Japanese companies, Denso Corp. and Mitsubishi Electric (OTC:MIELY), have invested $1 billion into Coherent (NYSE:COHR)'s silicon carbide business on Tuesday. The business, located in Saxonburg, Pa., produces silicon carbide wafers, a key component for electric vehicles (EVs).
The investment gives each company a 12.5% stake in the unit, valuing it at $4 billion. Coherent will maintain a 75% ownership and continue to operate the business as an independent subsidiary. The transaction also includes long-term supply agreements with both investors.
Silicon carbide wafers are essential for EV manufacturers as they help improve charging times and extend vehicle range. With this new investment, Coherent concludes its strategic review and has the means to expand its manufacturing capacity.
This joint investment underscores the increasing importance of silicon carbide technology in the rapidly growing electric vehicle industry. It also highlights the strategic moves by Denso Corp. and Mitsubishi Electric to secure their positions in the supply chain of this critical component.
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