Toyota and Denso Join Forces to Develop Advanced Chips for Cars

With the vehicle market moving full speed ahead toward connected and self-driving vehicles Toyota Motor Corp. doesn't want to be left out of any revenue coming from automotive semiconductors. 

To meet that end it announced a joint venture partnership with Denso, the Japanese-based auto-parts maker. The two companies are joining forces to develop the automotive semiconductors that will be found in the next generation of connected and autonomous cars. 

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Under the terms of the deal Denso, which already supplies parts to Toyota, will have 51% control of the new entity with Toyota owning the remainder. The new company will begin business in April of 2020, employing around 500 employees and will be located on the premises of the Advanced Research and Innovation Center in Aichi, Japan. The company will have capital of 50 million yen. 

Toyota, Denso to Focus on Advanced Chips for Connected Cars

The new company will focus on advanced research on the basic structure and processing method of next-generation semiconductors and develop components powered by semiconductors including power modules for electric vehicles,  and sensors for monitoring self-driving cars. 

According to the two compaines, the explosion of electronic controls that is being built into vehicles is prompting the creation of the joint venture. Denso and Toyota noted that there has been an increase in the number of in-vehicle semiconductors and the performance of the chips have continued to improve. 

"To create a future of mobility that is safe and sustainable, it is necessary to develop next-generation semiconductors that are integral to technology innovations, such as connected cars, automated driving, sharing mobility and electrification," the companies said in the joint announcement. 

Connected Car Market is Exploding 

The creation of the joint venture is occurring at a time when the connected car market has been booming. According to a recent Markets & Research report the global connected car market size hit $73.18 billion last year. It's projected to grow at a CAGR of 14.2% during the next few years, reaching $237.1 billion by 2025. 

This isn't the first time Toyota and Denso have joined forces. Last summer the two inked a deal to consolidate both companies electronic components production and development in an effort to cut costs and speed up the development of advanced chips. Denso and Toyota have also joined forces with Aisin Seiki, the Toyota supplier to create a research and development center focused on self-driving vehicles. The new business will be housed there.