Special Feature 2022 - Integrated Report 2022

Technology Strategy

Executing the semiconductor strategy necessary to achieve the FY2030 target Ryuji Omura, Senior Vice President Deputy CTO (Chief Technology Officer) Head of Nidec Semiconductor Solutions Center, General Manager of Business Planning and Strategy Department of Nidec Semiconductor Solutions Center

I joined Nidec in February 2022. I was appointed Senior Vice President in July 2022, serving also as Deputy Chief Technology Officer and the Head of Nidec Semiconductor Solutions Center. Here, I would like to explain about Nidec’s semiconductor strategy.

Establishing a sustainable semiconductor supply chain

Today, whether semiconductors can be procured stably significantly affects the production and sales of a company. As greening and DX (digital transformation) will continue to advance around the world, further growth is expected in the amount of semiconductors used.
 When its consolidated net sales reach 10 trillion yen, Nidec will need to procure 1 trillion yen of semiconductors. This is almost equivalent to the annual sales of a major semiconductor manufacturer. Semiconductors are necessary parts of all of our products, including our EV traction motor system E-Axle. Regardless of the business segment or the product type, we cannot expand our business without stable procurement of semiconductors. Therefore, securing semiconductors stably in the medium to long run is a key challenge that we must overcome to achieve the target of consolidated net sales of 10 trillion yen in FY2030.
 Under these circumstances, Nidec established the Nidec Semiconductor Solutions Center in May 2022. The purpose of the Center is to build strategic partnerships with suppliers and establish a sustainable semiconductor supply chain capable of responding to any risk, thereby ensuring stable production and supply of our products. The mission is to follow up on issues related to semiconductors within the Group from all directions, not limited to specific segments or products.
 The specific actions planned in relation to the semiconductor strategy are as follows.

STEP1: Centralized purchasing from Nidec Group suppliers

We will shift the method of semiconductor procurement, which is currently not consistent within the Nidec Group, to Group centralized purchasing so as to maximize economies of scale. We are promoting business expansion with a clear vision and expecting high sales growth. We will remind our suppliers of these advantages in delivering semiconductors to Nidec, and select the semiconductor suppliers that will be our strategic partners. Receiving a lot of reaction from our suppliers upon the establishment of the Semiconductor Solutions Center in May 2022, I think we were able to make a step forward in selecting our strategic partners.

STEP2: Move toward global RFQ (Request for Quotation)

RFQ is a process in which, instead of purchasing the products offered by semiconductor suppliers, we define the specifications of the semiconductors that we need and select the supplier that submits the best quote. With this process, we aim to establish a stable supply system for semiconductors. The flow of semiconductor procurement, including issuing RFQs and receiving responses, and concluding a long-term contract as a result of subsequent negotiations, is a common practice for companies in Europe and the U.S. with their semiconductor suppliers, but I do not see this taking place in Japan. By carrying out the RFQ process to build good relationships with suppliers, we may reduce the time spent on price negotiations. Also, as RFQ enables us to show a highly accurate demand forecast to the semiconductor suppliers, which will lead to reduction of investment burden on semiconductor manufacturers, in other words the reduction of semiconductor costs on us and other benefits, I believe we can establish a win-win relationship.

STEP 2: Move toward global RFQ (Request for Quotation)

STEP3: Provide high value-added solutions through synergies between semiconductors and motors

Once the stable procurement of semiconductors is enabled, we can see the possibility of providing solutions with Intelligent Motor®. Intelligent Motor® is a microcomputer-embedded motor developed by Nidec, which can be easily controlled via a wireless network and whose information the user can obtain, such as the location, speed, and torque. This enables us to offer a variety of solutions to customers, which was not possible with conventional products.
 For example, DX has dramatically increased the cloud storage capacity, but it is associated with the problem of large consumption of electricity. A solution to this problem is decentralization by edge computing. Our Intelligent Motor® is expected to make a significant contribution in this field. Not limited to this example, the trend of computing has been accelerating in a variety of fields, including automobiles and appliances. I believe Intelligent Motor® has great potential in expanding the solutions.
 I myself feel the high expectations placed on semiconductor solutions within the Nidec Group, which gives me a great hope and a sense of mission. Under the Nidec’s spirit of “Do it now; do it without hesitation; do it until completed,” I will make my utmost efforts to fulfill my mission in promoting semiconductor solutions.

STEP 3: The world of Intelligent Motor<sup>®</sup> in the Nidec insight

* Intelligent Motor®
A motor developed by Nidec, equipped with a built-in microcomputer. In addition to being easily controllable via a wireless network, this motor can obtain various types of information about the motor, including its position, speed, and torque.

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