The multibillion-dollar business plans being hatched by global automakers and technology companies for self-driving vehicles depend on a sensor that’s less than 1 inch wide and costs all of 92 cents. And a company you’ve probably never heard of, Nippon Ceramic (Nicera), controls about half of that market. Its stock is up more than 40 percent over the past three years and analysts expect profits to nearly double by 2018.
In other words, it’s good to be Nippon Ceramic right now.
The Japanese maker of ultrasonic sensors, which help autonomous vehicles avoid crashes and fit into tight parking spaces, expects demand to double in the next five years and is expanding its production lines to keep up, President Shinichi Taniguchi said in an interview.
Nippon Ceramic hopes to ride the industry’s shift toward more autonomous driving technology. Toyota Motor Corp., Ford Motor Co., Alphabet Inc.’s Google and Baidu Inc. aim to introduce driverless cars in as soon as five years.
“This is a great opportunity for our growth,” Taniguchi, 43, said at his office in Tottori. “The number of sensors going into the vehicles will increase. And we would like to take a bigger share.”
The chipmaker plans to invest as much as 1 billion yen ($9.2 million) to expand manufacturing capacity in the Philippines, he said. Nippon Ceramic, which controls about 50 percent of the global market for ultrasonic sensors, is expected to almost double its net income by 2018, according to the average of analyst estimates compiled by Bloomberg.
Nippon Ceramic also is in talks with a European autonomous-driving system supplier seeking to switch from in-house production to purchasing the sensors from outside. This may further boost Nippon Ceramic’s market share, said Taniguchi, who declined to disclose the supplier’s name.
It’s estimated that a quarter of all cars sold by 2035 will be able to guide themselves. Japanese suppliers Hitachi Automotive Systems Ltd. and NEC Corp. also make sensors for autonomous driving systems.
Toyota, Ford
“I will do whatever I can to further increase the market share in this segment,” said Taniguchi, whose father founded Nippon Ceramic. “We hope to remain the No. 1 company. We have to keep our defenses strong.”
Nippon Ceramic doesn’t sell directly to automakers. Rather, it supplies the ultrasonic sensors to companies including Denso Corp. and Panasonic Corp., which then package them into electronics systems for Toyota, Ford, General Motors Co. and Volkswagen AG, according to data compiled by Bloomberg.
The company forecast in February that sales will rise about 4 percent annually to about 25 billion yen by 2020. Sales of the ultrasonic sensors for vehicles will grow even faster, at about 10 percent annually, Taniguchi said. Shares of the company, which also makes sensors for security systems and car air conditioners, rose 46 percent in the three years ending Dec. 31.
Source: Bloomberg
