News: Microelectronics
5 December 2023
Coherent’s silicon carbide business completes $1bn in investments from DENSO and Mitsubishi Electric
Materials, networking and laser technology firm Coherent Corp of Saxonburg, PA, USA has closed the $1bn aggregate investment in its silicon carbide (SiC) semiconductor business by automotive supplier DENSO Corp of Kariya, Aichi prefecture, Japan and Tokyo-based Mitsubishi Electric Corp, announced on 10 October.
DENSO and Mitsubishi Electric each invested $500m in exchange for a 12.5% non-controlling ownership stake, with Coherent owning the remaining 75%. Coherent has separated and contributed the business to a new subsidiary that will operate it. Going forward, all operating and capital expenses will be funded by the business. Coherent will control and operate it, which will continue to be led by Sohail Khan, executive VP, Wide-Bandgap Electronics.
In connection with the transaction, the business has entered into arm’s-length long-term supply arrangements with DENSO and Mitsubishi Electric that support their demand for 150mm and 200mm silicon carbide substrates and epitaxial wafers.
“We are excited to expand our strategic relationships with DENSO and Mitsubishi Electric to capitalize on the significant demand for silicon carbide,” says Coherent’s chair & CEO Dr Vincent D. Mattera Jr. “Such a close relationship with two leaders in SiC power devices and modules is the best path forward to maximize shareholder value and position the business for long-term growth. The investments from our strategic partners will be used to accelerate our capacity expansion plans and help sustain our leadership position, while ensuring the development of a robust and scalable supply for the rapidly growing market for SiC-based power electronics, largely driven by the explosive growth of the global electric vehicle market,” he adds.
“Through this strategic relationship with Coherent, we will secure a stable procurement of SiC wafers, which are critical for battery electric vehicles, and contribute to the realization of a carbon-neutral society by promoting the widespread adoption of BEVs in all regions around the world,” says Shinnosuke Hayashi, president & chief operating officer, representative member of the board at DENSO.
“Going forward, we will further strengthen our collaboration with Coherent, leveraging their capabilities in development and manufacturing of SiC substrates, to achieve solid growth of our SiC power device business and contribute to a more sustainable world through decarbonization,” says Dr Masayoshi Takemi, executive officer, group president, Semiconductor & Device, at Mitsubishi Electric.
Strategic rationale
Market estimates indicate that the SiC total addressable market will grow at a compound annual growth rate (CAGR) of 28% from $3bn in 2022 to $21bn in 2030.
The transaction builds on Coherent’s more than two decades of expertise in SiC materials. In recent years, the firm has invested to scale its manufacturing of 150mm and 200mm substrates to address this underserved market.
Over the past two years, Coherent has invested in capital and R&D for SiC. The closing of this $1bn combined investment into the business should accelerate the company’s capital plans in the coming years. Specifically, the investment will fund the manufacturing expansion of the business and, in combination with the concurrent supply agreements, enhance its position in the market, it is expected.
The transaction enables Coherent to increase its available free cash flow to provide greater financial and operational flexibility to execute its capital allocation priorities, as it expects the aggregate $1bn investment will be used to fund future capital expenditure requirements of the business.
DENSO and Mitsubishi Electric investing $1bn in Coherent’s silicon carbide business
SiC substrates Mitsubishi Electric
