On October 11, Japanese automotive components manufacturer Denso and Mitsubishi Electric announced that they will invest $500 million each to invest in Silicon Carbide, the Silicon Carbide (SiC) business subsidiary of Coherent, a semiconductor material, networking and laser supplier in the United States. Each has 12.5% equity (the two Japanese companies have 25% equity combined).

It is understood that Silicon Carbide is mainly engaged in the manufacturing of SiC wafers and other products, and is a SiC business subsidiary that was spun off from Coherent in April 2023.

Denso pointed out that through this investment, it will be able to achieve a long-term stable purchase of 6 inch and 8 inch SiC wafers, further strengthening the inverter (inverter) competitiveness used to drive/control electric vehicle motors.

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Coherent’s Chairman and Chief Executive Officer, Dr. Vincent D. Mattera, Jr., said, “We are pleased to have entered into a partnership with Denso and Mitsubishi Electric, and after a thorough review of strategic alternatives for our silicon carbide business, we have decided to create a separate subsidiary and make a strategic investment. Denso and Mitsubishi Electric, two leaders in SiC power devices and modules, are the best way to maximize shareholder value and long-term business growth. The investment from our strategic partners will be used to accelerate our capacity expansion plans, helping to maintain our leadership position while ensuring the development of a strong and scalable supply for the rapidly growing silicon carbide power electronics market, which is primarily driven by explosive growth. Global electric vehicle market.”

Shinnosuke Hayashi, President and Chief Operating Officer of DENSO and representative member of the Board of Directors, said: “We are pleased to enter into a strategic relationship with Coherent, which has a world-class track record in SiC wafer manufacturing. With this investment, we will ensure a steady sourcing of silicon carbide wafers, which are essential for pure electric vehicles, and contribute to achieving a carbon-neutral society by promoting the widespread adoption of pure electric vehicles.”

Dr. Masayoshi Takemi, Executive Officer and Group President of Mitsubishi Electric’s Semiconductors and Devices Division, said: “As the global electric vehicle market grows with the transition to a decarbonized world, the demand for SiC power semiconductors is expected to grow exponentially. To capitalize on this trend, we decided to expand our SiC power semiconductor capacity, including the construction of a 200 mm wafer fab in the Sakai area of Kumamoto Prefecture. We are excited to strengthen our partnership with Coherent by investing in this new SiC company, which will provide us with a steady supply of high-quality SiC substrates that is critical to our ability to grow our supply.”

Affected by the news, on October 10 local time, Coherent’s share price rose 6.61% to close at $33.05 / share. Synchronous drive SiC giant Wolfspeed and On Mei share prices rose 6.19% and 2.65%, respectively.