, developer experience, and platform. Today, the foundation is already in place.
RA is platform-ready, key workflows are live, and the core system, the ESD, the electronic system design, and the digital thread is operational. In 2026, we broaden. We're going to add more devices, RX, RL78, RZ, RH850, all of the capabilities of Renesas, plus our analog and power components, essentially with AI-driven workflows and a unified data model with open APIs. By 2027, we are going to scale up, expanding into higher complexity devices with subsystem solutions and full lifecycle management. By 2028, we will be completing our vision. We will be adopting agentic design and agentic flows that really makes the platform a lot more active. It makes intelligent recommendations, and legacy migration will happen at scale. Each step builds proven capabilities with AI as a step function accelerator throughout our journey. How are we going to leverage agentic AI as the future of Renesas 365?
Our intention is to make the platform active, not passive. It understands where the developer is in the process and guides the decision in real-times without slowing them down. It also helps developer get started faster by understanding the intent of the developer and setting up the environment and generating working designs from the very beginning. Importantly, it moves us up the stack from component-level tools to system-level guidance, bringing hardware, software, and designs together. This is the key transformation from a silicon supplier to a platform-driven company. I gave a lot of great ideas, Renesas 365. Are we really set up to succeed and execute within the organization? The platform sits at the intersection of three key groups, software and digitalization, product groups, which are all the different business units, and the user interface group, or UX, led by Ivo.
Together, these three groups will deliver all the layers that we need for the platform. Developer experience will be provided by SWD. Product building blocks will be given by the different product groups, and the open ecosystem subsystems will be driven by the user interface group. This is not a side initiative for us. This is at the core of our company. We have a very clear mission, and there is a lot of accountability that is being driven from top to bottom. With that, I will summarize my presentation and add with four closing points. First, AI growth is a tailwind for us. We are very well-positioned for edge and physical AI with the right silicon and a platform that makes adoption easy. Second, there is a clear advantage. Renesas 365 reduces time to design, improves retention, and builds strong switching costs. Third, differentiate IP.
We have a very large portfolio. Our IP-enabled software-defined systems across artificial intelligence, motor control, security, connectivity, power. These are all the modalities that we are looking at in terms of developing our platform and our IP. Fourth, execution is in place. We have strong aligned investments, a very clear roadmap, and early traction with 365. Overall, we are shifting from product sales to a platform-driven recurring model, driving long-term growth and shareholder value for our shareholders. Thank you, and now I'll invite Leigh to give demo of Renesas 365. Thank you.
Gaurang. I will do my best to bring all of this to life with a real demo today of Renesas 365. Okay. All right. What you're looking at right now is a real-life Renesas 365. This is in the browser, okay? This is effectively where users or developers will come to to get started on Renesas 365. The great thing about it is that it's available anywhere. Any device, any place, anywhere in the world, you can come and access this. Immediately, you're being freed from the shackles of those point tools, which are generally buried or located somewhere else, a lot of the time inaccessible. It's a very accessible platform. What you're looking at here is what's known as a workspace, okay? This brings together all of the different design assets in a design. It also allows people to come together to collaborate.
All of those stakeholders in the value chain can come together and work together in one digital place. There's a few different ways you can get started with Renesas 365. If you're an existing customer, you could connect your existing project to the platform. You might also come in and want to explore some of our technology, some through our evaluation kits or software projects. The other way is you might just have some idea. You want to actually get started, maybe bring that idea to life from scratch. You can go ahead and do that here as well As I scroll down, what you're looking at here is what we call solutions. Solutions are essentially things that are a container for all of the different kind of design assets that come together on the platform.
I've got a bunch of them in here today, we're going to take a look at one of them specifically. We're going to jump into this balancing robot solution. This is a real balancing robot that we built. You can see here on the left-hand side, this big tile is the system design. I'm going to jump into this in a moment, talk a bit about what you can do here. This is where ideation starts. On the right-hand side here, we've got other tiles, and these represent things like hardware designs and the actual software projects themselves. If we scroll down a bit further, you can even start to see devices that come alive on the platform. This is real instances of these devices that have been built that we can deploy and manage software on.
That's the kind of operational lifecycle management part of this. When you start a new solution, we've also got the ability to bring in reference designs. A lot of the time, as Gaurang was saying, these things are fragmented. It can be difficult to go and find the assets that you want to actually use and bring in and start a design from. In Renesas 365, we make that really easy. For example, if I want to find all of the evaluation kits for our RA series of microcontrollers, I can just scan them here, click Import, and they're brought immediately into my solution. Similarly, with software projects, I can do the same thing. This makes it extremely seamless in terms of starting to leverage all of the design assets that Renesas provide today, making it very easy for you to get started with designs.
Let's jump into this electronic system designer, because this is where, as Gaurang mentioned, this is the heart of things and where you get started. Most designs start with some block diagram, some conceptualization, some idea of what you're trying to do. Here, much like if you're using, say, a Visio or a Lucidchart, you can just start effectively free drawing what you're interested in and what you're trying to achieve. This is the beginning of capturing system design intent. Of course, in Renesas 365, this is much more than just a graphical diagram. This isn't just a bunch of blocks and pictures. The platform itself actually starts to understand what you're trying to do.
What this means is that, and I'll show you this kind of in action, is that as I'm drawing these things, and this is a diagram, obviously, that's been built up a bit, so there's a few things in here. I can start to, say, click on the things inside the diagram, and you'll see on the right-hand side, this panel starts to react to what I've got selected. It's reacting to my context and what I'm interested in and what I'm looking at. Now, this means that the platform can actually start to surface design documentation, design assets, things that are relevant to you in helping you build things. You think about how people do this today, it's really up to them to go away and start finding these things, searching through websites, trying to find links and things that might be relevant.
With the platform, it starts to come to you based on your context. You can start to see the intelligence emerging here. The other thing that it can do, I mean, it gets much deeper than that. You'll see up here, we've got this little thing in the top right that says, "We found 595 match parts for you." What the system's doing is that as I've described my design intent here, I've got this block with a few different interfaces and some connections. In the background, what it's started to do is look across all of our product portfolio as far as the RA series goes today, and it's started to come up with devices that actually fulfill those requirements. Doing that today is a very manual thing to go and do.
I've got to go and take that intent, search through wherever I've got to search through, data sheets, so on and so forth, and actually find things that might fulfill my needs. Here, we actually do all of that completely automatically. We not only do that automatically, we do it across several hundred of those devices in one go. If I want to come in and change those requirements, say, for example, I want to increase the number of UARTs that I have on my design or whatever it might be, we will go away and evaluate all of those, hundreds of them, just within a few seconds and actually come up with, say, a new set of devices that fulfill those requirements.
This is really, really powerful because it means that individually, users don't have to go away and kind of do that essentially one by one. Doing that one by one would be very laborious. It would take quite a lot of time ordinarily, but now the system is going away, and it's doing that completely in the background. In a few seconds, that will come up and I'll get a list of all the devices that are essentially compatible with those requirements. On the right-hand side, you'll see we've actually got the configuration of that device. It's not actually just searched to say, "Well, this might work." It's actually come back and said, "This configuration will work for your design." That's really, really powerful because this is the deterministic nature of this model-based approach to design.
Now what we've, say, got our high-level system design here. Our robot's looking pretty reasonable. We've said from the top what we want this to kind of go and do. We now get into the kind of development phase of this. The development phase would be, for example, actually implementing hardware. Again, the whole platform connects not only the system design part, but the hardware design and the software implementation together. What you're seeing here, if I select this thing surrounding this blue block, is actually one of our evaluation kits that I can bring in directly into the platform. From that evaluation clip, I can click on this open project here, and that will actually take us to, say, the actual model of the evaluation kit directly here inside the browser. I get this nice 3D visualization on that evaluation kit.
I get all of the reference material supporting that. This is all the schematics, layout, and all those kinds of things. Again, it gives me a great starting place from which I can start my design from. Similarly, I can bring all of my custom hardware into this as well. This is a custom board for that robot, and that, again, is connected directly into the platform, as you can see it here. Let's just jump back out real quick. It's not only the hardware side of things, but it's the software side of things too, that's also connected into the platform into this system designer. This is where it gets really exciting because what we can do, we can take that high-level intent that we've already put together.
The system's already, say, understood what device I want to use and how I want to use it, we can actually now generate software for the user to actually start building their end application on. Going back to what Gaurang was saying, this is really important because engineers are not now spending time doing all of the things which I say is the grunt work, the kind of boilerplate things, the things that's not particularly interesting or value add to them. We get them past that much quicker, and we get them to focus on what they need to do, which is building their application and building that quicker. The whole thing makes for a much nicer experience. It makes it much faster. It makes it much more enjoyable.
We want people to come and use and want to use what we do and not need to use what we do. Let's just say, for example, we've completed this implementation now. Our software is there, our hardware is together. I actually want to go and, say, deploy this, either onto an evaluation kit that might sit on my desk. Maybe it's a prototype that's in the lab. It could even be something that's out in the field, and later on, even production devices. This is where we've got the full operational lifecycle management part in the platform. I'm just going to go back to our solution here, and you can see I've got a few different devices connected, three of them here. I'm just going to switch to one of those over here.
You'll see that this is one of our balancing robots, and this defines essentially information about that robot. That robot can report back telemetry to the platform. You'll see that actually in a really nice demonstration a little bit later with the robotic hand, how we're actually not only bringing back, say, textual telemetry, but also even things like live video feed and things like that can also be brought back into the platform. Then from here, we can also start to do things like deploy software directly. If that thing might not be accessible, it might not be sitting next to me, it might be out in the field somewhere or something like that, we can manage all of that from the platform as well.
I appreciate this is something of a whistle-stop tour, and there's a lot within the platform, so it's difficult to compress all of this into 10 minutes. Hopefully it starts to give you guys some kind of understanding and an insight as to how we start to tie this digital thread together and weave it all together. Thanks very much for your attention and listening today. If you'd like to see some demonstrations after this, be very happy to talk to you at the back afterwards. Thank you so much.
Thank you very much. Next, Vice President and Head of UX, Ivo Marocco, and Vice President, General Manager of Analog and Mixed Signal, Peter Jenkins, will present. The floor is yours.
Can you hear me okay? Hello, everybody, and welcome. My name is Ivo Marocco. I'm Head of UX, or user experience, at Renesas. Today, after looking at, excuse me, at the growth drivers of intelligence at the edge as one of our secular growth vectors for Renesas, we will dig into humanoid robotics in more details, and particularly why we believe this market is so important to us and how we are addressing today. We will look into some of the technical challenges and how Renesas today is looking to address them, and the differentiation we bring with our portfolio, and especially what we're going to do in the future to establish ourselves as a credible and reliable player in the space. Of course, with the intent of grab a significant part of this market share.
As I said, let's take a quick look at the composition of revenue that is supporting intelligence at the edge and physical AI that are key growth drivers for Renesas. The contribution of revenue is encompassing edge AI, smartphones, IoT devices, robotics, and humanoid robotics. Our growth is actually supported by four foundational drivers. The expansion of intelligence is increasing demand for processors solution. These are including, of course, microprocessors, microcontrollers, and SoCs. The increasing system intelligence is also driving much more content in analog connectivity and sensors. We see also that expansion of power and energy management is becoming critical. This is due, of course, to the emergence of physical AI, the proliferation of, excuse me, IoT devices, and this is, of course, including PMIC, battery management, and GaN solutions. Lastly, with our platform approach that we have just seen.
Basically, we are combining components together with software, making the solution stickier, but creating also more designs, more solution, go-to-ready solutions that enable partners and enable also customers and users to scale and adopt faster. Let's take a closer look at physical AI and humanoid robotics. With emergence of physical AI, intelligence is actually changing in the sense that it's interacting with real world. It is much more than a compute problem statement that requires pretty much a low latency. It is an intelligence that interacts with the world, so has to learn from it and respond to it. In this way, basically, what we are observing is increased complexity of how to solve this problem, and this is basically pulling more sensing, more compute, more power management, safety, and reliability. All of this has to be dealt with in a very harsh environment.
Robotics, and particularly we will see also humanoid robotics, is the embodiment of such complexity. Of course, this is representing a shift or is driving a shift. I'm sure you all are aware of what the interaction with machines will mean moving forward. This shift actually is also opening up a full stack silicon opportunity for us. This is where the excitement comes from. I think we all believe, of course, we are very well positioned to address these challenges. Let's dig into the market, why we believe the market is attractive. Let's also take a look at the challenges and the position we have to address the challenges today, and what we're going to do in the future to basically continue to gain the momentum and the market share. Clearly with the emergence of physical AI, the long-term opportunity is created.
We're looking at, here, robotics as one of the segments that is benefiting from it. Within it, we can see also how the humanoid segment, the humanoid robotic segment, stands out in terms of attractiveness. This is where we want to play. This is where actually our strategy is aligned with the trend. We will go through the reason why in the next few minutes. This transition is really creating a meaningful, unique opportunity for us to capture. Humanoid robotics should not be seen as a single product, right? It's really a composition or an aggregation of connected system domains that each of them has their own challenges. Brain and motion, sensing, actuation, and motor control, and power management, each of them have their demanding technical requirements. In each of these domains, Renesas already plays a fundamental role.
Let's take, for example, brain and motion. Perception data needs to be processed locally, and then it needs to be translated into deterministic real-time control for rapid decisions. Where is the challenge? The challenge is that there are very tight limits from a power management standpoint, from a compute standpoint, low latency standpoint, and of course, memory. Here is where we have a fit already in offering a scalable portfolio of processors, having already experience in motor control, and progressing in development of motion control solutions. We have also connectivity and a long history of functional safety that we can leverage. In sensing, low latency is not only the name of the game, but also very high accurate data acquisition that needs to be synchronized and turned into actionable intelligence to support real-time fast decision.
Pete Jenkins will dig into this, showing our portfolio, our strategy, and especially, above all, our differentiation. We talk about actuation, for example, which is another of the most relevant challenges or most relevant subsystem, the focus has to be around precise and safe motor control for all the joints through the robot. We do it through motor control MCU, sensors, and power devices. These are all connected together in a feedback loop, really like a single system. This is a natural fit for Renesas, given the experience and given the long history of working in application, both in industrial market and automotive market, where we solved these challenges already. Lastly, in power management, system efficiency is really critical. I'll touch base in a second about what evolution of humanoid robotics is really meaning.
Of course, you can imagine runtime for battery is going to be extremely important. The ability of addressing these challenges with intelligent battery management, really taking care of handling thermal performance and heat dissipation, and especially, I'd say, the very important enabling and keeping the overall delivery of the power throughout the whole architecture is imperative for the functionality of the humanoid robot. Basically, as humanoids become more capable, this becomes more important. Also in battery management, and in power management in general, we do have a strong portfolio and a way forward. Today, basically, with all this, we are in the position to cover roughly 30% of the overall bill of material for humanoids. We are doing it through all the solutions that I mentioned, through the ability of providing safe and accurate control systems and system-level solutions ready.
As a result of it, we actually have more than 100 customers globally, are actively engaged with us today. Just to make sure that I make my message clear, where is this growth coming from? What is the reality behind this? The emergence of physical AI is happening, but the evolution is something that we're going to witness very soon. We will see this even though there is a very strong price pressure on each component in the semiconductor world. Let's take, for example, humanoid in 2025 or even let's say today. They are at a very early stage. There are basically maybe around about 30 joints throughout the overall robot. There is limited functional safety, and the ability of using hands is very basic, as well as the fact that intelligence is very much concentrated in the brain.
As a result, they can operate very well, but in a very controlled environment. Fast-forward 10 years from now, 2035, for example, we can foresee the number of joints going much higher, so maybe 40+ , that are safety-enabled joints with more sensing capabilities, more integrated position force and torque sensing. Hands will definitely develop and evolve from just bare dexterity or grippers to the ability to interact with the world around. This is through an increased number of degrees of freedom, probably around about 20 degrees of freedom and more rich sensing. Intelligence also, we will see becoming more distributed. Again, going from just the brain with architectural development of different type of way of doing it, intelligence will most likely also be distributed in joints and limbs. As a result, this will bring better latency, better scalability, and safety.
Actually, this is the reason why, with the growing complexity and evolution, the semiconductor content will expand. This is the reason behind the fact that we are so interested, and we are also already positioned to go after it. This is why portfolio breadth matters. This is why the position we have today is already strong. We offer end-to-end coverage across motor control, actuator, network, and safety, and with high product solution that are spanning from compute, power, analog sensors, and so on. As a result of this, we expect, and we can claim confidently, that we could go from a 30% BOM coverage today to a 70% BOM coverage in the future, positioning us to catch a disproportionate amount of market share. Having said that, I would like to now pass on to Pete Jenkins for digging into the sensors and analog portfolio.
All right. Thank you, Ivo. My name is Pete Jenkins. I am the General Manager for the Analog and Mixed Signal Product Division. At Renesas, our sensors portfolio is based in a strong automotive foundation. We continue to be ranked number one with over 30% market share in automotive SSC solutions, giving us a solid foundation in future revenue growth and market knowledge. New product intros consisting of position impedance sensing are winning designs at leading EV manufacturers and two-wheeler companies across the globe, particularly in the U.S., India, and China. Targeting motor control and sensing has been key to our success and will remain a key focus area for us in the future. However, looking to tomorrow, our fastest growth will be outside of our traditional expertise and revenue lanes.
Renesas is expanding its focus into new secular growth areas, and among these, advanced mobility, industrial AI, and robotics, which are natural fits for our existing portfolio and maximize our technology advantages and key customer relationships. This evolution reflects a natural shift as the markets of automotive and industrial sensing start to merge. It brings Renesas to the forefront as a key supplier and innovation leader. Just to name a few examples of this, leading robotics manufacturers out of India are evaluating our solutions for use in welding applications and warehouse autonomous robots, while U.S.-based precision surgical companies are evaluating our new solutions for robotic-assisted surgery. When looking at future trends, supporting robotics and humanoid advancement, our automotive expertise carries over extremely well into this emerging market.
From safety and reliability to EMI hardened and tuned solutions, Renesas is well prepared to address these development needs and plan for future advancements that are required for humanoid adoption. Our newest solutions in impedance sensing and inductive position sensings are great examples of how this technology is bridging markets. The same successes our latest sensors are seeing in automotive applications like EV motor control, hands-on detection, drive-by-wire, are the same technology humanoid and robotics companies need for joint encoders, force feedback, and safe human contact. The duplication reuse matters here. We are extending a proven automotive-grade platform into a brand-new market without rebuilding our R&D base, so upside and new opportunities will materialize quickly. A single vehicle uses a handful of these sensors, but a humanoid needs more than 30 joint encoders alone, which multiplies our addressable content per unit as the robotics market scales.
In short, our automotive franchise de-risks the technology, while our robotics expertise dramatically expands the total addressable market. Diversifying us beyond a single end market and into one of the fastest-growing categories in technology today. Very quickly, let's address how these technologies cross market boundaries. The force feedback we already deliver in a steer-by-wire solution is the same in a calibrated grip a humanoid needs to touch and feel. The active suspension we tune for ride quality becomes real-time contact detection at the joint or the hand, and the haptic response in drive controls becomes the safe coworking behavior required when a robot operates right alongside people. It's these similarities that have triggered core robotics and humanoid companies in China to start evaluating and using our tactile solutions today.
Several leading Chinese humanoids robotics companies, including major players in dexterous hand development and full-body humanoid platforms, have either chosen Renesas solutions already or are working with our engineering teams today on integrating these sensors into next generation designs. Let's talk about one of those activities next. One of the wins in robotics that I want to showcase today is with Inspire, who's a leading dexterous hand manufacturer. Inspire selected our strain gauge SSC to reach human-level tactility, requiring sub 1% precision and extreme repeatability. Winning a category leader validates our differentiation and tends to pull through follow-on designs across this field. The reason we won extends beyond just performance, though, and into system-level knowledge. Performance is obviously key, but our solution was able to reduce calibration into just a single step that lowers our customers' cost and time to market.
With dexterous hands being extremely sensors rich, having multiple force and tactile sensors across many degrees of freedom, each win like this carries high-value content per unit and technical advantages that can't be replaced. Our goal is to have the highest performing sensing solutions on the market, but our rich sensing background with these devices enables greater benefits that we just showed here today. Examples like these are the reason Renesas sensing solutions are gaining traction in multiple end markets across the entire robotics landscape. The full analog solution surrounding our sensing platform runs extremely deep, including our refresh of standard products and basic analog, and all the way to our fully customizable solutions in GreenPAK, AnalogPAK, and GreenFET. Add on top of that our Forge FPGA technology that targets edge applications.
Renesas is able to deliver the analog solutions to enable hardware-level sensor aggregation and real-time data processing needed to excel in this space. As part of the complete solution approach, Renesas is offering our software tools for sensor and analog customization online. Our ICOT tool, purposed for designing inductive sensors embedded in the PCB, gives hardware engineers freedom of customization to their own solution based on size and performance. Alongside online sensor tools, our Go Configure software hub is the key to truly unlock customizable analog hardware and in the entire family of GreenPAK products. We're evolving from selling hardware to delivering complete solutions that are bundled together with software and tools under the new Renesas 365 framework. Pairing these core technologies allows for true platform digitalization, pushing Renesas up the value stack and targeting a broad customer landscape. Back to you, Ivo.
Thank you again. As we have learned already through Gaurang and Leigh, basically at the center of this robotics or ecosystem, there is the Renesas 365. Basically, it's our flexible and scalable cloud-based development platform, enables developers to go from ideation to realization and eventually utilization. This is of course helping customers and users to optimize virtually, eventually visualize everything in front of them before deploying everything else on the hardware itself. This is actually enabling a much smoother path in developing products, removing a lot of friction between software and hardware, and actually easing the process of integrating the software on the hardware itself. I would like to share with you maybe a couple of minutes video that is giving a taste of the capabilities of the Renesas 365, our technology using 365 and our products in developing a dexterous hand.
Can we play the video, please?
The Renesas Sensor Fusion dexterous hand solution demonstrates multimodal perception. It combines vision, tactile, and force sensing to enable adaptive grip control across a variety of objects. Powered by the RZ/V2H edge AI processor, this low power MPU can simultaneously run two cameras and models. This allows for identifying objects and the required grip force, while also tracking hand landmarks for human gestures. The RAA2S4704 impedance sensor enables tactile interaction. The RAA2S4251 sensor signal conditioner provides high accuracy amplification to identify force values in each finger. The combination of high-performance compute, vision, tactile, force sensing, and AI/ML is a powerful combination in dexterous capabilities. We are able to detect different objects and apply the correct amount of grip force. Objects like cans or solid pieces of fruits or vegetables need to be gripped with greater force.
Based on the object detected, we can apply different levels of force across the fingers for accurate control. A paper cup, as an example, shouldn't be deformed from grip pressure and doesn't require all the hand fingers to hold. Fragile objects, like an egg, require the least amount of force to minimize the chance of breakage. Being able to identify, perceive, sense, and calibrate takes the Renesas solution to another level and is the launch point to other innovations in the dexterous hand space, especially in safety-critical human interactions. This solution is part of Renesas 365, an integrated platform that unifies workflows and context. Each part of the solution preserves digital context, from block diagrams all the way through schematics, PCBs, firmware, and system logic. Boards can be accessed remotely, removing local hardware barriers.
Through the deployment interface, solutions are assigned to specific boards, built in the cloud, and pushed directly to the target device anywhere in the world. Renesas 365 includes a live metrics engine that tracks CPU utilization, power draw, processing time, and frame rates. The metrics dashboard is fully customizable, letting teams add or remove indicators for debugging, performance tuning, or validation. By combining solution management, remote deployment, and live metrics, Renesas 365 streamlines embedded system workflows from cloud to edge.
Excellent. The demo is at the back of the room. I encourage you and invite you to familiarize yourself with that at the end. A couple of more things before we close the segment. What is our forward strategy and go to market moving forward? First we will expand our robot development kit. This is going to be done by providing complete model conversions tool chain, software stack, and operating system support to simplify the overall development across parts of the robots, like joints, dexterous hand, motion, and eventually brain, leveraging our portfolio, as I mentioned, of scalable processors from microcontrollers, microprocessors, and SoCs. We want to accelerate this digitalization through Renesas 365 so that the development and the test can be done virtually before the deployment is done on the hardware itself.
Lastly, also, we want to take an approach where we support, overall, the mass market direction that Stephen has mentioned in the beginning, by providing, again, a quite rich digital content, providing more ready-to-go solutions, more models that we will populate on the Renesas 365, and especially having a distribution focus with our collateral and with our resources. Together, these pillars help customers move faster from concept to deployment, which will directly tie eventually into our growth. I want to close this segment summarizing a couple of things. First, we do believe that humanoid robotics represents an important long-term opportunity for us. As physical AI evolves, as I mentioned before, also the semiconductor content will expand, and this plays directly into the strengths of our portfolio breadth as well as our solutions across compute, connectivity, analog sensors, and power.
What differentiates us is not only the breadth of portfolio, as I mentioned, but also our ability to deliver system-level solutions, software, ecosystem enablement, and the Renesas 365 will help us go into this direction very fast. We believe, for this reason, that we are uniquely positioned to capture an increasing value of this market as it matures over time. Again, I want to thank you for your attention and continued interest in our portfolio and our journey. Thank you.
Thank you. Moving on, we would like to invite Zaher Baidas, the Senior Vice President and General Manager of Power. The floor is yours, Zaher.
Thank you. Hello, everyone. My name is Zaher Baidas. I'm the General Manager of Power Product Group at Renesas. I'm very excited to share with you today Renesas' progress in the very fast-growing and very dynamic AI infrastructure and compute market. I would like to start with an overview of our portfolio. Renesas has an impressive portfolio of products and technologies that addresses the AI infrastructure and compute market needs. We have three pillars of growth. First, our digital power plays a critical role by delivering the high power density and thermal efficiency required for next-generation data centers. In addition, we have been, for a long time, leading the memory interface market with technology critical to maximizing compute efficiency and addressing data bottlenecks. This is becoming increasingly important for AI inferencing.
Finally, our legacy with MCU technology puts us in a great position to capture control opportunity in this market, as well as analog attach. The balance of these pillars is shown in our 2025 revenue mix. Combined, they uniquely position Renesas to capture the healthy, sustained demand we are seeing in AI infrastructure and compute. AI infrastructure and compute market for Renesas includes digital power, memory interface, control plane, and other analog components servicing AI servers and general servers. Over the past two years, we have seen tremendous revenue growth in this space, and as we look ahead, we expect to continue our momentum and grow market share with our three growth pillars. There are three compounding effects here. First, we see a huge increase in AI accelerators and CPU volumes, which means more power and more memory product.
Second, our growing portfolio allows us to address more sockets in the data center for both power delivery, data, and control plane functions. Finally, the architecture shift to support 800-volt DC as well as higher power demands favors our module solution that are specifically designed for AI workloads and command a higher price. All of this translates to a faster revenue growth, positioning us to achieve above-market growth well into the future. Our confidence is supported by the massive demand we've all seen for compute driven by generative AI adoption. As reported by Gartner and Omdia, the data center market is expanding at a great pace, with AI-specific server volume expected to more than double by 2030.
What's really interesting here is that while GPUs for AI have been dominating the initial build-out, we see AI ASICs and CPU volumes growing at a faster pace as workloads shift towards AI inferencing. Since Renesas' diverse product portfolio serves AI and general server CPUs, GPUs, and AI ASICs, we stand to benefit from the overall growth regardless of the speed of transition of AI inference. It's important to note that with CPU-related power and memory interface content now growing alongside AI accelerator, the distinction between AI and non-AI is becoming blurred. As Shinkai-san answered in one of the questions in the earlier Q&A session, going forward, we will be reporting and discussing this business as data center revenue. Let us take a look at the big picture, starting with the whole power delivery path from the grid all the way down to the sub-1-volt supply on an XPU.
AI incredible power demand are driving a major redesign of this entire chain, Renesas is one of the few companies with products and expertise in every critical stage. Our portfolio today can address the high voltage conversion from the grid, the 48-volt distribution in the rack, and the core power on the board. As seen on the next slide, we continue to invest and innovate in power technologies such as GaN FETs and isolated gate drivers, which will allow us to capture more content as the power architecture transitions. At the same time, our memory interface technology will continue to play a pivotal role in improving speed and bandwidth of data transaction at the rack level. We have an excellent attach opportunity with our MCUs targeting both power and control plane.
Let us now spend some time to expand on each one of these growth pillars, starting with digital power. Overall, we see power content growing by over tenfold as next-generation data center packs large number of accelerators or CPUs as close together as possible. Doing so will maximize system performance but require a careful planning of power and heat management. This is not a trivial problem, as next-gen racks are on pace to consume over 1 megawatt of electricity each. That's enough electricity to power over 1,000 homes just for a single rack. Renesas' presence in this market is highlighted in the figure on the right, showing a leading next-generation AI board, where Renesas digital multi-phase core power and intermediate bus converter occupy a sizable footprint.
In this example, we were able to provide a total power solution, including MOSFET in the 48-volt IBC stage, which in this case, has a leading performance as measured by our customer in this particular board. Supplying large numbers of accelerators in a rack require a new type of power architecture and move towards 800-volt DC. 800-volt DC reduces current, minimizes conduction loss, and improves system efficiency. To address this, Renesas is continuing to invest in discrete technology. Our high voltage D-mode GaN products are ideal in the conversion stage from 800-volt down to intermediate voltage, like 48-volt, and in some cases 12-volt, due to its compact form factor and fast, efficient switching. In addition, our bi-directional GaN switches opens the door to replacing a two-stage architecture with a single stage for improved efficiency and cost saving.
We believe these investments will continue to help position Renesas as a key GaN market leader. We also continue to invest in our MOSFET technology and deliver competitive products that are getting designed in this market. To summarize, within AI infra and compute portfolio, the main growth engine so far has been digital power. We are currently in a very strong position, our solution gaining share with all leading market players. As each new AI generation demands a big leap in power delivery, our power modules and vertical power solution directly addresses this. It's our biggest content opportunity in this market. It's worth spending a moment to highlight the innovation in vertical power stages. Our module-based approach to this technology delivers a world-class solution that does not only deliver best-in-class performance, but also addresses some of the customers' most challenging problem, managing the SoC thermals.
Our modules is 50% better than our competition at conducting heat out of the SoC. This is a clear example where Renesas system knowledge and innovation allowed us to differentiate. We did not stop there because we cannot be complacent. We know our competitors will catch up. We are working on our next generation of that module that will offer similar leap in heat conductivity. Overall, the growth equation is simple, quantity times value. On one hand, we have more XPUs being deployed over 2x growth in volume by 2030, and on the other hand, each of these XPUs require far more Renesas content, roughly 5x in power. These together create a powerful growth trajectory. In addition, we expect the shift toward agentic AI will further unlock aggressive growth opportunities as we supply standalone CPU power rails.
Speaking of CPU growth, I wanted to highlight that our digital power growth engine is built on top of a very robust and stable memory and control foundation, the other two pillars of our AI infrastructure and compute growth story. As AI inference dominates and server GPU to CPU ratio decreases, we expect the volume of x86 and Arm CPUs to significantly grow above our current modeling. Each CPU will require RAM, making our memory interface products a key enabler of AI system scaling. As shown in the slide, our comprehensive memory interface portfolio covers all chips in a DDR modules. Next gen data center performance will increasingly depend on efficient data movement between the processor and the memory, Renesas memory interface technology innovation are going to be critical.
Finally, our expertise in MCU is well-known, and we are beginning to see increased popularity of MCU-based implementation for control plane as well as power management within the server due to flexibility MCU provides over other solutions such as FPGAs, for example. Now, it's very important to highlight how Renesas will deliver in this current environment. AI demand, as you know, can be volatile. How we scale as a company is critical. Renesas is one of the few companies that purposely built a balanced supply model. We combine our own internal manufacturing with external foundries to add capacity on demand. This gives us the agility to respond to rapid shifts while reducing execution risk compared to being a single-sourced company. With 14 manufacturing facilities in Japan, China, Southeast Asia, and the U.S., we will have stable base capacity in-house, plus flexible capacity through our partners.
Finally, actually, this is one of my favorite slides, and I was discussing it with some of our guests in the break. I wanted to touch briefly on what sets us apart when it comes to working with our customers early in their design cycles. Currently, these ASIC design boards happen in parallel with the actual ASIC. There is a greater risk to customers that these boards do not behave as expected. We help mitigate that risk through an early engagement with pre-PCB modeling, followed by an excellent test tool and software. We do have the test tool and the model. I encourage you to have a look at it. Basically, this test tool emulates, with great accuracy, the thousands of amp the SoC consume, including transients, and it has an accompanying extensive suite of software for analysis and monitoring.
This allows us much higher initial design quality and first-pass power-up success. For Renesas, digitization and UX, along with our world-class system and application teams, means that we are the first to engage at very early stage in SoC development. This increases visibility into system-level challenges quite early in the design, which directly improves our design-in success and, more importantly, expands our attach opportunity of complementary product. While competitors now are working on similar offerings, we have released our third generation of this hardware. In addition, we are actively investigating a path to offer these tools to a wider audience through Renesas 365. To summarize, we are living through an unprecedented market expansion as AI usage drives more power and more memory. Today, I shared how Renesas can offer not just next-generation power delivery solution, but also memory interface technology.
On top of that, MCU capability will also play a critical role in control plane. More importantly, with our deep automotive supply chain heritage, we are able to do so at the quality levels demanded by our customer. Ultimately, with our digitization and UX efforts, we offer a smooth design experience that helps our customer and ultimately makes our life easier. Thank you for your time and attention.
We are moving on to Q&A session. Please give us some time to prepare the stage. We have Shibata-san, Gaurang Shah , Ivo San, Pete San joining this Q&A session. Please come up to the floor for all the speakers. Okay, now we're starting Q&A session. Please raise your hand if you have any questions. For those online, use the Q&A function to give us a question in text. Due to the time constraint, we'll limit your question to two per person. Let's start with Fujiwara San from Citigroup.
Thank you very much. This is Fujiwara from Citigroup Securities. My question is about the power. I have two questions on power. First question, the target for the power, to have a slightly stronger growth than the market growth and gaining market share. I believe that's what's meant by this. I'm sure there are many other competitors in this market. In order to ensure the market share in this market, what are you going to do? How are you going to ensure the market share, and what confidence do you have?
We are confident. We cannot get complacent. It's a great position Renesas finds itself in. It came through the multiple years of innovation in this field and our ability, as I discussed, to support customers in a very unique way with our system knowledge. We need to continue to innovate. We have high level of confidence that we are capable of innovating. As long as we innovate, we should be able to continue growing in this market. It's not an easy challenge. When I talked about the innovation we've done in vertical power stages and when I discussed our crown jewel with the modeling system and the emulation system we have, we have to continue doing that.
Thank you. One question. This is again related to the power business. In the first half of your presentation, you talked on the AI infrastructure. There's no major price increase, maybe not factoring for AI. In this midterm, for the power products, what is your pricing strategy? Can you maybe elaborate on this?
Zaher. Zaher-san, please.
I think Stephen did actually mention that. We will not be shy from increasing prices if the cost increases. Now, this has to happen in a very delicate balance. Our customers today are big customers with a very big pull. We want to make sure that we adjust our pricing to protect our margins while we actually protect our market share. It's a delicate balance. We are working on it every day as we speak. We are confident we can execute. Regarding margin, on the same note. From the revenue perspective, as you see further integration taking place, then you have more current, then ASP will be growing, right? Looks like you seem to be selling something similar, but your unit price, ASP, is going up. Along with the volume from both perspectives, I think that will work positively on revenue, right?
Thank you.
Moving on to the next question. That will be Okawa-san from Daiwa Securities.
Thank you very much for the opportunity. I am Okawa from Daiwa Securities. I also have two questions pertaining to power, especially digital power. In your presentation, you said that it's not going to be so easy to expand your market share in the earlier presentation session. You are going to achieve growth this time around at a pace faster than PAM. Was there any event that allowed you to deepen your confidence? I had an impression that you're very strong at the board, but in order to expand your business on the rack level and higher, is there any missing piece? What is your confidence coming from, especially for digital power?
Okay, then we'll start with Zaher again.
Our confidence is high. The big piece of the story is what I mentioned with SiC modules. Our innovation in modules, gaining market share in modules, and delivering a unique vertical power stage module for our customers, which is already seeing a big traction, is going to be providing us with the growth against the market. You mentioned other sides. We have modeled it as not a very significant growth at this point. As I mentioned, we will continue to invest in our discretes, our GaN devices, and try and address as much market with that with innovation.
Thank you. The vertical power supply. The vertical power supply. I think other companies are ahead of you in that regard, so you are going to catch up with that. The thermal design, I think you are very good at the thermal dissipation. Why are you so strong in that space? Can you elaborate on that?
Sorry. It goes back to our system engineers. When we presented vertical power and modules last year, we got a lukewarm response. That's what Renesas' DNA is. We try to innovate, differentiate, and find a place where we can deliver power in a very specific, innovative way. These vertical power stage modules that we are talking about, we actually delivered unprecedented performance, and our competition are working now to actually match this performance, taking our vertical power module footprint. As I said, we cannot be complacent. We found a unique entry to this market that we are using. That's why we are working on our second generation of this module, while the first generation is still going to samples and hasn't reached production yet. Yes.
Regarding my second question relates to memory interface. The microphone is not on. The memory interface, other companies are achieving a higher growth rate, I believe. I'm so sorry. This is a question relating to memory interface. All these players are expecting a higher growth than the PAM. Once again, compared to your competitors, what is your strength in memory interface? Other companies have a good portfolio of memory interface products. They have a one-stop solution. Once again, can you elaborate why you are confident that you will be able to increase your market share in the memory interface space?
For that, Peter, I think, will be responding to that question. Peter. Thanks, Shibata-san
I think the question is a good one. Renesas is, I believe, the only one that is a full solution provider across all the memory interface components. The one-stop shop definitely applies to our core portfolio. Our key to success is being the first to sample. In every new iteration of device from DDR to MR, we're the first to sample. That's our number one goal. That's how all of our metrics are based. If we're 1st to sample, we set the benchmark of what performance look like and what quality looks like. That's our goal. That's how we maintain market share, and that's how we evolve customer relationships for future growth. That's key. If anything else, that's the number 1 that we focus on.
Thank you.
This is a product with a standard, so it's not we are going to deliver some uniqueness with our design. Instead, the speed of execution and the quality becomes very important. In another expression, put it the other way, if you do a good job in there, even before the actual revenue comes in, we shall be able to predict the position that we can secure in the market. If it becomes two generations or three generations ahead, as long as it's one generation away, it is very predictable. Our position is quite predictable. If it's the next three years or so, we can talk about the story with a good amount of confidence. We cannot foresee 10 years ahead, this is the nature of this product.
Thank you. Next question. The person with the jacket over there. Now we're getting close to the ending time, so we want to make this as the last question. Kojima from Nikkei Cross Tech.
Power and memory interface related question. In the past, Renesas had a certain level of capability in this era, the very first with the Rocket AI infrastructure. I think we heard it seems to be quite promising. Are you going to introduce new type of products? Is that what you mean? Or those strong product you had, are you trying to increase the SKUs or maybe increasing slightly performance or the capabilities or functions? Would that be the case? Can you elaborate on this point first? That's my first question. My second question is about the automotive, the cars. I have this question on the car. Sorry about asking about the car.
There are people who are driving for more than 10 years. I've been driving my car for 15 years, and it's quite long, but compared to that, AI growth is so fast. With the R-Car Gen 5, I think it had a quite strong computing power. I think you mentioned that you should be able to accommodate the expected evolution of AI. When we think about the future from now on, just by updating software would be good enough to keep up with the evolution. Do you have to maybe change the hardware? Is that the other way? Is that the other option? I just wondered if that is also an option or not. For example, you could use OEM. When you're talking to OEM maker or component maker, the hardware will remain the same.
Trying to upgrade the software, is that how you're trying to reach them? Is that still the case, or are you also talking about potentially changing the hardware? Would that be also in the scope or not? That is my second question.
The first question, first answer by Zaher. If needed, Pete can elaborate. Zaher, please.
I'm sorry, the question was long. I missed the beginning of it.
In your presentation, AI infrastructure and power and the memory, I think you're showing growing faster than the market, meaning that you are taking market share to grow stronger than the market. To do that, are you trying to introduce completely new products to accomplish this market share gain, or are you thinking of utilizing existing product, and then you're trying to increase the SKUs or different products? What is the direction you're thinking to grow the business?
I think Shibata-san in his introduction did touch on that. We are not going to do something drastically, completely different where we cannot differentiate and we don't have any core product. Having said that, our power heritage and memory interface heritage puts us in a place where we can do a lot. As you can find, one example we have where we said we went from SPSs all the way to module and vertical power stages, and then we will be looking at the next generation and the next generation out of that. At one point in time, we will be working on four different generations, looking all the way to the future when it comes to power. It's all about increasing the density and improving efficiency and dealing with better thermals.
When it comes to memory interface, I actually had the luxury of being involved with some of these designers based on my previous life and as was part of the analog interface. It involves everything. Very high frequency SerDes, a lot more complex clock management, and this applies to many things that we can do where you can, when Shibata-san briefly talked about interconnect, that could be a place where we can actually strive because it's in our core business, our core capability and our engineers are uniquely positioned to deal with that. That's the answer.
Yeah, in the power business, this is slightly different from other product lineups. To integrate many more IPs or multiple devices to be laid out on the board to build a system, that's not the only thing we can do. The form factor itself is actually changing. It's not like there are just many more layers on the chip, but they're trying to increase the voltage to get closer to chip. It's something going beyond that conventional semiconductor, and such an innovation is taking place in a very rapid manner. We have a dedicated team for that. Conventional semiconductor engineer to take care of everything, that's no longer happening right now. This is quite a unique area. The same product, reinforcing furthermore, it's not the case. Almost every day, but every year, a completely different product must be generated or created.
You are introducing new products at the module level? Roughly speaking. Roughly speaking, at the module level, yes. For automotive, probably, I am assuming, according to your question, this is my understanding. In the past automotive sector, in order to ride a car for 15 years, the electronics has become quite old-fashioned, even from the new car. I have been thinking of what we can do about this situation. Let us say ECU is like a blade, and if we can reinsert the board, then we can use the new electronics. That is what I thought. Now it has not become like that. Partly Tesla is doing things like that, it is not that easy to reinsert with something new. It is just like a battery replacement, it is how hard it is.
Unfortunately, at this point of time, such an architecture is not really considered, and we have not really heard that anyone has really approached us in that direction. I do not think there is any OEM looking into that possibility. I think currently they are rather working on trying to secure enough headroom, and trying to address by updating software. Finally, we started to see that direction. Of course, very excited to see more to come. Such a modular approach, still not seen at all right now, it could happen. Thank you very much.
Thank you so much. We would like to wrap up the Q&A session because we have exceeded the allotted time. Shibata-san remain on stage. Others, please get back to your seats. Thank you. In closing, Shibata-san will give a closing remark.
Yes. This has been an in-person Capital Markets Day in a while. It's been several years since the previous one. Thank you very much for your participation. Let me repeat. Of course, numbers are important, but those are result-related indicators. How are these numbers going to move going forward? That has to do with competitiveness, and even if we say it, you need some evidence. By talking to our executives and taking a look at the demos and samples that we have partially provided, I think you will have a better understanding of where we are headed. Up until now, be it online or in person, we have been conducting Capital Markets Day every year. Up till this point, as I responded to one of the questions, I think the way forward has become clear, at least to me.
Whether having this every year or not, or following our competitors, having this every two years or three years or not, that is something that we would like to consider and update you in due course. I am not sure how useful this was for you, but at least I hope you were able to feel something beyond the usual earnings calls. Some kind of leading indicator, although qualitative. I hope you achieved that at least in today's event. This year is expected to be a very strong year. I hope to see you again at the next earnings call. Thank you for your participation today. With that, we would like to close the Capital Markets Day 2026 for Renesas. Today's materials and videos will be made available in our investor relations website. These will be uploaded from this evening onwards.
Thank you very much for participating over a long period of time. In the venue, we will have a breakout session with some of the presenters today. If you would like to ask further questions or have discussions, please utilize this opportunity. If you have used your simultaneous interpreting receiver, please leave that on the desk and take part in the breakout session. If you need to leave, please be careful. Thank you again for your participation.