Denso And Mitsubishi Electric From Japan Invested IDR 15.7 Trillion In The Silicon Coherent Business

Chip illustration. (photo: twitter @eidfonte)

Coherent, one of the main suppliers of materials used in chip manufacturing for the automotive industry in the United States, announced on Tuesday 10 October that Denso and Mitsubishi Electric from Japan will invest $1 billion in the company's silicon carbide business.

Denso and Mitsubishi Electric will invest $500 million each as part of this deal and will hold a 12.5% non-control stake in Coherent's silicon carbide unit.

Coherent, which produces lasers and switches for circuits, has a market capitalization of US$4.69 billion (Rp73.7 trillion) and has a total debt of US$4.4 billion (Rp69.1 trillion) until the 2023 fiscal year, according to LSEG data.

This investment will reduce the financial burden for Coherent, who previously underwent a strategic review of the silicon carbide business in May.

The deal is in line with the company's plan to invest $1 billion in the next 10 years to expand production of its silicon carbide wafer, which helps increase the reach of electric vehicles over chips made of traditional silicon.

Chips made from silicon carbide are used in applications that require large amounts of power conversion, such as inverters and drivetrains in electric vehicles.

"It is hoped that demand for the SiC power semiconductor will grow exponentially along with the global increase in the electric vehicle market in line with the transition to a decarbonized world," Masayoshi Takemi of Mitsubishi Electric said in a statement.

Last month, Reuters reported that the Pittsburgh-based company Pennsylvania attracted interest from four Japanese conglomerates, including Hitachi Ltd and Sumitomo Electric Industries Inc, to acquire minority ownership in its business.