In a strategic move to strengthen its position in the semiconductor industry, Renesas Electronics Corporation, a leading supplier of advanced semiconductor solutions, has entered into a definitive agreement to acquire all outstanding shares of Transphorm, Inc., a global leader in robust gallium nitride (GaN) power semiconductors. The deal, valued at approximately $339 million, involves purchasing Transphorm’s common stock at $5.10 per share in cash. This price represents a premium of roughly 35% to Transphorm’s closing price on January 10, 2024, 56% above the volume weighted average price over the past twelve months, and 78% over the last six months.

Expanding Reach into Fast-Growing Markets

The acquisition is a significant step for Renesas, providing access to in-house GaN technology, a critical material for next-generation power semiconductors. This technology will expand Renesas’ reach into rapidly growing markets, including electric vehicles (EVs), computing (data centers, AI, infrastructure), renewable energy, industrial power conversion, and fast chargers/adapters.

Transition to Wide Bandgap Materials

Addressing the increasing demand for highly efficient power systems and carbon neutrality, the industry is witnessing a shift toward wide bandgap (WBG) materials like silicon carbide (SiC) and GaN. These advanced materials offer broader voltage and switching frequency ranges compared to traditional silicon-based devices. Renesas has furthered this transition by announcing the establishment of an in-house SiC production line, backed by a 10-year SiC wafer supply agreement.

GaN’s Rising Demand and New Enhanced Power Solutions

Renesas plans to leverage Transphorm’s expertise in GaN, which enables higher switching frequency, lower power losses, and smaller form factors. The benefits of GaN technology, such as greater efficiency, compactness, and cost-effectiveness, are driving its demand, predicted to grow over 50% annually. Renesas aims to develop new power solution offerings, including X-in-1 powertrain solutions for EVs, and applications in computing, energy, industrial, and consumer sectors.

Statements from Renesas and Transphorm Leadership

Hidetoshi Shibata, CEO of Renesas, noted the significance of adding Transphorm’s GaN technology to their portfolio, enhancing their momentum in IGBT and SiC. Dr. Primit Parikh and Dr. Umesh Mishra, co-founders of Transphorm, expressed excitement about joining forces with Renesas, paving the way for industry-wide adoption of WBG materials.

Transaction Details and Expected Closing

The board of directors of Transphorm unanimously approved the agreement, recommending stockholder adoption. KKR Phorm Investors L.P., holding approximately 38.6% of Transphorm’s stock, agreed to vote in favor of the transaction. The deal is expected to close in the second half of 2024, subject to approval from Transphorm stockholders, regulatory clearances, and other customary closing conditions.

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