Mitsubishi Electric weighs power-chip merger with Rohm and Toshiba

Japan’s three biggest power-chip makers want to become one company, and the wiring is proving harder to rearrange than the ambition.

Mitsubishi Electric is exploring a combination of its power-semiconductor operations with those of Rohm and Toshiba, according to people familiar with the matter cited by Bloomberg.

The talks are part of a wider scramble to control the chips inside every electric vehicle, and the three have already signed a memorandum of understanding to study what they call a “business and management integration”.

Power semiconductors are the unglamorous parts that manage the current flowing through motors, chargers and industrial drives. Demand is climbing as carmakers electrify and, increasingly, start designing chips in-house.

A combined group would hold roughly 11% of the global market, according to analyst estimates, second only to Germany’s Infineon on about 24%. That would make it the world’s number-two supplier, with combined power-device revenue above $8bn.

Each partner brings a different piece. Rohm runs its own silicon-carbide wafer fab and leads in SiC MOSFETs, Mitsubishi dominates high-power IGBT modules, and Toshiba supplies a broad silicon IGBT and MOSFET line.

On paper the fit is neat, giving one group a foothold in almost every corner of the market, from car inverters to factory drives and grid equipment.

Their shared research budget would run past $2bn a year, enough to fund the jump to 8-inch SiC wafers that lowers cost per chip.

SiC is the reason the timing matters. The material lets EVs charge faster and squeeze more range from the same battery, and the global power-semiconductor market is forecast to approach $62bn by 2028 as that demand grows quickly.

The plan carries an awkward backstory. In February, Toyota-affiliated Denso bid about ¥1.3tn ($8.3bn) for Rohm, part of Toyota’s drive to localise its EV chip supply, an offer Rohm rebuffed to protect its cross-industry customers before Denso withdrew in late April.

That left a horizontal tie-up among peers as the surviving route to scale, rather than absorption by a single carmaker. It also left Rohm free to keep selling to every vehicle-parts group at once, which was rather the point of saying no.

Rohm president Katsumi Azuma has since warned that the talks are proving “more complex, and slower, than initially expected”. The partners, he told reporters, wanted to avoid a situation with too many captains steering the ship onto a mountain.

Structure is the sticking point. Reporting suggests the arrangement could run on two tracks, a broader integration with Toshiba’s device unit alongside a possible joint-venture carve-out with Mitsubishi, rather than one clean merger.

Ownership adds a further layer. Toshiba’s chip business sits under the investment fund Japan Industrial Partners and TBJ Holdings, both of which signed the memorandum, so any deal must satisfy financial backers as well as engineers.

Direct government involvement in this particular tie-up has not been confirmed. Rohm and Toshiba did jointly win state backing in 2023 for a domestic supply plan, however, and METI has openly favoured fewer, larger national champions.

Then there is duplication. Mitsubishi and Toshiba have each pushed ahead with separate 300mm wafer plans, which could shrink the shared savings that make consolidation worth the effort.

The wider logic is defensive. Japan invented much of modern power electronics, then let the business fragment across its conglomerates while Infineon and STMicroelectronics built scale, and Tokyo has spent years nudging firms such as Rapidus and Renesas toward the same heft, part of a broader push to rebuild its chip base.

Chinese suppliers are meanwhile undercutting prices across SiC and neighbouring parts, the squeeze that keeps pushing customers toward their own bespoke-silicon deals.

Folding three subscale units into one is the least glamorous response, and perhaps the only durable one.

Nothing is signed. The companies say full-scale discussions will continue, with any binding agreement, and its financial impact, disclosed once terms are reached.