Japan-backed chipmaker JS Foundry files for bankruptcy

TOKYO -- Japanese government-backed contract chipmaker JS Foundry has filed for bankruptcy protection with the Tokyo District Court on Monday.

The Tokyo-based company is a producer of power semiconductors that are typically used for regulating electric power flows and installed in large electric equipment such as electric vehicles, home appliances and trains.

JS Foundry is backed by a fund run by the government-affiliated Development Bank of Japan (DBJ), among others. The company will leave an outstanding debt of 16.1 billion yen ($110 million).

The chipmaker has been hampered by operating cash shortages. It has had issues with finding customers for its services as Chinese chipmakers increase their presence in the market.

The company was set up in December 2022 by Mercuria Investment, a DBJ affiliate, and independent financial advisors Sangyo Sosei Advisory. Of JS Foundry's total payroll of around 550, about 200 are dispatched to work for other companies.

The bankruptcy comes ahead of a disbursement of subsidies from the central and local governments of a few billion yen.

JS Foundry has a manufacturing facility in Niigata Prefecture. The plant was originally built by Sanyo Electric in 1984. It was then sold to U.S. chipmaker Onsemi in 2011 before being sold to JS Foundry in 2022.

JS Foundry had sales of 10 billion yen in its first year, but sales slid to 2.6 billion yen in the year ending December 2024 after a production arrangement with Onsemi came to an end.

The power semiconductor market has deteriorated since the second half of 2023, as demand from electric vehicles, once expected to grow rapidly, fell short of projections. At the same time, Chinese manufacturers increased production, adding more competition to JS Foundry's quest to attract new customers.

In 2025, JS Foundry began negotiations with overseas companies for a capital tie-up to enter the silicon carbide power semiconductor segment, known for superior energy efficiency. However, the talks collapsed, leading JS Foundry to decide to file for bankruptcy.

The collapse comes amid broader turmoil in the power semiconductor industry. U.S.-based Wolfspeed filed for Chapter 11 bankruptcy protection in June. Japanese chipmaker Renesas Electronics, which had extended financing to Wolfspeed, is expected to book a loss of approximately 250 billion yen. Rohm, another major Japanese chipmaker, also suffered setbacks from its investments in power semiconductors, posting its first net loss in 12 years for the fiscal year ending March 2025.