FOCUS: 3 Companies Weigh All-Japan Power Semiconductor Alliance

Tokyo, July 1 (Jiji Press)–Rohm Co., Toshiba Corp. and Mitsubishi Electric Corp. are moving ahead with negotiations on a possible integration of their power semiconductor businesses. If realized, the alliance would create the world’s second-largest power semiconductor group, behind Germany’s Infineon Technologies AG. Power semiconductors are used to control electric power in a wide range of products, including electric vehicles and industrial equipment, to convert and control voltage and current. The three companies are seeking to form an all-Japan alliance to counter the rise of Chinese rivals, which are gaining ground through aggressive low-price strategies. With each company vying for leadership of the proposed alliance, however, the outcome of the talks remains uncertain. Crowded Domestic Field “We aim to establish a structure capable of demonstrating sustained competitiveness in the global market,” Rohm President Katsumi Azuma said, expressing his enthusiasm for the envisaged business integration. Executives from the two partner companies, which plan to spin off their power semiconductor businesses and establish a jointly funded company with Rohm, also voiced strong support for the initiative. “We will provide value to a broad customer base and make a major contribution to the development of diverse industrial fields,” said Toshiba Corporate Senior Executive Vice President Koji Ikeya. Mitsubishi Electric President Kei Uruma said, “We should work together to develop chips that can outperform those from China and other competitors.” Japan’s semiconductor industry has suffered a sharp decline in international competitiveness, but it still maintains a meaningful global presence in power semiconductors. According to research company Fuji Keizai Co., the global market for power semiconductors reached 3,755 billion yen in 2025. Driven by growing demand from data centers amid the expanding use of artificial intelligence, the market is forecast to grow to 7,349.5 billion yen by 2035. However, Japan’s power semiconductor sector remains crowded, with numerous companies competing in relatively small-scale businesses. At the same time, Chinese manufacturers are rapidly catching up. If Japan remains idle, the sector could follow the same path of decline as memory semiconductors. Yet momentum for industry realignment has been slow to build, partly because of sluggish demand for EVs. Denso’s Bid The stalemate was broken in February, when Denso Corp., a major auto parts manufacturer affiliated with Toyota Motor Corp., proposed acquiring Rohm. Rohm, however, was wary of coming under Denso’s umbrella. The company was concerned that such a deal would shift the focus of its power semiconductor production heavily toward automotive applications, leaving it less prepared to supply power chips for data centers, an increasingly important market amid growing demand for AI-related services. Rohm quickly moved to hold collaboration talks with Toshiba, with which it has capital ties. Mitsubishi Electric, which had long advocated industry reorganization, also joined the discussions. Denso later withdrew its proposal. Rohm had remained highly cautious about being absorbed into the Toyota group, and Denso concluded that further talks were unlikely to produce a mutually beneficial outcome. “Even if we continue discussions any further, we will not be able to envision a scenario that would lead to an increase in value for both companies,” Denso President Shinnosuke Hayashi said. To Avoid Same Mistakes It remains unclear, however, whether talks among Rohm, Toshiba and Mitsubishi Electric will proceed smoothly. Coordinating the details of the envisioned business integration, including the ownership stake each company would hold in the new organization, is unlikely to be straightforward. Rohm President Azuma had initially aimed to reach an agreement with Toshiba by around the summer. However, he said the process is “taking longer than expected,” suggesting that difficulties may already be emerging. Although Denso has abandoned its proposal to acquire Rohm, it remains eager to pursue personnel and technological exchanges with the chipmaker. Rohm may still participate in some form in the alliance being discussed by the three companies, leaving the final shape of the sector realignment uncertain. All-Japan semiconductor alliances have a mixed track record. Elpida Memory Inc., for example, was formed through the integration of the memory semiconductor businesses of Hitachi Ltd., Mitsubishi Electric and NEC Corp., but ultimately went bankrupt. That history explains Azuma’s strong sense of urgency. “We must never repeat the same mistakes. We cannot have too many cooks spoiling the broth,” he said. END [Copyright The Jiji Press, Ltd.]