Ambitious Denso: already one of the world's biggest automotive suppliers, Denso Corp. plans to expand its reach by developing a diverse array of new products, and it has the R&D wherewithal to get it done.

"Ambitious Japan." That's what it says on the side of new bullet trains that speed from Tokyo to Osaka. It is an optimistic and somewhat defiant statement that could easily be borrowed by Aichibased Denso Corp. "Ambitious Denso" is a company that already holds worldwide number one product share in 18 different automotive components, but plans to increase that to 25 by 2005. It plans to maintain its leading position in HVAC unit production despite stiff competition, while making big pushes into hybrid vehicle power systems and Intelligent Transportation System (ITS) areas like navigation and telematics. To achieve its ambitions the company is spending generously on R&D: $1.5 billion, or a hefty 8% of total net sales in 2003 alone.

Big Changes in Air Con. The refrigerant R134a is expected to be phased out of use within five or six years, which if you are Denso, the world's largest maker of automotive air conditioning units, is a very big deal. According to to Hikaru Sugi, director of the thermal products division, Denso has been spending a significant amount of R&D effort on perfecting units that can run on refrigerants other than R134a. Right now, he says, the leading candidates are C[O.sub.2] and R152a, but C[O.sub.2] seems to be getting the bulk of the attention since its potential greenhouse gas emissions are far lower than other alternatives. But while going with C[O.sub.2] systems may be better for the environment, it creates a lot of challenges for cost-efficient mass production. At the simplest level, a C[O.sub.2] unit requires an additional heat exchanger which helps to bump up the cost to about 15% higher

than a conventional unit and adds 10% more weight. Also, since C[O.sub.2] systems must operate at much higher pressures than current units, the tiny passages through which the gas moves must be formed with a precision far higher than that used today, which means huge investments in new equipment. Sugi knows that despite these challenges OEMs will not stand for any price or weight increases for co2 air con, so Denso has set a goal to meet the same per unit production cost as R134a (about $28), while simultaneously reducing system weight by 15% within four years.

Apparently, this ambitious company is confident that it will achieve its goals because they plan to have it in production by 2007-08, with an initial annual production of 100,000 units, going to as many as 400,000 units in the second year. And OEMs must be confident that Denso will achieve its targets, as Sugi says there are "five or six" customers for the C[O.sub.2] system.

SiC Chips. "SIC is a key technology for reducing cost in vehicles," says Dr. Yoshiki Ueno, head of Denso's research labs, of silicon carbon-based semi-conductors. They've been working on them for over 10 years and expect that the chips won't be market-ready for a few more years. But the work continues because SiC is very weft suited to the harsh environment of the automobile. It can take higher sustained temperatures than silicon-only chips, while relying on a much simpler chip cooling system. It has much lower switching losses and on-state resistance which means its size can be trimmed down by two orders of magnitude over traditional chips. (One example of this dramatic size reduction is a SiC MOSFET that Denso is currently developing for release in 2008 which can replace 13 13-mm chips with just one 10-mm unit.) Denso is targeting next generation power inverters for hybrid vehicles as a key application for SiC technology, and has a goal of reducing inverter size to 1/6 that of the current model (i.e.: from 20 liters to 3.25 liters). The company expects to have the new inverter ready for production around 2010--assuming it overcomes cost hurdles. In order to get the purity it needs for its chips, Denso currently makes its own SiC wafers at the unsustainable cost of $2,000 for a 2-in. disc.

Emergent computing and seamless roaming. Denso executives see big growth ahead for camera-based safety systems used for tasks like pedestrian recognition and lane detection. To get a piece of this market, Denso is developing an advanced software program that uses parallel-processing techniques modeled on the workings of the human brain to analyze video images. Called "emergent soft computing," the software can extract meaning from images even when faced with complex backgrounds and variations in brightness. It is currently effective at a distance of 50 m, though engineers plan to increase the range to 100 m soon.

Another software initiative meant less to enhance safety than to ease frustration is a seamless roaming system that automatically switches between low-speed wireless phone connections and high-speed wireless local area network (W-LAN) hot spots. Denso engineers saw that as W-LAN hot spots continue to proliferate the desire for vehicles to take advantage of their broadband capabilities without having to disconnect and reconnect to lower-speed but more readily available standards like CDMA2000. So they designed software that eliminates the current practice of breaking and manually re-establishing wireless connections (which can take up to one minute) with an automated switching system that can move smoothly from source to source in the space of a second.

Navi, ETC."Denso wants to be the worldwide leader in navigation systems," says Mitsuharu Kato, managing director, ITS Product division. And it already has a good start as a leader in the Japanese market, which buys about 2.5 million navigation units per year in a new car market of around 6 million. Denso projects that navi installation rates will rise conservatively over the next few years in Japan, but more than double in Europe to over 3 million units a year and triple in the U.S. to 1.5 million annually by 2008. It is banking on its deep experience in making navi systems (it has had units in Japan since the 1980s and provided the first OEM navi unit in the U.S. for Lexus in 1997) to get to Kato's goal. Denso develops and manufactures its own navi ECU (which currently packs the graphics power of a Sony Playstation) and has an ambitious program of creating and enhancing detailed maps of key countries. (For example, Denso began mapping China last year in preparation lot strong growth in navi installation there.)

Another competitive advantage for Denso when it comes to navi is a proprietary location system called "Mapcode" that breaks down areas into increasingly smaller numbered grids, each of which are assigned numeric values. Any location in Japan can be found to within a few feet simply by inputting its 8 to 10-digit code. Travel books in Japan are already starting to use Mapcode as a shorthand to help tourists quickly find points of interest, and Denso has licensed the technology to other makers, essentially creating an open standard.

Combining its experience with navi systems and its leading position in producing Electronic Toll Collection (ETC) units, Denso has developed a single unit that can map all of the toll booths on a given route, direct the driver to the proper lane designated for ETC and then pay the toll. It also has developed a small RF transmitter that can be mounted on a license plate and read by roadside sensors for use in cities that have congestion pricing. The module transmits at 5.8 GHz and uses a low-consumption battery designed to last several years. Denso thinks that as more cities are forced to charge to reduce congestion, this approach will offer a lower cost alternative to the current system of photographing every license plate that goes in and out of the congestion pricing area.

RISKY BUSINESS

"Co-dependent no more!" could be the rallying cry for Denso Corp.'s president and CEO Koichi Fukaya. His company has long been dependant on Toyota, which currently accounts for about half of its business, but he plans to lower that percentage by increasing business with the Big Three and aggressively pursuing European makers like Volkswagen. Fukaya's ambitious goal in Europe is to double sales in the next five years. In China, Fukaya is hoping to match the explosive growth of that market by expanding production of components including HVAC units and alternators, while providing diesel Fuel injection systems for the burgeoning heavy-duty truck segment. Anticipating big growth in high-tech electronics systems, he is transforming the company's Intelligent Transportation System (ITS) division into a major profit center by pushing for global preeminence in navigation systems.

To make all of this happen Fukaya will have to spend a lot of money and fake a lot of chances, He says that converting air con modules to run on C[O.sub.2] alone will require "a huge global investment" and that expanding common rail production is "very risky" because of the high investment needed for precision manufacturing.

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