U.S. materials supplier Coherent Corp. has attracted the interest of four Japanese conglomerates for a significant silicon carbide (SiC) investment. Denso Corp., Hitachi Ltd., Mitsubishi Electric Corp., and Sumitomo Electric Industries Inc. have engaged in discussions with Coherent regarding a minority stake in its SiC business. Coherent intends to invest around $1 billion over the next decade to expand its SiC wafer production. Recent reports suggest that the company might accept an investment from one of these Japanese conglomerates in the range of $4 billion to $5 billion to help alleviate the financial burden.
The growing demand for SiC semiconductors is the driving force behind these investments. SiC chips have gained popularity in the development and operation of electric vehicles (EVs) and renewable energy sources. As governments implement regulations to reduce carbon emissions and consumers show increased interest in environmental-friendly solutions, the adoption of EVs is skyrocketing. This surge in demand has created new opportunities for SiC semiconductors, especially in the automotive power sector, which has traditionally been dominated by silicon IGBT and MOSFETs.
To ensure a secure supply of SiC chips for the future, many automotive OEMs and companies working on internal EV components are establishing partnerships and securing deals. Market research firm TechInsights predicts that the automotive power market, including power MOSFETs, IGBT, and SiC semiconductors, will generate revenues of $26.6 billion by 2030, almost double the expected revenue for this year at $12.6 billion. Over the next five years, the power chip market for automotive applications is projected to grow at a compound annual growth rate (CAGR) of 16.0%.
Over the past year, numerous exclusive deals have been made in the SiC semiconductor market. These include a 10-year agreement between Onsemi, Vitesco Technologies, and a $2 billion investment with Onsemi and Kempower. Other notable developments include XFab's $200 million SiC expansion in Texas, Bosch's acquisition of TSI Semiconductors' SiC foundry, Wolfspeed's construction of a SiC fab in Europe, TI's establishment of five new facilities with increased SiC capacity, and ST Microelectronics' SiC joint venture with Sanan in China.
The interest generated by Coherent's SiC investment opportunities confirms the promising future of SiC semiconductors in the automotive and renewable energy sectors. These investments will not only contribute to Coherent's expansion plans but also cater to the increasing demand for SiC chips, ultimately driving innovations in clean energy and sustainable transportation.
