DENSO Corporation has decided to increase its shareholding in Renesas Electronics to accelerate the development of various in-vehicle systems including automated driving systems.

Denso is an affiliate of and supplier to Toyota Motor Corp. It has been ramping up spending on research and development of new technologies including "connected cars". In February, Denso announced an investment in California cybersecurity startup Dellfer.

It is acquiring the stake from Innovation Network Corp of Japan (INCJ), a state-backed fund that owns 50.1 percent in the chipmaker, INCJ said in a statement. The terms of the deal were not disclosed, but the transaction is worth about 85 billion yen ($796.9 million) based on Renesas' share price.

As a result of the deal, Denso's stake in Renesas will rise to 5 percent, while INCJ's will fall to 45.6.

"By taking full advantage of its knowledge of in-vehicle products acquired through many years of operation, and in order to develop competitive vehicle control systems in new fields such as automated driving, DENSO considers it essential to further enhance collaboration with semiconductor manufacturers that have profound experience and expertise," Denso said.

Last week, Toyota said it would establish a new venture with Denso and another group supplier Aisin Seiki Co, which would invest more than $2.8 billion to develop automated-driving software.