The transaction expands the Cree Wolfspeed business unit’s wireless market opportunity.
Infineon continues to drive key growth areas such as electro-mobility, autonomous driving, renewables and technologies for a connected world. The transaction has closed and is effective today.
“The acquisition strengthens Wolfspeed’s leadership position in RF GaN-on-SiC technologies, as well as provides access to additional markets, customers and packaging expertise,” said Cree CEO Gregg Lowe. “This is a key element of Cree’s growth strategy and positions Wolfspeed to enable faster 4G networks and the revolutionary transition to 5G.”
“Cree is a strong new owner for this portion of our RF business and has an excellent reputation in the industry,” said Reinhard Ploss, CEO of Infineon. “We are excited about the business rationale and the prospects for the combined businesses. At the same time, we will be able to focus our resources more effectively on Infineon’s strategic growth areas and will retain a strong technology portfolio for the wireless market.”
Infineon and Cree have a long-standing history of technology leadership, collaboration and shared business interests.
The acquired Infineon RF Power team and capabilities will complement Wolfspeed’s existing offerings and expertise with additional technology, design, packaging, manufacturing, and customer support.
This business holds a leading market position offering transistors and MMICs (Monolithic Microwave Integrated Circuits) for wireless infrastructure radio frequency power amplifiers based on both LDMOS and Gallium Nitride on Silicon Carbide (GaN-on-SiC) technologies.
The transaction includes:
· The main facility in Morgan Hill (CA) which includes packaging and test operations for LDMOS and GaN-on-SiC;
· Well-established customer relationships with leading manufacturers of wireless infrastructure equipment, including field support personnel on site;
· Approximately 260 employees in the US locations, Morgan Hill and Chandler (AZ), as well as in Finland, Sweden, China and South Korea; and
· A transition service agreement to ensure business continuity and a smooth transition under which Infineon will perform substantially all business operations for approximately the next 90 days.
Infineon will support the transaction with a long-term supply agreement for LDMOS wafers and related components out of its fab in Regensburg, Germany, and will also supply assembly and test services out of its facility in Melaka, Malaysia.
The transaction comprises Infineon’s RF Power operations for wireless infrastructure in Morgan Hill (CA) and Chandler (AZ) in the U.S., as well as locations in China, Sweden, Finland and Korea.
The state-of-the-art backend manufacturing in Morgan Hill, as well as a leading intellectual property (IP) and technology portfolio are also part of the transaction.
The transaction does not include the Infineon Chip Card & Security (CCS) operations in Morgan Hill that will remain at the site and continue to operate as part of Infineon.
Cree funded the Euro 345 million from cash and borrowings on its revolving line of credit.
The Infineon RF Power business will become part of Cree’s Wolfspeed operating segment and is targeted to increase annual revenues by approximately $115 million in the first twelve months post acquisition.
Additionally, the acquisition is targeted to be accretive to Cree’s non-GAAP earnings per share in its first full quarter of operations with Cree (which will be Cree’s fiscal fourth quarter ending June 24, 2018). Targeted non-GAAP earnings per share exclude expenses related to the amortization of acquired intangibles, stock based compensation expense and one-time acquisition related expenses.