BorgWarner gets access to $650M in silicon carbide devices

BorgWarner gets access to $650M in silicon carbide devices

BorgWarner Inc.. said it entered into a partnership with Wolfspeed Inc. that will allow the auto supplier to purchase up to $650 million of silicon carbide devices annually as it ramps up its electrification business.

In exchange, BorgWarner agreed to invest $500 million into North Carolina-based Wolfspeed, which is in the midst of a $6.5 billion effort to boost manufacturing capacity for silicon carbide products including semiconductors.

“Silicon carbide-based power electronics play an increasingly important role for our customers as our electric vehicle business continues to accelerate,” BorgWarner CEO Frédéric Lissalde said in a statement on Wednesday.

The multiyear agreement will help to ensure BorgWarner’s access to silicon carbide devices, which Lissalde said “are significant to the company’s inverter growth plans.”

Boosting sales of inverters for use in electric vehicles will be critical for the supplier as it looks to meet its electrification targets. BorgWarner aims to bring in $4.5 billion in revenue from supplying components for EVs by 2025, up sharply from around $350 million in 2021.

The company said in October that it was on track to bring in about $850 million in EV revenue this year and to hit about $4 billion in EV revenue in 2025.

Some of that revenue will stem from the sale of 800-volt silicon carbide inverters. BorgWarner will increase production of those inverters to supply an undisclosed premium European automaker by 2024, the company said in a news release last month.

The partnership gives Wolfspeed access to significant funding as it invests heavily into its manufacturing capacity. The company said last month it will invest $6.5 billion over the next several years to expand its materials capacity by more than 10 times current levels.

The investment includes construction of a new manufacturing plant in North Carolina, which will produce 200-millimeter silicon carbide wafers for use at Wolfspeed’s Mohawk Valley, NY, semiconductor fabrication facility. The first phase of construction is expected to end by 2024.

Wolfspeed recently signed agreements with automakers including General Motors and Lucid to supply them with silicon carbide devices. Wolfspeed supplies Lucid with 200-millimeter semiconductors for use in its Air electric car, while GM said last year that Wolfspeed will provide silicon carbide to be used in the integrated power electronics within its Ultium Drive units.

BorgWarner ranks No. 15 on the Automotive News list of the top 100 global suppliers, with 2021 worldwide parts sales to automakers of $13.99 billion.

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