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Infineon buys Wolfspeed from Cree for $850m

Steve Rogerson
July 21, 2016
 
German chip company Infineon Technologies is to acquire the Wolfspeed power and RF division of US-based Cree for US$850m to help attack next-generation cellular infrastructure markets relevant for IoT applications.
 
The deal also includes the related SiC (silicon carbide) wafer substrate business for power and RF power.
 
This acquisition will enable Infineon to provide a broader offering in compound semiconductors and will further strengthen it as a leading supplier of power and RF power products in high-growth markets such as electro-mobility, renewables and next-generation cellular infrastructure relevant for the IoT.
 
“Joining forces with Wolfspeed represents a unique growth opportunity,” said Reinhard Ploss, CEO of Infineon Technologies. “Wolfspeed’s and Infineon’s businesses and expertise are highly complementary, bringing together industry leading experts for compound semiconductors. This will enable us to create additional value for our customers with the broadest and deepest portfolio of innovative technologies and products in compound semiconductors available in the market.”
 
He said with Wolfspeed Infineon would become the number one in SiC-based power semiconductors and in RF power.
 
“After much consideration and due diligence over the past year, we concluded that selling Wolfspeed to Infineon was the best decision for our shareholders, employees and customers,” said Chuck Swoboda, Cree chairman and CEO. “We believe that Wolfspeed will now be able to more aggressively commercialise its unique silicon carbide and gallium nitride technology as part of Infineon.”
 
Wolfspeed is based in Research Triangle Park, North Carolina, USA, and has been a part of Cree for almost three decades. With more than 550 employees and an IP portfolio of approximately 2000 patents and patent applications, this deal complements Infineon’s previous acquisition of International Rectifier in early 2015.
 
“By joining the Infineon team, Wolfspeed will now have all the advantages of a global company in our sector, including the ability to leverage Infineon’s market reach and infrastructure,” said Frank Plastina, Wolfspeed CEO. “With Infineon’s complementary culture and additional investment, we’ll be better positioned to unlock the potential of our portfolio and our people.”
 
Power management products based on compound semiconductors have several advantages enabling Infineon’s customers to develop systems with higher energy-efficiency, smaller footprints and lower system costs. Major areas where the applications will profit from SiC are renewables and especially automotive. Both areas benefit from the increased power density and improved efficiency.
 
In automotive it fits well with the recent increased commitment of the industry to plug-in hybrid and all-electric vehicles.
 
Next-generation cellular infrastructure standards such as 5G and beyond will use frequencies up to 80GHz. Only advanced compound semiconductors can deliver the required efficiencies at these high frequencies. GaN-on-Si allows higher levels of integration and offers its advantages at operating frequencies of up to 10GHz. GaN-on-SiC enables maximum efficiency at frequencies of up to 80GHz. Both technologies are crucial for next generation cellular infrastructure standards.
 
The business to be acquired by Infineon has generated pro-forma revenues of $173m in the twelve months ending March 2016. The acquisition will be immediately accretive to Infineon’s adjusted earnings-per-share and margin. Infineon will fund the transaction with bank financing of $720m and $130m of cash-on-hand.
 
Cree’s board of directors and Infineon’s supervisory board have approved the acquisition. The closing of the transaction is subject to regulatory approvals in various jurisdictions and is expected by the end of this year.