BorgWarner to invest $500M in Wolfspeed, securing up to $650M in annual capacity for SiC devices
17 November 2022
Wolfspeed and BorgWarner announced a strategic partnership that calls for BorgWarner to invest $500 million in Wolfspeed’s new $1.3-billion financing transaction in exchange for a silicon carbide device capacity corridor.
Wolfspeed intends to offer, subject to market conditions and other factors, $1.300 billion aggregate principal amount of its Convertible Senior Notes due 2029 in a private offering to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. In addition, Wolfspeed expects to grant the initial purchasers of the notes an option to purchase, for settlement within a 13-day period from, and including, the date on which the notes are first issued, up to an additional $200 million aggregate principal amount of the notes.
Under the multi-year agreement between BorgWarner and Wolfspeed, BorgWarner will be entitled to purchase up to $650 million of devices annually as BorgWarner requirements increase.
Silicon carbide-based power electronics play an increasingly important role for our customers as our electric vehicle business continues to accelerate. We believe this agreement helps ensure that BorgWarner will have a reliable supply of high-quality silicon carbide devices, which are significant to the company’s inverter growth plans.
Building upon BorgWarner’s world-class Viper power switches and inverter technology, we are excited about the opportunity to work jointly with Wolfspeed, the leader in silicon carbide, on the potential development of the next generation of silicon carbide products. We believe our relationship with Wolfspeed will drive innovation, accelerate the global transition to electric vehicles, and further BorgWarner’s vision for a clean, energy-efficient world.—Frédéric Lissalde, President and CEO of BorgWarner
BorgWarner’s Charging Forward strategy targets $4.5 billion of electric vehicle revenue for 2025, compared to less than $350 million in 2021. Based on new business awards and acquisitions announced as of the company’s third quarter earnings release, BorgWarner believes it is already on track to achieve approximately $4 billion of electric vehicle revenue by 2025.
Today’s announcement demonstrates the creative solutions two collaborative and strategic partners are pursuing to better support the growing demand for silicon carbide devices. BorgWarner has been a strong partner with Wolfspeed for many years, and we are pleased to secure the investment from them which will be used to support our capacity expansion efforts and ensure we have a steady supply of product for their customers. This agreement, combined with our most recent announcement of a multi-billion-dollar materials expansion in North Carolina, confirms the industry transition from silicon to silicon carbide is well underway.—Gregg Lowe, President and CEO for Wolfspeed
Last month at the company’s Investor Day, Wolfspeed outlined a multi-year, $6.5 billion capacity expansion effort which included the installation of additional tools at the company’s state-of-the-art, 200mm Mohawk Valley fab and the construction of a 445-acre Silicon Carbide materials facility in North Carolina, which will expand the company’s existing materials capacity by more than 10x. The first phase of construction is slated to be complete by the end of FY2024.