A report from Japanese news publication Nikkei has revealed that Apple is in talks with Renesas Electronics to acquire a unit of the company that designs chips for smartphone displays.  Apple gets all its LCD chips from Renesas SP Drivers, which is a joint venture between Renesas, Sharp and Taiwan’s Powerchip.  If Apple is successful in acquiring Renesa SP, the units engineering would allow Apple to improve image sharpness and battery life across its device lineup.

Renesas owns a 55 percent stake in Renesas SP, which Apple is looking to acquire for an estimated 50 billion yen, or around $479 million.  Sharp owns 25 percent of the venture, leaving the remaining 20 percent to Powerchip.  According to the report, Sharp is open to selling its stake in Renesas SP if Apple wants in after the cessation of  its deal with Renesas.

Apple’s sales declined the previous year as consumer interest shifts towards improved display resolution and quality materials.  By acquiring Renesas SP, Apple will be able to integrate the design of core display components into overall product development.

The deal is expected to be completed by the summer and most of Renesas’ 240 or so employees in Japan are expected to stay on board after the completion of the deal.

Too good to sell?

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Renesas’ shares rose by 10 percent after news of Apple’s interest in acquiring Renesas SP surfaced.  Despite the positive response from investors, Hideyuki Ishiguro, senior strategist at investment strategy department at Okasan Securities, stated that “It’s one of their core technologies. I actually think it’s too good to sell.”

Another reason Apple is acquiring Renesas SP may be that it wants to lessen its reliance on suppliers, and shift towards the production of its own devices.  It’s a tested tactic for rivals like Microsoft, in a world where business needs balance between hardware and software. The right partnerships, along with key acquisitions, will define the power players. For Apple, the Renesas SP buy is the latest of several noted acquisitions.

Other core component acquisitions for Apple include Passif Semiconductor, an American maker of energy-efficient communications chips. There’s also the matter of two Israeli companies – namely Anobit Technologies which makes flash memory chips, and PrimeSense, the company behind the original motion-tracking Kinect technology found in the Xbox 360, which is also a major player in the 3D-sensing scene.

Growth spurt in Apple’s future

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The pressure of maintaining market leadership is bringing about a lot of changes at Apple, as the Cupertino company is rumored to be releasing bigger iPhones come September.  The iPhone will be available in 4.7-inch and 5.5-inch screen variations, but according to recent reports the production of the bigger variant will be delayed.

According to sources, the 4.7-inch variant will be prioritized because in-cell touch sensor technology is better executed in smaller screens.  The report stated that there’s a possibility the bigger version will use a film-based multitouch sensor instead of the in-cell touch sensor.

For its upcoming iPhone/s, Apple said to have chosen three suppliers for its displays:  Japan Display, Sharp, and LG Display.  Of the three companies, Japan Display will be the earliest to manufacture the LCDs needed by Apple, and it recently announced that it will start production of 5.5-inch displays as early as May.

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