Semiconductor Storm in Japan: Navigating EV Risks to Unearth Hidden Gems

The Japanese semiconductor industry faces a perfect storm of production delays, supplier bankruptcies, and aggressive Chinese competition—yet within this turmoil lie overlooked opportunities for investors. As giants like Renesas Electronics grapple with setbacks in the EV power semiconductor market, smaller players with niche technologies and resilient supply chains are emerging as undervalued contenders. This article dissects the risks and rewards, revealing why now is the time to act.

The Crisis: Renesas' Delays and Wolfspeed's Collapse

Renesas Electronics, a cornerstone of the global EV semiconductor supply chain, is reeling from production delays at its Takasaki factory. Originally slated to mass-produce silicon carbide (SiC) power semiconductors in early 2025, the timeline has been abandoned due to declining EV demand and Wolfspeed's impending bankruptcy. A $2 billion prepayment to Wolfspeed—a U.S. SiC wafer supplier now near insolvency—has left Renesas exposed to supply chain fragmentation.

Key data points: Revenue dropped to ¥603.277–618.277 billion (non-GAAP) in Q2 2025, down 15% from 2024. Gross margin fell to 55.9%, reflecting strained operations.

Wolfspeed's collapse threatens to disrupt Renesas' ability to secure critical SiC wafers, a cornerstone of EV power systems. This ripple effect has already led to a 30% drop in capacity utilization at Renesas' Kofu plant, forcing job cuts and production delays.

The Chinese Threat: Aggressive Pricing and Subsidies

Chinese manufacturers like BYD and Huawei are leveraging government subsidies and low-cost production to undercut Japanese rivals. For example, Chinese SiC modules now cost 40% less than Japanese equivalents, eroding Renesas' market share.

Chinese firms' share in the global EV power semiconductor market grew from 18% to 28% in 2025, while Japanese firms' share fell from 35% to 29%.

This competitive pressure has forced Japanese firms to rethink their strategies. Renesas' delayed production and reliance on Wolfspeed now risk ceding ground to rivals with shorter supply chains and faster innovation cycles.

The Opportunity: Undervalued Plays with Resilient Supply Chains

Amid the chaos, two Japanese semiconductor firms stand out as undervalued gems with robust supply chains and niche technologies:

1. ROHM Semiconductor (TSE:6963): The Power MOSFET Specialist

ROHM is a leader in power MOSFETs, critical for EV inverters and battery management systems. Despite slim profit margins, its 52.1% annual earnings growth over the next three years makes it a “no-brainer” investment.

ROHM's 29.9% discount to intrinsic value and strategic partnerships with automakers like Toyota position it to capture EV demand as Chinese competitors focus on price over performance.

2. Tokyo Electron (TSE:8035): The AI Semiconductor Partner

Tokyo Electron's collaboration with IBM to develop AI-driven semiconductor technology gives it a first-mover advantage in next-gen chip design. With a 19.6% discount to intrinsic value and 9.1% annual earnings growth, it's a must-own stock for the AI boom.

ROHM's projected 52.1% EPS growth (2025–2028) dwarfs the 7.3% industry average.

3. Japan Electronic Materials (TSE:6855): The Undiscovered Supply Chain Star

This firm's 37% revenue growth in 2025 stems from its role in supplying high-purity semiconductor chemicals to foundries. With a 14% profit margin (up from 3.6% in 2024), it's a stealth play on the semiconductor ecosystem's resilience.

Why Act Now?

The EV semiconductor market is undergoing a seismic shift:
- Margin Compression: Chinese firms are sacrificing profits to gain market share.
- Technological Arms Race: SiC and GaN innovations are accelerating, favoring firms with R&D agility.
- Geopolitical Tailwinds: Japan's $65 billion semiconductor fund and partnerships with Taiwan (e.g., the Taiwan-Japan Semiconductor Technology Promotion Association) are shoring up supply chain resilience.

Risk Factors to Consider

• Supply Chain Fragmentation: U.S.-China trade wars could worsen bottlenecks.
• Currency Volatility: A strong yen could dent export margins for undervalued stocks.
• Debt Loads: Some firms face critical warnings (e.g., Japan Electronic Materials has two “critical” risks).

Conclusion: Buy the Dip, but Pick the Right Chips

The Japanese semiconductor industry's struggles are real—but so are its hidden gems. Investors who target ROHM, Tokyo Electron, and Japan Electronic Materials now can capitalize on their undervalued status, niche technologies, and strategic partnerships. As EV demand rebounds and supply chains stabilize, these firms are poised to outperform.

ROHM's stock rose 28% in 2025, while Renesas' fell 12%—a stark contrast in resilience.

The EV semiconductor market's contraction is temporary. For those with the courage to act, this storm is a buying opportunity.

Act now—before the next wave of growth washes away these discounts.