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Denso to invest ¥2.5 billion in Sharp for development of auto parts

Kyodo, JIJI

Denso Corp. President Nobuaki Kato has said the leading auto parts maker plans to invest about ¥2.5 billion in Sharp Corp., probably in September, to help the struggling electronics maker strengthen its financial base and support restructuring efforts.

In a recent interview, Kato said the investment in Sharp is aimed at strengthening ties to promote joint development of auto parts. He said Denso, affiliated with Toyota Motor Corp., is eyeing joint development of air-conditioning equipment and of speedometer indicators that would make use of Sharp’s liquid-crystal technology.

Denso “will not be involved in Sharp’s management, but the investment will help spur closer joint development,” Kato said.

He also said Denso plans to raise the ratio of such new businesses as health care and auto parts sold in overall group sales to 20 percent from the current 10 percent in fiscal 2020.

The development of the new businesses “will lead to their stabilization and further growth, and can bring in feedback to the auto business,” Kato said.

Denso will continue investing capital of ¥250 billion per year for the next one or two years, Kato said, adding that “half the amount will be invested in domestic production.”

This is in contrast to moves by Japanese manufacturers to shift their production overseas.

As for the government’s call to increase wages, Kato said his company would like to comply by increasing bonuses but said it will be difficult to raise monthly wages in light of international competitiveness.

Kato also said the government should raise the consumption tax next April as scheduled, noting that putting off the hike would have larger impact on the economy and businesses.