NAGOYA -- Trading house Toyota Tsusho plans to merge two wholly owned subsidiaries to create Japan's largest semiconductor trading company by sales.
Tomen Electronics and Toyota Tsusho Electronics will combine as early as next April, with the parent's overseas-related operations to be added to the mix. The new company would boast annual sales of around 460 billion yen ($4.46 billion), based on figures for the year ended in March. It would lead the world in automotive semiconductors, with sales of around 300 billion yen.
Demand for automotive chips is growing along with the increased use of electronics in vehicles. Toyota Motor -- Toyota Tsusho's primary business partner -- aims to release a self-driving vehicle around 2020 and also intends to add communications functions as a standard feature on virtually all passenger cars sold in Japan and the U.S.
Toyota Tsusho also seeks to better serve major U.S. and European chipmakers, which are pursuing scale through acquisitions and are increasingly becoming selective in doing business with suppliers.
Tomen Electronics is strong in electronic products, while Toyota Tsusho Electronics caters to the auto industry. After the merger, products such as image processing chips made by U.S. concern Nvidia, a major client of Tomen Electronics, likely will see more sales to the auto industry.
The merger also should help expand such operations as semiconductor quality control and software development. The new company would, for example, bundle software and other products to help automakers cope with the additional work related to the greater use of electronics.
The new company would consolidate information systems and sales locations to cut costs. It would seek to increase sales by 100 billion yen within a few years.
Toyota Tsusho merged with the former Tomen in 2006 and since then has been integrating subsidiaries with overlapping functions. Merging the two semiconductor trading houses will conclude major restructuring.