TOKYO — Japanese motor maker Nidec said Wednesday it will form a joint venture with Taiwan’s Hon Hai technology group, known as Foxconn, in a move that is set to intensify competition between traditional automakers and new entrants over the rapidly growing segment in the auto industry.
The joint venture for EV motor production will be formed with Foxconn and its auto-making subsidiary in Taiwan in 2022.
Nidec has emerged as an auto industry disrupter by promising to supply drive motors to any aspiring EV makers, including Chinese upstarts, Foxconn and Apple.
Nidec separately reported a 60% rise in operating profit from a year ago for the April-June quarter on the back of robust demand for computer and appliance motors.
The world’s largest motor maker has been focusing on investments in motors for electric vehicles as part of its push into the EV sector, even as the move is expected to increase depreciation costs and slam its bottom line in the short term.
The Kyoto-based company aims to be the world’s dominant EV battery supplier by grabbing a market share of around 45% by 2030.
Quarterly operating profit came to 44.5 billion yen ($405 million) as sales increased 33% to 447 billion yen.
The company maintained its earnings estimate for the fiscal year ending March, forecasting a 13% increase in operating profit to 180 billion yen on a 5% rise in sales to 1.7 trillion yen.
The earnings release comes after the company installed Jun Seki as president and CEO after the annual shareholders meeting in June, with the founder and largest shareholder, Shigenobu Nagamori, serving only as chairman.
But Nidec is facing headwinds from global semiconductor shortages and tough price competition in the Chinese EV market.
Vehicle motors account for about a fifth of Nidec’s sales, as they are used in power steering, seats and other parts.
In China, new vehicle sales have fallen before year-ago levels in May and June amid the semiconductor shortage.
New energy vehicles — such as EVs and fuel cell vehicles — have been doing well in China, but they are dominated by budget models, such as $4,400 mini EVs made by SAIC-GM-Wuling Automobile of China, a market not served by Nidec.
In Japan, new auto sales in the first six months of the year grew 11.6% from a year ago, but fell 10% short of the 2019 level due to the chip shortage.
Nidec continues to expand personnel at its research and development facility in Suzhou, near Shanghai, and at an EV motor plant in Daliang.