Coherent to receive $ 1 B investment from Denso and Mitsubishi Electric
14.11.2023 - The silicon carbide semiconductor business enters into long-term supply agreements to satisfy 150-mm and 200-mm substrate and epitaxial wafer demand.
Under the terms of the transaction that was announced in May, Denso and Mitsubishi Electric will each invest 500 million dollars in exchange for a 12.5 % non-controlling ownership interest in the business, with Coherent owning the remaining 75 %. Prior to the completion of the transaction, Coherent will separate and contribute the business to a subsidiary, control and operate it, under the continued leadership of Sohail Khan, Coherent’s EVP for new ventures and wide-bandgap electronics technologies.
Market estimates indicate that the silicon carbide (SiC) total addressable market will grow from $ 3 B in 2022 to $ 21 B in 2030, representing a 28 % compound annual growth rate.
The transaction builds on Coherent’s more than two decades of demonstrated leadership in SiC materials. In recent years, the Company has aggressively invested to scale its manufacturing of 150 mm and 200 mm substrates to address this underserved market.
Over the past two years, Coherent has invested aggressively in capital and R&D for SiC as part of its ten-year, $ 1 B commitment announced in August 2021. The closing of this $ 1 B combined investment into the business will accelerate the company’s capital plans in the coming years. Specifically, the investment will fund the manufacturing expansion of the Business’s substrates and epitaxial wafers and, in combination with the concurrent supply agreements, enhance its position in the market.
The transaction will enable 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 $ 1 B investment will be used to fund future capital expenditure requirements of the business.
When incorporated into electric vehicles and industrial infrastructure, SiC-based power electronics have demonstrated the potential to significantly reduce carbon dioxide emissions and accelerate the transition to a cleaner and more energy efficient world. Through the rapidly growing demand for SiC power devices, Coherent, Denso, and Mitsubishi Electric will accelerate their contribution to sustainable energy consumption and the decarbonization of society.
The transaction is expected to close in the first quarter of calendar year 2024.
Further reading: Mitsubishi and Coherent collaborate on SiC manufacturing, wileyindustrynews.com, 26 May 2023
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