Gallium Nitride and Silicon Carbide companies likely targets in high-voltage power electronics push
By Hana Askren and Mark Andress
Until now, electric vehicle batteries suffered from being costly, large and inefficient. Gallium nitride (GaN) and silicon carbide (SiC) are two semiconductor technologies in the driver’s seat to change all that.
Close-up of battery packs box in the the electric car.
The newer chemistries allow for smaller, more efficient semiconductors that can operate at higher voltages than traditional silicon wafers. Tesla’s decision to include SiC transistors in its Model 3 was seen as a big milestone for the industry.
SiC first established itself at 1,200 volts, where it outcompetes silicon and GaN, and has moved down toward the 600 to 900 volt level to serve the EV market. GaN outcompetes silicon in the 200 to 900 volt level and is also establishing itself in the EV market. At these voltages, the technology can also be used in power electronics for solar power systems and industrial motor drives.
With the automotive industry’s rapid pivot to electric vehicles, a slew of semiconductor startups are expected to be targeted by more-established players.
Among the most mature GaN startups are Ottawa, Ontario-based GaN Systems and El Segundo, California-based Navitas Semiconductor, whose power switching components already have been identified in product “teardowns,” in which a device is dismantled to figure out who manufactures the parts.
Other promising GaN startups include Ithaca, New York-based Odyssey Semiconductor and Israel’s VisIC Technologies, which are both developing high-voltage power switches and modules. El Segundo-based Efficient Power Conversion (EPC) and Goleta, California-based Transphorm, in which private equity firm KKR is an investor, are also notable GaN startups.
Meanwhile, Cree, the largest pure-play SiC company, announced last year that it would invest $1 billion to expand manufacturing capacity at its Durham, North Carolina headquarters, as well to build a new fabrication facility in upstate New York. Other smaller SiC companies include Virginia-based GeneSiC Semiconductor, New Jersey-based United Silicon Carbide and New Hampshire-based GT Advanced Technologies.
Leading power semiconductor device players, which feature STMicroelectronics, Infineon Technologies, ON Semiconductor and Mitsubishi Electric, likely are all watching the upstarts. Some have already made acquisitions, as STMicro did in February 2019 when it bought Swedish SiC wafer manufacturer Norstel for $137.5 million. Other big players – such as Panasonic, ON Semiconductor, Texas Instruments and SanKen Electric – also have been developing GaN switching transistors. Expect some to switch gears with an acquisition to speed up that process, according to an industry investment banker and analyst.
In addition to proven applications like EVs and solar panels, these devices are opening the door to whole new applications, said Craig Irwin, managing director and senior research analyst at Roth Capital, adding, “there’s a lot of blue sky out there – where else are these going to be used?” New companies are entering the market, taking on the R&D and startup risks, and could become targets once their products are established.
There is “intense interest” in these companies for M&A and investment, and a scarcity of targets, Irwin added. Takeout valuations would have to be large in order to counter the opportunity of remaining independent and raising private capital, or pursuing an IPO.
Hana Askren covers energy and mining M&A for Mergermarket from New York. She can be reached at email@example.com.
Mark Andress is Mergermarket’s San Francisco Editor and covers the technology sector. He can be reached at firstname.lastname@example.org.