Monday, January 30, 2023

DENSO seeks to reduce dependence on Chinese semiconductors with Taiwanese companies

Toyota’s Tier 1 supplier Denso has partnered with Taiwan’s TSMC and UMC to make semiconductors in Japan to reduce reliance on Chinese chips.

Nagoya, Japan, January 1, 2023 (with data from Nikkei Asia). In a recent interview with Nikkei, Denso President and CEO Koji Arima discussed the industry outlook and plans to address geopolitical risks. With US-China tensions and the coronavirus forcing the auto sector to rethink supply chains, Toyota Motor supplier Denso sees great potential in its partnership with Taiwanese chip companies.

The Japanese auto parts maker has partnered with Taiwan’s United Microelectronics Corp through 2022 to make power semiconductors for automobiles. It also announced investment in Taiwan Semiconductor Manufacturing Company’s first plant in Japan, now under construction in Kumamoto Prefecture.

Denso has partnered with a Taiwanese foundry to produce auto chips in Japan, and Taiwanese companies are also investing in the US, “but sometimes cultural differences get in the way. In contrast, Kumamoto Prefecture Things are going well at the TSMC plant in the U.S. in which we have a stake. Even when there is a problem, the problem is not left to others and instead we try to find a solution together. That’s how we in Japan We also work in the US, which makes us compatible”, commented the CEO of Denso.

In addition, Denso has also invested in Rapidus, which aims to start production of next-generation semiconductors in Japan. According to the CEO, mass production of next-generation semiconductors requires around $75 billion and no single company can do it alone. The big question is how to raise the funds. But with the development of cars and digital society, the demand is increasing. “We don’t know if we’ll succeed, but if Japan has the know-how to manufacture and the chip experts to do it, it’s useless not to try,” he said.

Regarding the fragmentation of worldwide supply chains, Koji Arima replied to Nikkei: “Our centers around the world receive various components from China. We will gradually reduce our dependence on the market, Japan and Southeast Asia.” We will be manufacturing key components in various locations across the U.S. We are looking to set up a production infrastructure specifically for electric vehicle parts in Southeast Asia, which lags behind other regions in the region.”

And on the outlook for the automotive industry in 2023, the global Tier 1 president responded: “We expect costs to continue to rise and parts suppliers in particular will face challenges. But automakers and others are working together to address the chip shortage, and if we’re successful, production could ramp up in the summer. For now, we expect earnings to be flat in fiscal 2023, but we could see further improvements. Stiff competition among automakers remains, and electrification is likely to accelerate. We aim to produce more inverters, a key component, where they are needed. Conditions can change greatly in each region, so we will make detailed adjustments to our production plans. If there are companies that can do it better than us, we will consider outsourcing engine parts. We will continue to develop technologies related to hydrogen and synthetic fuels”, he concluded.

Nation World News Desk
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