Denso Invests $800 Million in Chipmaker Renesas

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【Summary】In order to develop autonomous vehicle technology, Denso, a Toyota affiliate, recently announced it will purchase Renesas Electronics.

Mia Bevacqua    Mar 16, 2018 8:00 AM PT
Denso Invests $800 Million in Chipmaker Renesas

Remember when Denso was best known for spark plugs? Like many other companies, the supplier is now looking towards a self-driving, connected future. That's why it recently committed to buying $800 million worth of stake in chipmaker Renesas Electronics. 

Toyota and Denso, Dedicated to a Self-Driving Future 

Toyota has made its commitment to autonomous cars very clear. The company recently announced it will create a new branch, called Toyota Research Institute-Advanced Development. This venture, which focuses on self-driving cars, will cost a cool $2.8 billion. 

So, it comes as no surprise that Denso, Toyota's affiliate and supplier, wants to invest more in Renesas Electronics. Renesas is one of the leading providers of processors for autonomous cars.  

Denso is buying shares of Renesas from Innovation Network of Japan (INCJ). INCJ currently owns 50.1 percent of the electronics company. Initially, INCJ took 69.2 percent of Renesas as part of a recovery plan, when an earthquake crippled automotive supply chains in 2011. INCJ now aims to sell off all of its stakes in the chipmaker by 2025. 

Although the terms of the deal have not been disclosed, estimates show the transaction between Denso and INCJ to be worth about $800 million. This assessment is based on Renesas' current share price. Since Denso already owns stake in Renesas, the deal will increase the company's share by 5 percent, while dropping INCJ's down to 45.6 percent. 

Denso Hopes to use Renesas Chips in its New NSITEXE Division 

In a statement, Denso said it is "essential to further enhance collaboration with semiconductor manufacturers that have profound experience and expertise" to develop vehicle control systems in automated driving and other new fields.

Last year, Denso proved this statement to be true by setting up a company called NSITEXE to design electronics for automated driving. Currently, the company is working on a processor that can analyze the large amounts of data self-driving cars need. The hope is that Renesas can produce chips based on Nsitexe's design. 

From spark plugs to microprocessors – Denso has certainly come a long way. 

Sources: Nikkei Asian Review and Automotive News

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