Core Viewpoint - Renesas Electronics reported a mixed performance in Q3 2025, with revenue declining but improvements in gross and operating margins, indicating a focus on cost management and inventory adjustments in response to market conditions [3][6][12]. Financial Performance - Q3 2025 revenue was 334.2 billion JPY, a decrease of 3.2% year-on-year, while gross margin improved to 57.6%, up 1.7 percentage points [3][4]. - Operating profit reached 103.2 billion JPY, with an operating margin of 30.9%, reflecting a year-on-year increase of 48 million JPY [3][4]. - Net profit attributable to shareholders was 88.2 billion JPY, up 22 million JPY year-on-year [3][4]. Business Segments - Automotive business is expected to decline slightly due to inventory adjustments by major clients, while industrial and IoT sectors show signs of recovery driven by strong AI and server demand [6][12]. - The company anticipates a 16.2% year-on-year increase in Q4 sales to 340 billion JPY, with gross margin expected to rise to 57.0% [8][9]. Inventory and Production - The company plans to increase inventory levels in Q4, particularly in the "Die Bank" for wafer reserves, to prepare for future shipments [14]. - The production capacity utilization rate for wafer front-end production was approximately 50% in Q3, slightly above expectations, but is expected to decline in Q4 due to earlier production adjustments [14][15]. Future Outlook - The overall demand from channels to end-users is expected to remain stable, with a gradual expansion in the Chinese market anticipated [7][12]. - The integration of the EDA firm Altium is progressing, with a 15% year-on-year growth in annual recurring revenue (ARR) for its subscription products [7][8].