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Coherent Completes DENSO and Mitsubishi Electric Investments

2023-12-08 11:05:38

A lot has happened around the SiC industry in the past few years, and in this article, we share two major events related to the SiC industry.

First, SiC giant Wolfspeed has announced that it has completed the sale of its RF business to MACOM Technology SolutioNS Holdings, Inc. Under the terms of the transaction, Wolfspeed received approximately $75 million in cash (adjusted for the customary purchase price) and 711,528 shares of MACOM common stock, which had a market value of approximately $60.8 million based on MACOM's closing price. The company will issue the common stock on December 1, 2023, as reported by the NASDAQ Global Select Market.
"The completion of the sale of Wolfspeed RF is a transformational step for us, and we are pleased to say that Wolfspeed is now a pure Silicon Carbide semiconductor manufacturer in the industry," said Gregg Lowe, Wolfspeed's president and executive officer. "As the demand for automotive, renewable energy, and industrial markets continue to grow, we can now focus on innovation in our power devices and materials businesses."
Wolfspeed continues to drive the industry's transition to silicon carbide through ongoing capacity expansion, including the final expansion of the company's Mohawk Valley facility in New York and the construction of its global, Siler City, N.C.-based silicon carbide plant, John Palmour Manufacturing Center (JP). The goal of this multi-billion dollar facility is to increase Wolfspeed's current silicon carbide production capacity at its Durham, North Carolina campus by more than 10 times.

Coherent Completes DENSO and Mitsubishi Electric Investments
Coherent, a global materials, networking and lasers company, has announced that it has completed a $1 billion total investment by DENSO CORPORATION and Mitsubishi Electric in the company responsible for Coherent's Silicon Carbide Semiconductor Business (the "Business").
Under the terms of the transaction announced on October 10, 2023, DENSO and Mitsubishi Electric each invested $500 million in exchange for a 12.5% non-controlling ownership interest in the Business, with Coherent owning the remaining 75%. The associated companies have separated and transferred the business to a new subsidiary, which will operate the business. Going forward, all operating and capital expenditures for the business will be funded by the business. Coherent will control and operate the business, which will continue to be led by Sohail Khan, Executive Vice President of Broadband Gap Electronics.
In connection with the transaction, the business has entered into arm's length, long-term supply arrangements with DENSO and Mitsubishi Electric to support its demand for 150mm and 200mm silicon carbide (SiC) substrates and epitaxial wafers.

"As I mentioned in October, we are pleased to expand our strategic relationships with DENSO and Mitsubishi Electric to capitalize on the tremendous demand for silicon carbide," said Dr. Vincent D. Mattera, Jr. chairman and executive officer of Coherent. ”I think that building a close partnership with two of SiC's leading power devices and modules will help to maximize shareholder value and achieve long-term growth. The investments from our strategic partners will be used to accelerate our capacity expansion plans, helping to maintain our leadership position while ensuring the development of a strong and scalable supply for the fast-growing SiC power electronics market, which is largely driven by the explosive growth of the global electric vehicle market."
"Through our strategic partnerships with related companies, we will ensure stable procurement of silicon carbide wafers that are critical for pure electric vehicles and contribute to the realization of a carbon-neutral society by facilitating the widespread adoption of pure electric vehicles in all regions of the world," DENSO President and COO, Board of Directors Representative Member said Shinnosuke Hayashi, President and COO of DENSO and member of the Board of Directors.
Dr. Masayoshi Takemi, Executive Officer and President of the Semiconductor and Devices Group at Mitsubishi Electric, said, "We are pleased that this investment has been successfully completed. Going forward, We will continue to strengthen our collaboration with related companies, and use their capabilities in SiC substratum development and manufacturing in order to achieve solid growth within the SiC power devices business. This will also contribute to a sustainable world by decarbonization."
When integrated into electric vehicles and industrial infrastructures, SiC-based power electronics have demonstrated the potential to significantly reduce CO2 emissions and accelerate the transition to a cleaner, more energy-efficient world.

Market estimates indicate that the total potential market for SiC will grow from $3 billion in 2022 to $21 billion in 2030, a compound annual growth rate of 28 percent.
The transaction builds on the leadership position in silicon carbide materials demonstrated by Related for more than two decades. In recent years, the company has aggressively invested in scaling up manufacturing of 150 mm and 200 mm substrates to address this underserved market.
Over the past two years, Coherent has aggressively invested in SiC capital and research and development. The completion of this $1 billion combined investment will accelerate the company's capital program over the next several years. Specifically, the investment will fund the manufacturing expansion of the business and, in conjunction with concurrent supply agreements, enhance its position in the market.
The transaction enables Coherent to increase its available free cash flow, thereby providing greater financial and operational flexibility to execute its capital allocation priorities as it anticipates that investments totaling $1 billion will be used to meet the future capital expenditure needs of the business.

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