One sentence summary – US chip materials supplier Coherent Corp is reportedly in discussions with four Japanese conglomerates, including Denso, Hitachi, Mitsubishi Electric, and Sumitomo Electric Industries, about a potential investment in its silicon carbide business, which could help alleviate the company’s financial burden and support its expansion plans to meet the growing demand for silicon carbide wafers used in power conversion applications for electric vehicles.
At a glance
- Coherent Corp has attracted interest from four Japanese conglomerates for an investment in its silicon carbide business.
- The potential investment could help alleviate Coherent’s financial burden.
- Coherent plans to invest $1 billion over the next decade to expand its production of silicon carbide wafers.
- The four Japanese conglomerates involved are Denso Corp, Hitachi Ltd, Mitsubishi Electric Corp, and Sumitomo Electric Industries Inc.
- Chips made with silicon carbide are important for power conversion applications, particularly in electric vehicles.
The details
Coherent Corp, a US-based supplier of materials for chip production, has reportedly attracted interest from four Japanese conglomerates.
These companies are considering an investment in Coherent’s silicon carbide business.
The potential investment could help alleviate Coherent’s financial burden.
Coherent’s Expansion Plans
Coherent plans to invest $1 billion over the next decade to expand its production of silicon carbide wafers.
Denso Corp, Hitachi Ltd, Mitsubishi Electric Corp, and Sumitomo Electric Industries Inc are the four Japanese conglomerates in question.
These companies have held discussions about taking a minority stake in Coherent’s silicon carbide business.
The discussions are aimed at establishing a partnership.
This partnership would enable Coherent to meet its expansion plans.
The valuation for the investment is estimated to be between $4 billion and $5 billion.
Coherent may accept more than one of these companies as investors in the silicon carbide division.
However, no deal has been confirmed yet.
Coherent declined to comment on the matter.
The negotiations are ongoing.
Further details regarding the structure of the partnership and the specific terms are yet to be released.
Importance of Silicon Carbide
Chips made with silicon carbide are predominantly used in power conversion applications.
These applications include inverters and drivetrains in electric vehicles.
The growing demand for electric vehicles has led to an increased need for silicon carbide wafers.
This makes Coherent’s expansion plans strategically important.
Coherent is also involved in the production of lasers and switches for circuits, aside from its silicon carbide business.
The company carries a financial burden, with a market value of $4.3 billion and $4.3 billion in debt.
Coherent’s business has been affected by a slower-than-expected recovery in China.
Customers downsizing their inventory has also impacted the company.
These challenges have likely driven the need for investment and expansion.
The information provided is based on discussions and potential investments.
No definitive agreements have been reached at this time.
Coherent Corp remains cautious and has refrained from commenting on the matter.
Further updates will be provided as the negotiations progress.
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| reuters.com |
|---|
| – Coherent Corp, a US supplier of materials for chip production, has attracted interest from four Japanese conglomerates for an investment in its silicon carbide business. |
| – |
| The investment would help alleviate Coherent’s financial burden as it plans to invest $1 billion over the next decade to expand its production of silicon carbide wafers. – Denso Corp, Hitachi Ltd, Mitsubishi Electric Corp, and Sumitomo Electric Industries Inc have held discussions about taking a minority stake in Coherent’s silicon carbide business. – Coherent may accept more than one of these companies as investors in the silicon carbide division at a valuation of between $4 billion and $5 billion. – |
| No deal has been confirmed yet, and Coherent declined to comment on the matter. |
| – Chips made with silicon carbide are used in power conversion applications, such as inverters and drivetrains in electric vehicles. – Coherent also manufactures lasers and switches for circuits. – |
| The company has a market value of $4.3 billion and carries $4.3 billion in debt. |
| – Coherent’s business has been affected by a slower-than-expected recovery in China and customers downsizing their inventory. – Coherent’s shares have dropped 22% in the last 12 months. |
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