Japan's Denso, Mitsubishi Electric to invest $1 bln in Coherent's silicon carbide unit

Sumitomo Electric Industries

10/10/2023 12:56

Oct 10 (Reuters) - Coherent  COHR.N , a major U.S.
supplier of materials used to make chips for the automotive
industry, said on Tuesday Japan's Denso  6902.T  and Mitsubishi
Electric  6503.T  will invest $1 billion in the company's
silicon carbide business. 
    Denso and Mitsubishi Electric will invest $500 million each
in exchange for a 12.5% non-controlling ownership interest in
Coherent's unit, as per the agreement.
    Coherent, which makes lasers and switches for circuits, has
a market value of $4.69 billion and carries $4.4 billion in
total debt as of fiscal 2023, according to LSEG data. 
    The investment would alleviate the financial burden for
Coherent, which had explored strategic review of its silicon
carbide business in May.
    The agreement is in line with the company's plans to invest
$1 billion over the next 10 years to expand its production of
silicon carbide wafers, which help boost the range of electric
vehicles more than chips made with traditional silicon.
    Chips made with silicon carbide are used in applications
that require massive quantity of power conversion such as
inverters and drivetrains in electric vehicles.
    "Demand for SiC power semiconductors is expected to grow
exponentially as the global market for electric vehicles
increases in line with the transition to a decarbonized world,"
Mitsubishi Electric's Masayoshi Takemi said in the release. 
    Last month, Reuters reported that the Pittsburgh,
Pennsylvania-based company has attracted interest from four
Japanese conglomerates including Hitachi Ltd  6501.T  and
Sumitomo Electric Industries Inc  5802.T  to acquire a minority
stake in the business. 
    
     

 (Reporting by Priyamvada C in Bengaluru; Editing by Sherry
Jacob-Phillips)
 ((Priyamvada.C@thomsonreuters.com https://twitter.com/priyamouli1812?lang=en;))