Infineon Powers Up With Wolfspeed Deal

The Germany-based company says the $850 million acquisition will make it the No.1 supplier of silicon carbide-based power chips.
Matthew HellerJuly 14, 2016

Infineon Technologies, Europe’s largest semiconductor company, has agreed to acquire the Wolfspeed Power and RF unit of LED lighting company Cree for $850 million in a move to strengthen its position in power management chips for electric cars, mobile devices and other high-growth markets.

Chips for the automotive industry already generate almost half of Infineon’s sales and, according to Reuters, the Germany-based company is betting that energy-efficient power management chips will dominate the semiconductor market in the next decade. Wolfspeed also makes compound chips.

“With Wolfspeed we will become number one in [silicon carbide]-based power semiconductors,” Infineon CEO Reinhard Ploss said in a news release. “We also want to become number one in RF [radio frequency] power.”

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“This will accelerate the market introduction of these innovative technologies, addressing the needs of modern society — such as energy efficiency, connectivity and mobility,” he added.

North-Carolina-based Cree said last year that it planned to spin off Wolfspeed separately but changed tack after several potential buyers made approaches. The businesses Infineon is buying generated pro forma revenue of $173 million in the year ended March 27.

“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,” Cree CEO Chuck Swoboda explained. “We believe that Wolfspeed will now be able to more aggressively commercialize its unique silicon carbide and gallium nitride technology as part of Infineon.”

Swoboda said Cree would use the capital from the sale to “fund select M&A, as well as to support additional stock buybacks.”

Infineon had $6.4 billion in sales in its latest fiscal year, providing chips to the automotive, industrial, communications, consumer and security electronics sectors. In its biggest deal ever, it acquired power management company International Rectifier in August 2014 for about $3 billion.

Through the Wolfspeed deal, “Infineon strengthens its market position in markets which are set to experience structural growth with its attractive product and customer portfolio,” DZ Bank analyst Harald Schnitzer said.