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Toyota’s biggest supplier, Denso, has proposed a takeover of Rohm that would value the automotive chipmaker at ¥1.3tn ($8.2bn) as it attempts to develop high-end semiconductors that are vital for electric vehicles and autonomous driving to compete with China.
Denso’s bid is at an 18 per cent premium to the current share price of the Kyoto-based maker of power semiconductors, according to people familiar with the deal terms.
Shares of Denso fell as much as 5.6 per cent on Friday on the news, which was first reported by Nikkei, while trading of Rohm’s shares was halted due to a glut of buy orders.
The move is the first major step to realising the Japanese government’s long-held ambition to consolidate the country’s power semiconductor sector, which has been under siege from Chinese rivals and left with excess capacity.
Power semiconductors, which manage high voltages and currents, are essential for EVs and self-driving cars as they help to minimise energy loss. Cutting-edge logic chips that Denso is also developing can serve as the “brain” of the vehicle for autonomous driving functions.
Denso has been particularly concerned about the rise of a handful of Chinese suppliers, such as YMTC, in the race to develop next-generation silicon carbide chips for EVs and systems on a chip (SoC) used for computing and control in autonomous driving.
Carmakers have become increasingly worried about the ability to secure chip supplies after shortages caused by the coronavirus pandemic and the Dutch government takeover of Nexperia led to severe production outages.
Denso confirmed it was considering strategic options with Rohm, including buying all of its shares, but no decisions had been made. Rohm did not respond to a request for comment.
The two companies have had a partnership since May 2025, leading Denso to take a small minority stake in the group.
Analysts said Japan’s power chipmakers had cutting-edge technology but lacked scale as capacity was spread across many companies including Renesas, Rohm, Fuji Electric and Mitsubishi Electric, making it difficult to compete with China on cost.
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“Other power semiconductor companies enjoy large-scale production capacity but in Japan, there’s a lot of midsized semiconductor players,” said a person close to Denso. “Consolidation and M&A is much better to achieve cost efficiency and strong pricing power.”
The Japanese government has offered generous subsidies to incentivise power semiconductor groups to launch joint ventures that can pave the way for consolidation. Denso formed one such venture with Fuji Electric in 2024.
“Denso is aware of BYD’s increasing competitiveness on semiconductors, so they are working to improve SoC and semiconductors they can offer to Toyota,” said a government official.
