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Renesas Electronics acquires GaN supplier Transphorm, which is expected to close in the second half of 2024

Jessie January 12, 2024

On January 11, Renesas Electronics and Transphorm, a supplier of gallium nitride (GaN) power semiconductors, announced that they have reached a definitive agreement.

Under the agreement, the Renesas subsidiary will acquire all of Transphorm's outstanding common shares for $5.10 per share in cash, representing a premium of approximately 35% over Transphorm's closing price on January 10, 2024 and a premium of approximately 56% over the volume weighted average price over the past twelve months. This represents a premium of about 78% to the volume-weighted average price over the past six months. The transaction values Transphorm at approximately $339 million.

Transphorm's Board of Directors has unanimously approved the definitive agreement and recommends that Transphorm shareholders approve the definitive transaction and approve the merger. In conjunction with the signing of the definitive agreement, KKR Phorm Investors L.P., which owns approximately 38.6% of Transphorm's outstanding common stock. A customary voting agreement has been entered into with Renesas in support of the transaction.

The transaction is expected to close in the second half of 2024, subject to the approval of Transphorm's shareholders, regulatory clearances and the satisfaction of other customary closing conditions.

Transphorm designs and manufactures high-performance and highly reliable GaN semiconductors for high-voltage power conversion applications, has a portfolio of power GaN IP products with more than 1,000 owned or licensed patents, and produces the industry's first high-voltage GaN semiconductor devices compliant with JEDEC and AEC-Q101 standards. Transphorm's innovations have enabled power electronics to break the limits of silicon, achieving more than 99 percent efficiency, a 50 percent increase in power density, and a 20 percent reduction in system costs. Transphorm is headquartered in Golita, California, and has manufacturing facilities in Aizu and Golita, Japan.

Renesas said the acquisition will provide the company with in-house technology for GaN, a next-generation key material for power semiconductors, to expand its reach in fast-growing markets such as electric vehicles, computing (data center, artificial intelligence, infrastructure), renewable energy, industrial power supplies, and fast chargers/adapters.

Renesas will use Transphorm's automotion-grade GaN technology to develop new enhanced power solutions, such as the X-in-1 powertrain solution for electric vehicles, as well as solutions for computing, energy, industrial and consumer applications.

As a cornerstone of carbon neutrality, the demand for efficient power systems is increasing. In response to this trend, related industries are transitioning to wide band gap (WBG) materials represented by silicon carbide (SiC) and GaN. These advanced materials offer a wider range of voltages and switching frequencies than traditional silicon-based devices. Building on this momentum, Renesas Electronics has announced the establishment of an in-house SiC production line and signed a 10-year SiC wafer supply agreement.

In terms of silicon carbide, TrendForce consulting data shows that with the clarity of cooperation projects with automotive and energy companies such as Infineon and ON Semi, the overall SiC power component market size will be promoted to 2.28 billion US dollars in 2023, with an annual growth of 41.4%. It is expected that by 2026, the SiC power component market size is expected to reach $5.33 billion, and its mainstream applications still rely on electric vehicles and renewable energy.

The development of GaN power components market is mainly driven by consumer electronics, the core is still in the fast charger, other consumer electronics scenarios also include Class D audio, wireless charging and so on. Previously, the industry believes that gallium nitride has reached a new inflection point, not only can be applied to the charger fast charge market, but also can be used in energy storage, charging stations and other fields.

According to TrendForce Consulting's "2023 GaN Power Semiconductor Market Analysis Report - Part1", the global GaN power component market will grow from $180 million in 2022 to $1.33 billion in 2026, with a compound growth rate of up to 65%.

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