Japan’s chip trio eyes an $8bn power merger

Japan’s three biggest power-chip makers are exploring a merger, but turning that ambition into a workable structure is proving difficult. According to Bloomberg, Mitsubishi Electric is weighing a combination of its power-semiconductor business with Rohm and Toshiba, after the three companies signed a memorandum of understanding to study what they called a “business and management integration.”

The timing is tied to the race for the chips used in electric vehicles, industrial drives, and chargers. Power semiconductors handle current flow in those systems, and demand is rising as automakers electrify and increasingly design chips internally. Analyst estimates cited by the source put a combined Mitsubishi-Rohm-Toshiba group at roughly 11% of the global market, behind Infineon at about 24%. That would make the Japanese group the world’s number-two supplier, with combined power-device revenue of more than $8bn.

Each company brings a distinct strength: Rohm operates its own silicon-carbide wafer fab and is strong in SiC MOSFETs; Mitsubishi leads in high-power IGBT modules; and Toshiba sells a broad lineup of silicon IGBTs and MOSFETs. Together, they would cover much of the market, from car inverters to factory and grid equipment. Their combined research budget would exceed $2bn a year, enough to support a shift to 8-inch SiC wafers, which reduce cost per chip.

Why SiC is driving the talks

Silicon carbide has become central to the strategy because it can help EVs charge faster and extract more range from the same battery. The global power-semiconductor market is expected to approach $62bn by 2028 as that demand grows.

The backdrop is politically and commercially sensitive. In February, Toyota affiliate Denso offered about ¥1.3tn ($8.3bn) for Rohm as part of Toyota’s effort to localize EV chip supply. Rohm rejected the bid to preserve its ability to serve customers across the industry, and Denso withdrew in late April. That left a merger among peers as the remaining route to scale.

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Rohm president Katsumi Azuma has since said the negotiations are “more complex, and slower, than initially expected.” He told reporters the companies wanted to avoid a structure with too many leaders trying to steer the same organization.

Structure and ownership remain unresolved

The main obstacle is how the deal would actually work. Reports suggest a two-track arrangement is under discussion: a broader integration involving Toshiba’s device unit, alongside a possible joint-venture carve-out with Mitsubishi, rather than one simple merger.

Ownership complicates that further. Toshiba’s chip business is controlled by Japan Industrial Partners and TBJ Holdings, both of which signed the memorandum, meaning any agreement must satisfy financial owners as well as operating companies. While direct government involvement in this specific deal has not been confirmed, Rohm and Toshiba did win state support in 2023 for a domestic supply plan, and METI has publicly backed the idea of fewer, larger Japanese champions.

There is also overlap to resolve. Mitsubishi and Toshiba have each pursued separate 300mm wafer plans, which could reduce the savings that make consolidation attractive in the first place.

The broader pressure is clear: Japan pioneered much of modern power electronics, but the sector remained fragmented while Infineon and STMicroelectronics built scale. At the same time, Chinese rivals are pushing prices down across SiC and related components, while customers look harder at custom silicon. For now, though, nothing is signed. The companies say full discussions will continue, with any binding agreement and financial impact to be disclosed once terms are finalized.