Categories: Automobile

Top Toyota supplier Denso mulls $3B chip unit spinoff

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“We need to think about whether the time will come when we sell semiconductors, alone, externally,” CTO Yoshifumi Kato said in an interview at Denso’s headquarters in Aichi prefecture on Friday. “It’s worth looking into whether that kind of structure is possible,” he said.

Today, the semiconductors Denso makes in-house go into automotive parts that it then sells to carmakers or other suppliers. When examining the possibility of supplying semiconductors on their own, Denso will consider whether the semiconductor division is better positioned outside of the company, Kato said.

To date, nothing has been decided regarding a split, Kato said, adding that Denso’s focus for the time being is on meeting internal chip demand. The company is also not currently considering utilizing a potential spin-off of its chip business to raise fresh funds for other investments, he said.

A shortage of chips used in cars first began in late 2020, when Covid-induced lockdowns of millions of people around the world spurred a huge uptick in the purchase of consumer electronics goods, resulting in semiconductors being diverted away from automakers. Their dearth quickly became symptomatic of a broader supply chain crisis that’s upended the smooth delivery of goods globally.

Chip supply now seems to be getting back to normal in some places, amid concerns around how well consumer demand can hold up against the backdrop of accelerating inflation and higher interest rates.

According to Kato, demand for automotive semiconductors, on a tear amid the industry’s shift to electric, internet-connected and autonomous cars, is likely to continue going from strength to strength.

Denso said at a briefing earlier this month that it’s targeting 500 billion yen in sales from its in-house power and analog chip business, up from around 420 billion yen currently.

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