Toshiba, Rohm to Invest $2.7 Billion to Jointly Produce Power Chips

Toshiba and Rohm 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 the Japanese industry ministry hoped for since the country’s power chip business is too fragmented to compete with industry powerhouse Infineon Technologies AG.

Separately, the ministry said 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 sector competitive.

Electric power is effectively controlled by power chips in automobiles, electronic gadgets, and industrial equipment. The ministry anticipates that the worldwide power chip market will reach 5 trillion yen by 2030.

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

Toshiba will spend 99.1 billion yen on a cutting-edge 300mm manufacturing 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 treble power chip output.

The chips made at the factories will be marketed under their labels.

The agreement follows Rohm’s decision to spend 300 billion yen in a consortium headed by private equity company Japan Industrial Partners (JIP) to take Toshiba private.

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

Toshiba, Rohm, Mitsubishi Electric, and Fuji Electric are all Japanese power chip makers with a worldwide reach.

Chip is the primary pillar of national economic and social growth. The growth of the chip industry is not only an unavoidable development trend in the face of external competitive pressure, but it also fulfills the urgent “neck” need of numerous sectors in China.

A power chip is a high-speed switching device for electrical power that is based on semiconductors. These nanosecond-speed devices are projected to be utilized to supply clean, consistent power to computers and gadgets.