Denso and Mitsubishi Electric will each invest $500 million in return for a 12.5% non-controlling stake in Coherent’s subsidiary.
Coherent, a key U.S. supplier of materials used to create chips for its automobile sector, announced on Tuesday that Denso and Mitsubishi Electric of Japan will invest $1 billion in the company’s silicon carbide division.
According to the agreement, Denso and Mitsubishi Electric would each contribute $500 million in exchange for a 12.5% non-controlling ownership interest in Coherent’s subsidiary. According to LSEG data, Coherent, which manufactures lasers and switches for circuits, has a market value of $4.69 billion and $4.4 billion in total debt as of fiscal 2023.
The investment would relieve Coherent’s financial load, which had considered an in-depth assessment of its silicon carbide business in May.
The arrangement is consistent with the company’s ambitions to invest $1 billion over the next ten years in expanding its manufacture of silicon carbide wafers, which extend the range of electric vehicles more than standard silicon chips.
Silicon carbide chips are utilized in applications that demand a large amount of power conversion, such as inverters and electric vehicle drivetrains.
“Demand for SiC power semiconductors is expected to grow exponentially as the global market for electric vehicles expands in tandem with the shift to a decarbonized world,” stated Masayoshi Takemi of Mitsubishi Electric in the announcement.
According to a report, four Japanese corporations, including Hitachi Ltd. and Sumitomo Electric Industries Inc., have expressed interest in acquiring a minority position in the Pittsburgh, Pennsylvania-based company.
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