Infineon shares up: Infineon takes over Canadian group Gan Systems

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To this end, Infineon is taking over the Ottawa-based semiconductor manufacturer Gan Systems for 830 million US dollars (782 million euros). Infineon manager Adam White, responsible for the Power & Sensor Systems (PSS) division, sees great growth opportunities for gallium nitride-based solutions in the field of energy conversion.

The products from Infineon and Gan Systems complement each other, he said in an interview with the dpa-AFX news agency on Friday. The technology based on gallium nitride is still very small in comparison to the common silicon and the increasingly emerging silicon carbide, but according to him it is one of the fastest growing. He referred to market forecasts that sales of gallium nitride products for power applications are expected to increase by 56 percent annually to around two billion dollars by 2027. And these are rather conservative estimates, says White. He sees the technology as particularly suitable for applications such as mobile charging for electric cars, solar inverters for private households or the power supply of data centers.

Semiconductors based on gallium nitride (Gan) and silicon carbide are increasingly in demand. Chip companies put a lot of money into expanding production, which also benefits machine builders such as the MDAX group AIXTRON. GaN-based components are smaller, more energy-efficient and more temperature-resistant than classic silicon chips.

With the purchase announced on Thursday evening, Infineon boss Jochen Hanebeck wants to achieve the goals for the expansion of gallium nitride-based products more quickly. “Gan technology paves the way for more efficient and low-carbon solutions that support decarbonization,” he said. Alongside silicon and silicon carbide, gallium nitride is developing into a key material for power semiconductors. Infineon is currently expanding its site in Kulim, Malaysia, with a new factory worth more than two billion euros, which will complement the production capacities in Villach, Austria.

The purchase price should be financed with existing liquid funds, it said. The supervisory boards of both companies have approved the takeover. The regulatory authorities would still have to give the green light. Infineon had failed in the past with the takeover of a company active in silicon carbide and gallium nitride technology: the US group Wolfspeed. The US authorities put a stop to the purchase in 2016 for security reasons, among other things.

Gan and Wolfspeed are completely different, White says. At an analysts’ conference, PSS chief financial officer Ulrich Pelzer added that he saw no major hurdles from a competitive perspective, as there were few overlaps. Gan also only has a small position in defense, which he thinks is feasible. Founded in 2008, the privately held company employs more than 200 people and has sales in the low to mid double-digit million euro range.

The planned takeover was well received on the stock exchange. On Friday afternoon, the Infineon shares listed in the DAX gained 1.5 percent. According to JPMorgan analyst Sandeep Deshpande, Gan Systems is one of the top three gallium nitride companies in the world. Its strong growth should pay off for Infineon. Citigroup industry expert Andrew Gardiner also rated the acquisition positively. The move is likely to dilute earnings per share (EPS) for at least a few years. However, expectations for future growth are likely to be better. Stifel’s analysts called the price of Gan “high” compared to the company’s size.

NEUBIBERG (dpa-AFX)

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