Denso's $3bn Investment in Semiconductors Amidst EV Disruption

author: FutureCar Staff    

Automotive manufacturers are facing disruption as they attempt to keep up with the shift towards electrification. Denso, a Japanese supplier for Toyota, has announced plans to invest $3 billion into semiconductor materials and transition its employees into semiconductor roles. Denso's president, Shinnosuke Hayashi, made this announcement during the Japan Mobility Show, stating that the investment aims to triple the company's chip production by 2030. Hayashi emphasized the importance of forging strategic partnerships with various companies to ensure stable material procurement for expanded production.

In February 2022, Denso acquired a minority stake in a semiconductor manufacturing plant owned by TSMC in Japan. TSMC's CEO, Dr. CC Wei, expressed his satisfaction with this partnership, noting that the demand for semiconductors is expected to grow significantly as connected and electric cars become more prevalent.

A recent report by research analyst company GlobalData highlights the "unprecedented disruption" caused by the transition to electric vehicles (EVs) in the automotive industry. Established original equipment manufacturers, such as Denso, are now at risk of falling behind and facing substantial costs to retool their factories. EVs and connected cars are not traditionally a core competency for car manufacturers, leading to the emergence of EV startups to meet the growing demand.

GlobalData also notes that Japan's regional production of EVs significantly lags behind China, the US, and Europe. China's early lead in EV production is attributed to government incentives and shorter commutes, which made early EV models suitable for consumer needs. Dr. Rebecca Henderson, a Harvard economist and lecturer, warned about China's potential dominance in EVs and green technology, expressing concern that the US may be falling behind.

However, GlobalData acknowledges that the semiconductor market is influenced by geopolitics and AI, making its supply chain vulnerable to conflicts and events like the Covid-19 pandemic. Despite these challenges, the analyst predicts that by 2030, 80% of a vehicle's value will lie in its software and content, with AI playing a significant role in enhancing a car's capabilities.

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FutureCar Staff