Infineon and Wolfspeed Expand and Extend Multi-Year Silicon Carbide (SiC) 150mm Wafer Supply Agreement
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Insights
The extension of the supply agreement between Infineon Technologies and Wolfspeed signifies a strategic move to bolster their positions in the semiconductor industry, particularly in the silicon carbide (SiC) market. SiC semiconductors are gaining traction due to their efficiency and capacity to withstand high temperatures and voltages, making them ideal for use in automotive, solar, EV applications and energy storage systems. This partnership not only ensures a steady supply for Infineon but also secures a committed customer for Wolfspeed, providing both companies with a competitive advantage in an industry that is expected to experience significant growth.
From a market perspective, this deal is likely to have a positive impact on the share value of both companies in the short term due to increased investor confidence in their supply chain stability and long-term growth prospects. The emphasis on decarbonization and energy efficiency in various industries could lead to increased demand for SiC-based solutions, potentially positioning Infineon and Wolfspeed as key players in this space. The $20 billion annual opportunity mentioned by Wolfspeed's CEO underlines the financial potential of the SiC market, which could lead to upward trends in stock valuations for companies with a strong foothold in this area.
Infineon's multi-source strategy and the extended partnership with Wolfspeed reflect a proactive approach to managing risk and ensuring supply chain resilience, which is critical given the recent global supply chain disruptions experienced across industries. Investors should note the potential for improved gross margins and reduced supply risks, which can translate into more stable financial performance for Infineon. For Wolfspeed, the capacity reservation agreement provides a predictable revenue stream, which can be favorable for financial planning and investment in further capacity expansion.
Long-term, the agreement may also result in cost savings due to economies of scale and improved negotiation leverage with other suppliers. However, it is important to monitor the execution of this strategy, as any delays or quality issues in the supply of SiC wafers could impact production timelines and cost structures. Additionally, the increasing competition in the SiC market could pressure prices and margins over time, making operational efficiency and innovation key factors for sustaining profitability.
The multi-year capacity reservation agreement between Infineon and Wolfspeed showcases a commitment to mitigating supply chain risks, especially in a market where demand outstrips supply. By securing a long-term supply of SiC wafers, Infineon is taking a significant step towards ensuring that it can meet the growing demand for its automotive and industrial products without interruption. This is particularly relevant as the automotive industry increasingly adopts electric vehicles and requires reliable sources of high-performance semiconductors.
For stakeholders, the implications of this agreement extend beyond immediate supply assurance. It demonstrates Infineon's dedication to supporting the growth of clean energy applications through the adoption of SiC-based power solutions. The focus on energy-efficient technology aligns with global decarbonization efforts and positions Infineon as a leader in sustainable innovation. For Wolfspeed, it reinforces their role as a critical enabler in the semiconductor industry's transition to SiC, potentially leading to greater market share and influence.
“As the demand for silicon carbide devices continues to increase, we are following a multi-source strategy to secure access to a high-quality, global and long-term supply base of 150mm and 200mm SiC wafers. Our prolonged partnership with Wolfspeed further strengthens Infineon’s supply chain resilience for the coming years,” said Jochen Hanebeck, CEO of Infineon Technologies. “We have been working with Wolfspeed for more than 20 years to bring the promise of silicon carbide to the automotive, industrial and energy markets, and to help customers leverage this energy-efficient technology to foster decarbonization.”
The adoption of silicon carbide-based power solutions is rapidly growing across multiple markets. Silicon carbide solutions enable smaller, lighter and more cost-effective designs, converting energy more efficiently to unlock new clean energy applications. To better support these growing markets, Infineon is continuously diversifying its supplier base to secure access to high-quality silicon carbide substrates.
“Wolfspeed is the world’s leader in silicon carbide production. We are the catalyst in the industry transition to silicon carbide, providing high-quality materials to key customers like Infineon, a leading supplier in both the automotive and industrial markets, while also scaling our capacity footprint,” said Wolfspeed president and CEO Gregg Lowe. “Industry estimates indicate demand for silicon carbide devices, as well as the supporting material, will grow substantially through 2030, representing a
About Wolfspeed, Inc.:
Wolfspeed (NYSE: WOLF) leads the market in the worldwide adoption of silicon carbide technologies. We provide industry-leading solutions for efficient energy consumption and a sustainable future. Wolfspeed’s product families include silicon carbide material and power devices targeted for various applications such as electric vehicles, fast charging, and renewable energy and storage. We unleash the power of possibilities through hard work, collaboration and a passion for innovation. Learn more at www.wolfspeed.com.
X (formerly Twitter): @Wolfspeed
LinkedIn: @Wolfspeed
Wolfspeed® is a registered trademark of Wolfspeed, Inc.
About Infineon
Infineon Technologies AG is a global semiconductor leader in power systems and IoT. Infineon drives decarbonization and digitalization with its products and solutions. The company has around 58,600 employees worldwide and generated revenue of about
Further information is available at www.infineon.com
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Forward Looking Statements:
This press release contains forward-looking statements by Wolfspeed involving risks and uncertainties, both known and unknown, that may cause Wolfspeed’s actual results to differ materially from those indicated. Actual results may differ materially due to a number of factors, including risks associated with Wolfspeed’s expansion plans, including, among other things, design and construction delays and cost overruns, timing and amount of government incentives actually received, and delays or other difficulties in preparing for and ramping production; the risk of production or supply chain challenges that impact Wolfspeed’s ability to ship in sufficient quantities to satisfy customer requirements; the continued pace of the transition to using silicon carbide devices in electric vehicles and other industrial uses; the risk that Wolfspeed may be unable to manufacture its products with sufficiently low cost to offer them at competitive prices or with acceptable margins; customer acceptance of Wolfspeed’s products; the risk that demand for silicon carbide will not grow as Wolfspeed expects; the rapid development of new technology and competing products that may impair demand or render Wolfspeed’s products obsolete; and other factors discussed in Wolfspeed’s filings with the Securities and Exchange Commission, including its report on Form 10-K for the year ended June 25, 2023, and subsequent filings. For additional product and company information, please refer to www.wolfspeed.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240123864199/en/
Media Relations:
Bridget Johnson
Head of Corporate Marketing and Communications
847-269-2970
Media@wolfspeed.com
Investor Relations:
Tyler Gronbach
VP, External Affairs
919-407-4820
Investorrelations@wolfspeed.com
Source: Wolfspeed, Inc.
FAQ
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