Chip bidding war exposes Japan's competitive angst

Mitsubishi Electric

30/03/2026 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are her own

By Katrina Hamlin

HONG KONG, March 30 (Reuters Breakingviews) - The gloves are coming off in Japan's fight for industrial consolidation. Three weeks after Toyota Motor 7203.T supplier Denso 6902.T approached $8.2 billion power semiconductor specialist Rohm 6963.T about a potential takeover, the target on Friday confirmed it is in talks to integrate with the chip and power device businesses of Toshiba and Mitsubishi Electric 6503.T. The three-way tie-up would best fortify the fragmented industry against Chinese rivals.

Rohm's shares are up 18% since Denso's unsolicited approach was disclosed on March 6. No financial details were shared, but Toshiba and Rohm have a close relationship too, having detailed a plan in 2023 to jointly scale up manufacturing. Rohm also owns 14% of the now-privatised Toshiba, and that stake may be worth some $4 billion in net asset value, Pelham Smithers analysts reckon.

Indeed, Rohm's major motive may be maximising scale. While these Japanese companies boast technology vital for electric cars and data centres, Rohm had just a 2.8% global market share for both power devices and discretes – semiconductor components – last year. Mitsubishi Electric held 3%, while Toshiba and Denso claimed 1.7% and 1%, according to TechInsights. Denso's power semiconductor business is by far the smallest of the four. By contrast, the trio could be the world's second-largest player in power chips and related components by sales.

A larger entity would be in a better position to compete with global leader Infineon IFXGn.DE: the $56 billion German company will generate a 20% operating margin this year, versus Rohm’s 5.8%, per estimates compiled by Visible Alpha. It helps too that Japan's antitrust authorities have signalled to bankers that it will lean toward vetting M&A deals on the basis of global rather than domestic market share.

Joining forces also offers protection against Chinese upstarts. They already hold as large a share of the global market as their Japanese counterparts, per TechInsights, and are looking for new ways to grow.

Anxiety over Japan’s dimming industrial prowess goes far beyond semiconductors. Its seven major cars jostle for shrinking domestic sales, while Chinese rivals squeeze exports. Toyota Motor owns 21% of Denso's voting rights, but unless it firms up a commanding offer, the auto supplier looks like the weakest link in this round of industrial consolidation.

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CONTEXT NEWS

Japanese power chipmaker Rohm has begun discussions to integrate with Toshiba’s semiconductor business and Mitsubishi Electric’s power devices business, the company said on March 27.

On March 6, Rohm said it had been approached by Toyota supplier Denso regarding an acquisition of its shares. No details on the price of that approach were disclosed.

Denso owns 4.76% of Rohm. The pair last year established a strategic partnership in semiconductors, focused on devices for electric and smart cars. Rohm owns roughly 14% of the now-privatised Toshiba, according to analyst estimates from Pelham Smithers Associates. The two companies also have a partnership, established in 2023, to collaborate in chip manufacturing.

Rohm’s shares have risen 18% since March 5, the day before the Nikkei reported on a possible deal with Denso.

Rohm's shares have risen on takeover expectations https://www.reuters.com/graphics/BRV-BRV/akpeyoyyepr/chart.png

(Editing by Una Galani; Production by Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on HAMLIN/katrina.hamlin@thomsonreuters.com; Reuters Messaging: katrina.hamlin.thomsonreuters.com@reuters.net))