(Bloomberg) — Toyota Motor Corp. and supplier Denso Corp. rose Wednesday after the latter announced it is investing in a venture to build a semiconductor plant in Japan, easing concerns about the supply of key vehicle components.
Toyota and Denso jumped as much as 2% and 3.2% in Tokyo, respectively, the most in a week for both.
Denso said Tuesday it will invest $350 million in a joint venture with Taiwan Semiconductor Manufacturing Co. and Sony Group Corp. overseeing a chip factory that will be built in Japan’s southwestern Kumamoto prefecture.
Global shortages of semiconductors and other parts have been restricting automakers’ ability to produce cars. The disruptions will weigh on vehicle production worldwide through the end of this year and push a broader market recovery into 2023, according to a recent report by Fitch Solutions.
For Toyota, Denso’s move will help mitigate the risk of supply-chain disruptions and help it produce cars in a more stable fashion, Bloomberg Intelligence analyst Tatsuo Yoshida said. “It’s a positive sign for other automakers too that parts supply from Denso will stabilize.”
Denso earlier this month cut its operating profit forecast for the fiscal year through March, citing the revenue hit from automobile production cuts.
Denso will take a stake of more than 10% in the chip-making venture. Construction of the factory is slated to begin this year and production will start by the end of 2024.
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