BorgWarner Preps $500M Chip Maker Investment

BorgWarner Inc. has committed to investing $500 million in semiconductor maker Wolfspeed Inc., a move that puts in place part of the supply chain the auto parts manufacturer will need as it seeks to have nearly half its 2030 sales come from the electric vehicle industry.

Michigan-based BorgWarner plans to invest in a $1.3 billion convertible debt offering Wolfspeed executives announced last week. Wolfspeed specializes in silicon carbide and gallium nitride chips, the latter being a promising technology that has the ability to produce higher power levels while emitting less heat. BorgWarner’s commitment entitles it to buy up to $650 million of silicon carbide devices from North Carolina-headquartered Wolfspeed (which last year changed its name from Cree Inc.) starting in 2024.

“Silicon carbide-based power electronics play an increasingly important role for our customers as our electric vehicle business continues to accelerate,” said Frédéric Lissalde, president and CEO of BorgWarner. “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.”

Lissalde and his team last year booked about $350 million in EV-related sales of propulsion, heat and energy management charging components and want to grow that number to $4.5 billion by 2025–which would account for one out of every four top-line dollars—before pushing on from there. They said last month that recently-won contracts and acquisitions already have them on pace to ring up $4 billion in sales from EV customers in three years and begin turning an operating profit on EV work by 2024.

“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,” Wolfspeed President and CEO Gregg Lowe said in a statement.

The Wolfspeed team last month said it plans to invest $6.5 billion in capacity in North Carolina in coming years. If carried out as envisioned, the projects (pictured above) would grow the company’s production capabilities more than tenfold. Lowe and Wolfspeed also have strategic supply deals in place with General Motors and Lucid Group.

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