Infineon Technologies AG of Munich, Germany has entered into a definitive agreement to acquire the Wolfspeed Power & RF division of Cree Inc of Durham, NC, USA for $850m in cash (about €740m). The deal also includes the related silicon carbide (SiC) wafer substrate business for power and RF power.
The business to be acquired has generated pro-forma revenue of $173m in the 12 months ending 27 March. 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. The firm's capital structure should stay well within the previously communicated targets of €1bn gross cash plus 10-20% of revenue, and no more than two times the gross debt-to-EBITDA. Cree's board of directors and Infineon's supervisory board have approved the acquisition, which is expected to close by the end of calendar 2016 (subject to regulatory approvals in various jurisdictions).
Infineon says that the acquisition will enable it to provide the broadest offering in compound semiconductors and further strengthen it as a supplier of power and RF power solutions in high-growth markets such as electro-mobility, renewables and next-generation cellular infrastructure relevant for the Internet of Things (IoT).
Based in Research Triangle Park, NC, USA and part of Cree for almost three decades, Wolfspeed is a provider of SiC-based power and GaN-on-SiC-based RF power solutions. This also includes the related core competencies in wafer substrate manufacturing for SiC, as well as for SiC with a monocrystalline GaN layer for RF power applications. With more than 550 staff and an IP portfolio of about 2000 patents and patent applications, the deal complements Infineon's previous acquisition of International Rectifier in early 2015. Wolfspeed's SiC-based product portfolio adds to Infineon's existing offering.
"Joining forces with Wolfspeed represents a unique growth opportunity," believes Infineon's CEO Dr Reinhard Ploss. "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 reckons. "With Wolfspeed we will become number one in SiC-based power semiconductors. We also want to become number one in RF power. This will accelerate the market introduction of these innovative technologies, addressing the needs of modern society – such as energy efficiency, connectivity and mobility," he adds.
"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," comments Cree's chairman & CEO Chuck Swoboda. "Wolfspeed will now be able to more aggressively commercialize its unique silicon carbide and gallium nitride technology as part of Infineon," he believes.
"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," says Wolfspeed's CEO Frank Plastina. "With Infineon's complementary culture and additional investment, we'll be better positioned to unlock the potential of our portfolio and our people."
Infineon stresses that power management solutions based on compound semiconductors have advantages enabling its customers to develop systems with higher energy efficiency, smaller footprints and lower system costs. By combining their portfolios of technologies, products and manufacturing capabilities, Infineon and Wolfspeed aim to accelerate the development of components enabling customers to develop differentiating systems. Major areas where applications will profit from SiC are renewables and especially automotive. Both 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 (xEV), says Infineon. Combining both portfolios and competencies should accelerate time-to-market for new products based on compound semiconductors, the firm reckons.
Next-generation cellular infrastructure standards such as 5G and beyond will use frequencies up to 80GHz. Only compound semiconductors can deliver the required efficiencies at these high frequencies, notes Infineon. GaN-on-Si allows higher levels of integration and offers 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, says the firm. Together with its Si-based LDMOS products, Infineon claims to be the industry's most complete provider for RF power components.
Infineon says that the combined portfolio advances its strategic 'Product to System' approach. Additionally, it will benefit from accelerating the adoption of SiC- and GaN-based components in early-adopter markets, e.g. electro-mobility, high-end photovoltaic inverter, xEV charging infrastructure, and RF power components in cellular infrastructure.
