Japan’s Denso and Mitsubishi Electric Invest $1 Billion in Coherent’s Silicon Carbide Business
Introduction
In a move that highlights the growing importance of silicon carbide (SiC) in the automotive industry, major Japanese companies Denso and Mitsubishi Electric have announced a joint investment of $1 billion in Coherent’s SiC business. This strategic partnership aims to strengthen Coherent’s position as a key supplier of SiC materials for the production of chips used in electric vehicles (EVs). With the global market for EVs on the rise, the demand for SiC power semiconductors is expected to grow exponentially. This article explores the details of this investment and its significance in the transition to a decarbonized world.
Denso and Mitsubishi Electric’s Investment
Denso and Mitsubishi Electric, two leading Japanese companies, will each invest $500 million in Coherent’s silicon carbide business, acquiring a 12.5% non-controlling ownership interest in the company’s unit. This significant investment will provide Coherent with much-needed financial support and alleviate its existing debt burden. Coherent, a renowned manufacturer of lasers and switches for circuits, currently holds a market value of $4.69 billion and carries $4.4 billion in total debt as of fiscal 2023.
The agreement aligns with Coherent’s long-term plan to expand its silicon carbide wafer production. Over the next decade, Coherent aims to invest $1 billion in scaling up its SiC production capacity. Silicon carbide wafers offer superior performance compared to traditional silicon chips, playing a crucial role in enhancing the range and efficiency of electric vehicles. These chips find applications in power conversion systems such as inverters and drivetrains.
The Significance of Silicon Carbide in Electric Vehicles
As the world moves towards a decarbonized future, the demand for electric vehicles is expected to surge. Electric vehicles rely on advanced semiconductor technologies to achieve higher efficiency and longer ranges. Silicon carbide, a compound semiconductor, demonstrates excellent thermal conductivity, high breakdown voltage, and low power losses. These attributes make SiC power semiconductors ideal for EV applications.
Compared to traditional silicon chips, silicon carbide chips can handle higher temperatures and operate at higher frequencies, allowing for more efficient power conversion. This leads to improved energy utilization and extended driving ranges for electric vehicles. Additionally, SiC power semiconductors contribute to reducing greenhouse gas emissions by enabling the widespread adoption of electric mobility.
Coherent’s Silicon Carbide Business Review
Prior to Denso and Mitsubishi Electric’s investment, Coherent had been exploring strategic alternatives for its silicon carbide business. The partnership with these two Japanese conglomerates not only provides the necessary financial support but also strengthens Coherent’s position in the SiC market. The investment will enable Coherent to expand its production capabilities, meet the growing demand for silicon carbide wafers, and cater to the evolving needs of the automotive industry.
Growing Market for Electric Vehicles
The global market for electric vehicles has witnessed remarkable growth in recent years. With increasing environmental concerns and government initiatives promoting sustainable transportation, electric vehicles have gained significant traction. As more countries strive to reduce carbon emissions, the demand for electric vehicles is expected to rise exponentially. This growth presents immense opportunities for companies involved in the production of EV components, including SiC power semiconductors.
Mitsubishi Electric’s Perspective
Masayoshi Takemi, a representative from Mitsubishi Electric, emphasized the exponential growth expected in the demand for SiC power semiconductors. As the global market for electric vehicles expands, the transition to a decarbonized world will drive the need for efficient and reliable power electronics. Mitsubishi Electric recognizes the potential of silicon carbide in meeting these requirements and believes that the investment in Coherent’s silicon carbide business aligns with their long-term objectives.
Interest from Japanese Conglomerates
Coherent’s silicon carbide business has attracted attention from not only Denso and Mitsubishi Electric but also other Japanese conglomerates. Hitachi Ltd and Sumitomo Electric Industries Inc have also expressed interest in acquiring a minority stake in Coherent’s SiC business. This further highlights the growing recognition of the importance of silicon carbide in the automotive industry and the race to secure a foothold in this emerging market.
Conclusion
Denso and Mitsubishi Electric’s $1 billion investment in Coherent’s silicon carbide business signifies the growing significance of SiC in the automotive industry. As the demand for electric vehicles continues to rise, the need for efficient power semiconductors becomes paramount. Silicon carbide, with its superior properties, offers a viable solution for achieving higher energy efficiency and extended driving ranges. This investment not only provides Coherent with the necessary financial support but also strengthens its position as a leading supplier of SiC materials. As the world transitions to a decarbonized future, collaborations like these will play a crucial role in driving the adoption of electric mobility and reducing greenhouse gas emissions.
