(new: statements Infineon manager White, background, updated share price)
NEUBIBERG (dpa-AFX) - Chipmaker Infineon plans to expand its business with novel power semiconductors with an acquisition in Canada. To this end, the company is acquiring Ottawa-based semiconductor manufacturer Gan Systems for $830 million (782 million euros). Infineon manager Adam White, responsible for the Power & Sensor Systems (PSS) division, sees great growth opportunities for gallium nitride-based solutions in the field of energy conversion.
The products of Infineon and Gan Systems complement each other, he said in an interview with the news agency dpa-AFX on Friday. Gallium nitride-based technology is still quite small compared to mainstream silicon as well as the increasingly emerging silicon carbide, but is among the fastest growing, he said. He pointed to market forecasts, according to which sales of gallium nitride products for power applications are expected to grow 56 percent annually to about $2 billion by 2027. And these are rather conservative estimates, White said. He sees the technology as particularly suitable for applications such as mobile charging for electric cars, solar inverters for private households or power supply for data centers.
Semiconductors based on gallium nitride (Gan) and silicon carbide are increasingly in demand. Chip companies are spending a lot of money on expanding production, which is also benefiting mechanical engineering companies such as the MDax group Aixtron. GaN-based components are smaller, more energy-efficient and more temperature-resistant than classic silicon chips.
Infineon CEO Jochen Hanebeck wants the purchase, announced Thursday evening, to accelerate the company's goals in expanding GaN-based products. "The Gan technology paves the way for further efficient and CO 2-saving solutions that support decarbonization," he said. Gallium nitride is emerging as a critical material for power semiconductors alongside silicon and silicon carbide. Infineon is currently expanding its site in Kulim, Malaysia, with a new fab costing more than two billion euros to complement production capacity in Villach, Austria.
The purchase price is to be financed with existing liquid funds, the statement added. The supervisory boards of both companies have approved the acquisition, it said. Regulatory authorities still have to give the green light. Infineon had failed in the past with the takeover of a company active in silicon carbide and gallium nitride technology: the US group Wolfspeed. In this case, the US authorities put a stop to the purchase in 2016, among other things for security policy reasons.
Gan and Wolfspeed are completely different, White said. At an analysts' conference, PSS CFO Ulrich Pelzer added that he did not see any major hurdles from a competitive point of view, as there was little overlap. Gan also has only a small position in defense, he said, which he considers feasible. Founded in 2008, the privately held company reportedly employs more than 200 people and has sales in the low to mid double-digit million euro range.
The planned takeover was well received on the stock market. On Friday afternoon, Infineon shares listed on the Dax gained 1.5 percent. According to JPMorgan analyst Sandeep Deshpande, Gan Systems is one of the three most important gallium nitride companies worldwide. Its strong growth should pay off for Infineon. Citigroup industry expert Andrew Gardiner also viewed the acquisition positively. Admittedly, the move is likely to dilute earnings per share (EPS) for at least a few years. However, expectations for future growth should be better. Stifel analysts called Gan's price "high" relative to the size of the company./nas/jsl/he