Coherent’s silicon carbide semiconductor business to receive $1B in investments

Coherent (COHR) announced that Denso (DNZOY) and Mitsubishi (MSBHF) Electric have agreed to invest an aggregate $1B in its silicon carbide business. The transaction results from the strategic review process announced in May for the Business. Denso and Mitsubishi Electric will each invest $500M in exchange for a 12.5% non-controlling ownership interest in the business, with Coherent owning the remaining 75%. Prior to the completion of the transaction, Coherent will separate and contribute the business to a subsidiary. Coherent will control and operate the business, which will continue to be led by Sohail Khan, Coherent’s Executive VP, New Ventures & Wide-Bandgap Electronics Technologies. The business will enter into long-term supply arrangements with Denso and Mitsubishi Electric that support their demand for 150 mm and 200 mm silicon carbide substrates and epitaxial wafers. The investment will fund the manufacturing expansion of the Business’s substrates and epitaxial wafers. The transaction will enable Coherent to increase its available free cash flow to provide greater financial and operational flexibility to execute its capital allocation priorities, as it expects the aggregate $1B investment will be used to fund future capital expenditure requirements of the Business. The transaction is expected to close in Q1 of calendar year 2024.