Toshiba and Rohm jointly invest $2.7 billion to develop power chips together

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Toshiba and Rohm jointly invest $2.7 billion to develop power chips together
Toshiba and Rohm jointly invest $2.7 billion to develop power chips together

Toshiba and Rohm’s investment is part of a 125 billion yen plan announced last year to more than increase the output of power chips

Toshiba (6502.T) and Rohm (6963.T) announced a 388.3 billion yen ($2.7 billion) investment to co-produce power chips on Friday, the first partnership since Rohm’s $14 billion takeover of Toshiba.

The current collaboration is exactly what Japan’s industry ministry hoped for, as the country’s power chip business is too fragmented to compete with industry powerhouse Infineon Technologies AG (IFXGn.DE). Separately, the ministry stated that it will subsidize up to 129.4 billion yen, or one-third of the entire investment, as part of a drive to keep the local power chip industry competitive.

Electric power is efficiently controlled by power chips in automobiles, electronic devices, and industrial equipment. The ministry anticipates that the worldwide power chip market will expand to 5 trillion yen by 2030.

Rohm will invest 289.2 billion yen in a new plant in Miyazaki Prefecture on the southern island of Kyushu to produce silicon carbide power chips, which have proven popular with electric car makers due to their ability to handle high voltages and be more efficient.

Toshiba will invest 99.1 billion yen in a cutting-edge 300mm fabrication unit for silicon power chips in Ishikawa, central Japan.

The investment is part of a 125 billion yen plan launched last year to more than triple power chip output.

The power chips made at the factories will be sold under their own labels.

The agreement comes after Rohm announced a 300 billion yen investment to join a consortium led by private equity firm Japan Industrial Partners (JIP) to take Toshiba private.

However, the two businesses stated that they had been discussing a collaboration “for some time” and that Rohm’s involvement in the Toshiba takeover “did not serve as the starting point” for the latest agreement.

Toshiba, Rohm, Mitsubishi Electric (6503.T), and Fuji Electric (6504.T) are all Japanese power chip makers with a global presence.

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