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Japanese Chip Making Companies Face Decade Old Problem Of Reduced Output

According to experts, the small scale of chipmakers from Japan makes it quite difficult for up-scaling of marketing and production.

Japanese Chip Making Companies Face Decade Old Problem Of Reduced Output

Power chips are in high demand for various industries starting from robotics, EV’s, air conditioners, as well as data center servers. In the face of such huge demand, Japanese power chip makers find themselves in a shortage of output. This is not a new problem but an old one that has plagued this sector for many years. 

Japanese auto part maker Denso, last month said that it would build a big production plant for power chips in collaboration with UMC, a Taiwanese foundry. This move spells out the major problem with the power chip producing sector; fragmentation of output. 

The power chip segment of the market makes up close to 10% of the $555 billion chip industry globally. The demand for power chips is expected to grow along with the demand for semiconductors, according to estimates by the World Semiconductor Trade Statistics. These power chips are at the root of the transition from fossil fuels to electricity. 

Questions arise as to whether the Japanese chip makers will be able to defend their niche market. At present, the biggest power chip maker in the world is Infineon Technologies of Japan which has a 21% of the global share. This is equal to the shares of the top five Japanese players. 

According to experts, the small scale of chipmakers from Japan makes it quite difficult for up-scaling of marketing and production. Manufacturers from Japan are wary of investing big time, lest other companies do the same and result in an oversupply of power chips.

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