Onsemi said on Wednesday it would buy GT Advanced Technologies, a manufacturer of a key material used in chips for electric vehicles called silicon carbide, for US$415 million in cash.
The move is a major push further into electric vehicles for Onsemi, which already supplies other automotive chips such as sensors in driver safety systems.
Automakers are turning to chips made from silicon carbide for the drivetrains and charging systems in electric vehicles because the material is more energy-efficient than chips made from standard silicon.
But the crystalline material requires new techniques to produce and to manufacture compared to standard silicon.
To make silicon carbide chips, companies like Onsemi must use raw discs called wafers. The silicon carbide versions of those wafers come from a only few key suppliers such as Cree Inc, which has shifted its strategy from LED chips used in lighting to focus on silicon carbide chips for electric vehicles.
Phoenix-based Onsemi sells a range of silicon carbide chips that go into electric vehicles, but until the GTAT deal, it had sourced most of the raw wafers for those chips from outside suppliers. GTAT specializes in growing various kinds of crystalline materials, including silicon carbide.
Onsemi said the deal will help it secure and grow its supply of the material to make silicon carbide chips and give it greater control over the technology, which still remains less advanced than chips using older materials.
“This transaction reflects our confidence and stated commitment to meaningfully invest in silicon carbide solutions,” Hassane El-Khoury, president and chief executive officer of Onsemi, said in a statement.
(Reporting by Sohini Podder in Bengaluru and Stephen Nellis in San Francisco; Editing by Aditya Soni and Jonathan Oatis)