Toyota's Biggest Supplier to Take Majority Stake in Self-Driving Tech Firm

TOKYO—Toyota Motor Corp.'s biggest parts supplier, Denso Corp., said Friday it planned to buy a majority stake in a maker of self-driving technology as it seeks to beef up its offerings to compete with global rivals.

The deal to take a 51% stake in Fujitsu Ten Ltd., which builds the sort of radar systems used in autonomous driving systems, is Denso's third such deal since December.

Denso will acquire shares from parent company IT firm Fujitsu Ltd. The companies declined to say how much Denso would pay. Separately, Toyota will retain its current stake in Fujitsu Ten of a little over a third.

Car makers from General Motors Co. to Tesla Motors Inc. are adding systems that take over some driving tasks in order to make cars safer.

"By working together we hope to be able to mutually enhance our technologies and develop new products," a Denso spokesman said.

Fujitsu Ten has suffered two years of losses amid rising costs. In the year ended March 2016, it recorded revenue of ¥ 363 billion ($3.5 billion).

The deal comes as Denso is under pressure from its biggest single client, Toyota, to provide more advanced autonomous driving systems, analysts say.

Denso has long provided some of Toyota's most cutting-edge technology. But when Toyota unveiled the latest Corolla last year, the crash-prevention system was built by German auto-parts giant Continental AG.

Denso has been falling behind rivals Continental and Bosch GmbH in developing these technologies. As a result, it is spending more heavily on research and development. The company spent ¥ 399 billion ($3.9 billion) on research in the year ended March 2016. Last year Continental spent $2.7 billion. Both companies have similar revenue.

In addition to its ramped-up R&D budget, Denso has also set up joint ventures with companies that it thinks can help it build better self-driving systems. In April, Denso said it would join with NEC Corp. to build microcomputers to power an autonomous driving system. In December, Denso said it would buy a stake in Morpho, Inc., a Tokyo-based company working on a system that would allow a car to recognize its surroundings.

Denso has owned a small stake in Fujitsu Ten since the company was established over four decades ago as a spinoff of parent company Fujitsu's radio division.

Write to Sean McLain at sean.mclain@wsj.com

(END) Dow Jones Newswires

September 09, 2016 08:55 ET (12:55 GMT)

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