Toshiba Corp. may set up an auto-parts joint venture with bearing producer NSK Ltd. to win more business from carmakers, three sources said Wednesday.
The two Tokyo-based companies are in talks to jointly develop and make electronic power-steering, or EPS, systems, the sources said separately. The two may supply the components to Volkswagen AG and Renault SA, according to the sources, who asked not to be identified as the talks are private.
Toshiba, Japan's biggest chip maker, is expanding its auto parts business as rising sales in China and a recovery in the U.S., the world's two largest auto markets, boost global demand for cars. Working with Toshiba gives NSK, whose shareholders include Toyota Motor Corp. and Daihatsu Motor Co., access to the chip maker's semiconductor and software technology.
Toshiba probably "felt the need to partner with a manufacturer that already has a strong track record supplying carmakers," said Takeshi Miyao, an analyst at consulting firm Carnorama in Tokyo, adding that NSK, which has procured software from other makers, "can cut costs by absorbing Toshiba's advanced technology."
EPS systems use motors and electric power to assist steering instead of power from the engine, which improves fuel economy. The technology may be used in 57 percent of cars by 2015, compared with 39 percent in 2009, according to David Smith-Tilley, director of component research at IHS Global Insight.
Chika Sato, a spokeswoman for NSK, said the company is not in talks with Toshiba at the moment.
While Toshiba is considering various auto-related businesses, spokesman Keisuke Oomori said that he couldn't comment on speculation it will partner with NSK.
As part of its efforts to spur sales from auto parts, Toshiba is building a second plant to make lithium-ion batteries to meet rising demand for electric cars and hybrid vehicles.
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