Toshiba to make chips for Toyota hybrid cars

TOKYO, Feb 13, 2005; Reuters reported that Toshiba Corp.the largest chip maker, will start supplying Toyota Motor Corp. with microchips that control key functions of hybrid cars by the end of the year, a Japanese newspaper said on Sunday.

Toshiba will supply Toyota, the world's second-largest auto maker, with two types of chips -- one for adjusting the rotating speeds of motors and the other for regulating the flow of electricity, the Nihon Keizai Shimbun business daily said.

This would be the first time Toshiba has won such orders, breaking into a market that has been dominated by Mitsubishi Electric Corp., the newspaper said.

Toshiba officials were not immediately available for comment.

Demand for automotive chips is expected to grow steadily over the medium term, providing a stable source of revenue for chip makers, whose performance is often affected by wild fluctuations in prices and demand for chips used in PCs and digital products.

The newspaper did not give the size of the deal, but said Toshiba planned to spend 10 billion yen ($95 million) over the next three years to build a production line for hybrid-car-use microchips at an existing plant in western Japan.

The paper also said Sanyo Electric Co. Ltd. planned to spend over 1 billion yen to double its output capacity for rechargeable batteries used in hybrid cars to two million units a month by the end of the next business year starting in April.

The Osaka-based consumer electronics maker expected the global market for rechargeable batteries for hybrid cars to reach 340 billion yen in the year ending in March 2011 and wanted to take half of that market.

Sanyo officials were unavailable for comment.