Mitsubishi Electric Corp. is in advanced discussions to finalize an agreement with competitors Toshiba Corp. and Rohm Co. to consolidate their power semiconductor businesses by September at the latest. This move would merge three key suppliers in one of the fastest-growing segments of the global electronics supply chain.
The importance of power chips is increasingly prominent amid the surge in artificial intelligence infrastructure development. As systems like Nvidia Corp.'s next-generation Vera Rubin platform grow in complexity and power consumption, the critical role of power regulation chips becomes more pronounced.
In an interview, Mitsubishi Electric CEO Kei Uruma stated, "Our goal is to integrate sales, manufacturing, and R&D to create a powerful, single entity." The three companies are finalizing and adjusting the detailed terms of the agreement. "We hope to announce plans for a joint venture by September at the latest," he added.
For years, Japan's Ministry of Economy, Trade and Industry has been encouraging domestic chipmakers to consolidate to better compete with rivals like Germany's Infineon Technologies AG. According to Omdia data, Infineon controls nearly one-fifth of the global power semiconductor market. In contrast, Mitsubishi Electric, Toshiba, and Rohm—each of which has numerous other product lines—hold individual market shares of less than 5%.
Power chips are used for power control and conversion in vehicles, data centers, industrial robots, home appliances, and electronic devices. While less conspicuous than logic chips, they are of significant strategic importance. A shortage could undermine Japan's efforts to improve energy efficiency or hinder expansion plans for domestic industrial firms.
In March, Mitsubishi Electric, Toshiba, and Rohm announced they had begun negotiations to integrate their chip operations. This followed an acquisition proposal for Rohm by automotive parts supplier Denso Corp., which was later withdrawn.
Uruma indicated that merging the power chip businesses of the three companies could position the new entity to challenge for the top market share. He noted that too many domestic players lead to resource wastage, and partnering with Rohm and Toshiba would streamline R&D and enhance chip value.
"A strong alliance will enable us to compete head-on with global rivals," he said, adding that the parties have reached a preliminary consensus for Mitsubishi Electric to lead operations in the new entity.
Senior industry analysts Masahiro Wakasugi and Tatsuo Yoshida view the merger of the power semiconductor businesses of Mitsubishi Electric, Rohm, and Toshiba as strategically significant. Rohm and Toshiba each hold only about 2%-3% of the discrete semiconductor market, making it difficult to effectively compete against giants like Infineon and Texas Instruments. If the goal is to expand sales to automakers, parts suppliers, and industrial equipment customers, Mitsubishi Electric appears to be the stronger partner.
Uruma pointed out that determining the product portfolio for the new entity is a major challenge. Both Toshiba and Rohm want the new joint venture to cover various analog chips, including converters and drivers, to continue serving their existing customers. Mitsubishi Electric, however, prefers the new entity to focus specifically on power chips.
With working-level discussions at an impasse, the heads of the three Japanese companies have met personally to seek consensus. "Endless discussions can only achieve so much," Uruma stated. "At some point, you have to make the right decision and act on it."
The Japanese government, to encourage chip industry consolidation, has stipulated that power chip companies must make investments involving other companies of at least 200 billion yen (approximately $1.2 billion) to qualify for subsidies. This contrasts with a 30-billion-yen investment threshold for other semiconductor projects under Prime Minister Fumio Kishida's policy framework to promote domestic chip manufacturing.
Uruma considers this threshold too high. He noted that, despite a global race to expand capacity, Mitsubishi Electric currently receives no government support for its chip business. Meanwhile, the government has allocated billions of dollars in subsidies to startup Rapidus Corp., which aims to manufacture cutting-edge chips.
He emphasized that government subsidies are crucial for competing against overseas rivals who receive such aid. "Without this kind of support, even if we form a joint venture, our costs will remain higher than our competitors'," he said. "We just want a level playing field."
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