TOKYO: Denso Corp, one of the world’s top automotive semiconductor manufacturers and a key supplier to Toyota Motor Corp, (pic) may consider spinning off its chip business, which generates around 420 billion yen (US$3.1bil or RM13.6bil) in sales, the company’s chief technology officer says.

       Well known as the world’s second-biggest auto-parts maker, Denso has also quietly built up a presence in automotive chips.

       Now, with semiconductor-related capital expenditures totalling around 160 billion yen (RM5.3bil) over the past three years, Denso ranks as the world’s fifth-largest supplier of automotive chips by sales.

       “We need to think about whether the time will come when we sell semiconductors, alone, externally,” Yoshifumi Kato said in an interview at Denso’s headquarters in Aichi prefecture. “It’s worth looking into whether that kind of structure is possible.”

       Today, the semiconductors Denso makes in-house go into automotive parts that it then sells to carmakers or other suppliers.

       When examining the possibility of supplying semiconductors on their own, Denso will consider whether the division is better positioned outside of the company, Kato said.

       To date, nothing has been decided regarding a split, Kato said, adding that Denso’s focus for the time being is on meeting internal chip demand.

       Denso shares erased earlier losses late yesterday, jumping as much as 2.4% in Tokyo trading.

       A shortage of chips used in cars first began in late 2020, when Covid-induced lockdowns of millions of people around the world spurred a huge uptick in the purchase of consumer electronics goods.

       That resulted in semiconductors being diverted away from automakers, which had also reduced their own orders in expectation of falling demand for cars.

       The chip dearth quickly became symptomatic of a broader supply chain crisis that’s upended the smooth delivery of goods globally.

       Chip supply today appears to be getting back to normal in some industries, amid concerns around how well consumer demand can hold up against the backdrop of accelerating inflation and higher interest rates.

       According to Denso’s Kato, demand for automotive semiconductors, on a tear amid the industry’s shift to electric, internet-connected and autonomous cars, is likely to continue going from strength to strength.

       Facing such conditions, funding directed toward its chip business will grow and make up over 10% of Denso’s research, development and equipment-investment expenditure, Kato said. — Bloomberg