Major Investments And Expansion in Silicon Carbide Semiconductor Industry

Major Investments and Expansion in Silicon Carbide Semiconductor Industry

Over the past few years, there have been many developments surrounding the SiC (Silicon Carbide) industry. In this article, we will share two significant events related to the SiC industry.

Firstly, SiC giant Wolfspeed recently announced that it has completed the sale of its RF business to MACOM Technology Solutions Holdings, Inc. According to the terms of the transaction, Wolfspeed received approximately $75 million in cash (subject to customary purchase price adjustments) and 711,528 shares of MACOM common stock, valued at about $60.8 million based on MACOM's closing price. As reported by the NASDAQ Global Select Market, the company will issue common stock on December 1, 2023.

Gregg Lowe, President and CEO of Wolfspeed, stated: "The completion of the sale of Wolfspeed RF is the final step in our transformation, and we are pleased to say that Wolfspeed is now the only pure-play silicon carbide semiconductor manufacturer in the industry." "With the continued acceleration of demand in the automotive, industrial, and renewable energy markets, we can now focus on innovation and capacity in our materials and power device businesses."

Wolfspeed continues to drive the industry's transition to silicon carbide with ongoing capacity expansion. This includes the eventual expansion of the company's Mohawk Valley factory in New York, as well as the construction of the world's largest silicon carbide factory, the John Palmour Manufacturing Center (JP), in Siler City, North Carolina. This multi-billion dollar state-of-the-art facility aims to increase Wolfspeed's current silicon carbide capacity in its Durham, North Carolina, site by more than tenfold.

Coherent, a global leader in materials, network, and laser sectors, recently announced the completion of a $1 billion total investment by DENSO CORPORATION and Mitsubishi Electric in the company's silicon carbide semiconductor business.

According to the terms announced on October 10, 2023, DENSO and Mitsubishi Electric each invested $500 million for a 12.5% non-controlling ownership stake in the business, with Coherent retaining the remaining 75% equity. Coherent has spun off this business and transferred it to a new subsidiary that will operate it. Going forward, all operational and capital expenditures of the business will be funded by the business itself. Coherent will control and operate the business, which will continue to be led by Sohail Khan, Executive Vice President of Wide Bandgap Electronics.

The business has reached fair long-term supply arrangements with DENSO and Mitsubishi Electric to support their demand for 150mm and 200mm silicon carbide (SiC) substrates and epitaxial wafers.

Dr. Vincent D. Mattera, Jr., Chairman and CEO of Coherent, said, "As I mentioned in October, we are excited to expand our strategic relationship with DENSO and Mitsubishi Electric to fully capitalize on the tremendous demand for silicon carbide. Establishing such a close relationship with two leaders in the SiC power devices and modules sector is the best way to maximize shareholder value and long-term growth of the business. Our strategic partners' investment will be used to accelerate our capacity expansion plans, helping to maintain our leadership position while ensuring a robust and scalable supply for the rapidly growing silicon carbide power electronics market, primarily driven by the explosive growth of the global electric vehicle market."

Shinnosuke Hayashi, President and COO, Representative Member of the Board at DENSO, stated, "Through our strategic partnership with Coherent, we will ensure stable procurement of silicon carbide wafers that are essential to pure electric vehicles, and contribute to achieving a carbon-neutral society by promoting the widespread adoption of pure electric vehicles in various regions around the world."

Dr. Masayoshi Takemi, Executive Officer and President of Semiconductor & Device Group at Mitsubishi Electric, expressed, "We are pleased that this investment has been successfully completed. Looking forward, we will further strengthen our collaboration with Coherent, leveraging its capabilities in SiC substrate development and manufacturing to achieve robust growth in the SiC power device business and contribute to decarbonization for a more sustainable world."

When integrated into electric vehicles and industrial infrastructure, power electronics devices based on silicon carbide have shown significant potential to reduce carbon dioxide 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 by 2030, with a compound annual growth rate of 28%.

This transaction builds on Coherent's more than two decades of leadership in the silicon carbide materials sector. Recently, the company has actively invested in expanding the manufacturing scale of 150mm and 200mm substrates to address this underserved market.

In the past two years, Coherent has actively invested in SiC capital and R&D. The completion of this combined $1 billion investment will accelerate the company's capital plans for the coming years. Specifically, this investment will fund the manufacturing expansion of the business and, combined with the simultaneously signed supply agreements, enhance its market position.

This 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 expects the total $1 billion investment to meet the future capital expenditure needs of the business.

References:

https://mp.weixin.qq.com/s/ZNTB4IR4AaKpD8YlcVRwaQ

Author:

Semiconductor Materials and Process Equipment