No. 2: Decreasing the dependence on China for rare earths (December 25, 2011)

Showa Denko plans to triple the production of materials for rare earths in Vietnam by next summer. They are alloy materials that contain rare earth, such as dysprosium and neodymium, and iron. They are base materials for high-performance magnets for motors to be mounted on eco-cars. In the future, the company will procure rare earths from mines in Vietnam to produce the materials locally to decrease the dependence on China for rare earths. These decisions are to meet the growing demand for rare earths in the eco-car business.   

The company currently ships scraps from discarded home electronics and those from magnet producers it procures in Japan to Vietnam and collects rare earths using solvent in its Vietnam plant. It is currently 200 tons of rare earths annually on a trial basis in Vietnam. It will increase the annual production capacity of its Vietnam plant to 600 tons with an investment of about 300 billion yen by next spring with upgraded electrolytic furnace and new private electric generator. Showa Denko is a leading producer of rare earth alloys, and it commands a 40% market share in the eco-car market in Japan. It currently produces 5,000-6,000 tons of rare earth alloys domestically, and most materials are imported from China.   

No. 1: Competition between electronic parts producers grows hotter in the eco-car business (December 23, 2011)

According to a research company, sales of electronic parts including battery for eco-cars will grow seven times over the level in 2010 to about 3,000 billion yen in 2015. However, it is hardly possible to have presence in the market overnight because security and reliability are the two most important factors for EVs. Nichicon, the leading producer of aluminum electrolytic capacitors, started to develop battery chargers for EVs in alliance with automakers in 2002. The tireless efforts enabled the company to supply its products to Nissan’s Leaf and Mitsubishi’s I-MiEV, and double the operating profit in the second quarter of 2011 over the same period of the previous year.

Electronic parts producers are mostly subcontractors supplying their products to big electronic parts producers like Denso. However, they can be partners in new EV development as a prime contractor if their products are accepted as a major product of a new EV. TDK, the leading producer of ferrite-based products, succeeded in halving the volume of its converter to less than one liter and concluded with Honda to supply its DC-DC converters to Honda’s Insight.  

A gasoline engine vehicle has more than 30,000 parts, while an EV has 30% fewer parts than a gasoline engine vehicle. Worldwide sales of new vehicles are 80 million units annually. Although sales of EVs are still 50,000 units at present, the industrial structure of parts production will face transformation as the EV market grows. Electronic parts products are required to formulate strategy on how to make the best use of their accumulated technologies to survive in the market.