Japanese chip distributors have also begun mergers and acquisitions and restructuring

Once again, news of mergers and acquisitions among semiconductor distributors has emerged. Kaga Electronics announced that it will acquire shares of Kyoei Sangyo through a public tender offer (TOB) in May 2025. The TOB will commence on June 2, with the acquisition period running until July 11. The company plans to acquire approximately 2.2 million shares, with the total purchase amount expected to reach up to 8.7 billion yen.  

Founded on September 12, 1968, in Tokyo, Kaga Electronics is a prominent independent comprehensive electronics trading company listed on the Tokyo Stock Exchange's Prime Market. It specializes in electronic components, semiconductors, EMS manufacturing, and information equipment, representing brands such as Mitsubishi Electric, Renesas, ADI, and Omnivision.  

In the fiscal year ending March 2025, Kaga Electronics reported sales of 547.779 billion yen and operating profit of 23.601 billion yen, ranking among the top five semiconductor/electronics distributors in Japan. On the other hand, Kyoei Sangyo recorded sales of 57.709 billion yen and operating profit of 974 million yen for the same fiscal year. Upon merging, the combined entity will become a distributor with sales exceeding 600 billion yen, though still falling short of Japan's current leader, Macnica Holdings, which reported sales of 1.0341 trillion yen in the fiscal year ending March 2025.  

Currently, Japan's electronics distribution landscape is dominated by Macnica Holdings, the only distributor with sales surpassing 1 trillion yen. The second tier consists of several companies with sales ranging between 400 billion and 500 billion yen, followed by a fragmented market of distributors with sales in the 200 billion yen and 100 billion yen ranges.  

In recent years, consolidation has accelerated, with larger distributors merging with each other or acquiring smaller ones.  

About a year ago, Ryoyo Electro (with sales of 129.9 billion yen in the fiscal year ending January 2023) and Ryosan (with sales of 325.6 billion yen in the fiscal year ending March 2023) completed their merger, forming Ryosan Ryoyo Holdings (HD). This move was driven by the rapid adoption of new technologies amid the acceleration of IoT and digital transformation (DX), which has brought significant environmental changes to the industry. These include intensified competition among companies and geopolitical risks associated with mergers and acquisitions involving semiconductor manufacturers and other suppliers.  

The merger of the two companies is expected to yield strong synergies. Ryosan has a strong customer base in the automotive sector, while Ryoyo Electro serves many clients in the medical field, facilitating the integration and expansion of their combined customer portfolios. On May 14 this year, Ryosan Ryoyo Holdings (HD) released its first full-year financial results post-merger, reporting sales of 359.811 billion yen and operating profit of 8.542 billion yen. The company has set a group-wide target of achieving sales of 500 billion yen and operating profit of 30 billion yen by the fiscal year ending March 2029.  

In another case, albeit slightly different, Kanematsu acquired Electronics End Materials Corporation, a distributor of semiconductor wafers, in March 2025.  

Looking further back, consolidation among Japan's semiconductor distributors is not a new phenomenon. In 2003, Macnica and Fuji Electronics merged to form Macnica Fuji Electronics HD. In 2007, UKC HD and Vitec HD merged to create Leicester HD.  

A notable characteristic of Japan's semiconductor distribution industry is the large number of small and medium-sized enterprises. Traditionally, many distributors have operated within manufacturer-affiliated ecosystems, fostering unique business practices. As a result, even as external conditions undergo dramatic changes, breaking entrenched inertia has proven difficult, leaving some distributors struggling to adapt.  

This situation became particularly evident during the COVID-19 pandemic. Despite global semiconductor shortages, some markets remained fluid, exposing the weakening procurement capabilities of Japanese distributors—a reality that posed significant challenges.  

Against the backdrop of rising semiconductor/component prices, increasing logistics costs, the entry of foreign distributors into the Japanese market, and their intensified business expansions, it has become increasingly difficult for individual distributors to sustain investments. To effectively negotiate with global suppliers, avoid being outmatched in procurement, and maintain competitiveness, the trend of consolidation and restructuring among Japan's electronics distributors will continue in the coming years.  

In 2019, five years ago, Texas Instruments (TI) announced the termination of its authorized sales partnerships with distributors including Marubun, Avnet, and WPG, sending shockwaves through the industry.  

Additionally, mergers and acquisitions among chip manufacturers have also been a key driver of restructuring among Japanese semiconductor distribution firms. Renesas Electronics acquired U.S.-based Intersil in 2005 and IDT in 2017. Since 2008, there has been a trend of Renesas terminating distribution agreements with semiconductor trading companies, such as its agreement with RYODEN (formerly Ryoden Shoji) in February 2011.  

Amid shifts in semiconductor suppliers' sales strategies and supply chain restructuring triggered by the pandemic, the role of Japanese distributors within the broader industry ecosystem is being reexamined and questioned.