"Electric Vehicle Semiconductor Boom Approaches"… Japanese Semiconductor Companies Rush to Expand Facilities

Mitsubishi Electric, Toshiba, Fuji Electric and Other Major Japanese Companies Announce Successive Investment Plans in Power Semiconductors
Semiconductor Demand Rises Along with Surge in Eco-Friendly Vehicles

[Asia Economy Reporter Kwon Jae-hee] Japanese semiconductor makers such as Toshiba and Fuji Electric are rushing to invest in automotive power semiconductors. Power semiconductors are essential components that control or convert power to improve energy efficiency and have been used mainly for power plant equipment. However, with the expected increase in demand for electric vehicles, these companies are turning their attention to expanding production facilities for automotive semiconductors.

According to the Nihon Keizai Shimbun on the 15th, major Japanese semiconductor companies including Mitsubishi Electric, Toshiba, and Fuji Electric have simultaneously started expanding their power semiconductor production facilities. Fuji Electric announced plans to invest 120 billion yen in domestic and overseas facilities by 2023. Fuji Electric increased the production capacity of its Yamanashi Prefecture plant by 30% compared to the previous year within this year and plans to expand production capacity at overseas plants such as in Malaysia. Fuji Electric aims to raise the sales ratio of automotive power semiconductors from 35% in 2019 to 50% by 2023.

Toshiba plans to invest 80 billion yen by 2023 to increase the production capacity of its Ishikawa Prefecture plant and others by 30%. Toshiba has set a goal to increase its current sales scale of about 150 billion yen to 200 billion yen, a 30% increase, by pioneering new markets for power semiconductors such as power conversion devices dedicated to transmission and distribution equipment.

Mitsubishi Electric also announced that it will start operating a new factory, in which it invested 20 billion yen, in November next year and plans to double its production capacity by 2022 compared to 2019. These Japanese makers hold a 20% share of the global market.

The reason they are focusing on electric vehicles is that they believe the power control technology of power semiconductors will help improve the fuel efficiency of electric vehicles. Especially, with the recent expansion of electric vehicle demand, the power semiconductor market is also experiencing increased demand. The Nihon Keizai Shimbun reported, "With ESG (environment, social, governance) investments gaining attention, sales of electric vehicles, which emit less greenhouse gases, are expected to increase." According to the newspaper, the number of electric vehicles sold is expected to rise from 1.7 million units this year to 8.5 million units by 2025. According to Yano Research Institute, the global market size of power semiconductors is also expected to grow from $18.665 billion in 2018 to $24.351 billion by 2025.

In particular, within Japan, the inauguration of Prime Minister Suga Yoshihide, who pledged to achieve decarbonization by 2050, is seen as a factor that will help increase the adoption rate of eco-friendly vehicles such as electric cars. The European Union (EU) has already pledged carbon neutrality by 2050 in 2019 and is implementing related policies, and the United States is also expected to intensify efforts to reduce carbon emissions following the inauguration of President Joe Biden.

For this reason, overseas competitors are also actively investing. Infineon, the world’s number one in power semiconductor market share, is investing 1.6 billion euros to build a new factory in Austria. It is expected to be completed by May next year and start operations by the end of 2021. Onsemi, the world’s second-largest player from the United States, purchased a factory in New York State from semiconductor foundry GlobalFoundries and began production this year.

Forecasts that a full-fledged semiconductor super cycle (long-term boom) will begin next year also support these companies’ investments. Due to the U.S. crackdown on Chinese advanced technology companies, semiconductor companies in Korea and Japan are expected to enjoy relative benefits.

The Nihon Keizai Shimbun analyzed, "Despite bleak earnings forecasts due to the COVID-19 pandemic, active investment is being made because automotive parts are expected to experience high growth."

This content was produced with the assistance of AI translation services.