By Joseph White and Stephen Nellis
DETROIT (Reuters) - Germany's Bosch Group has agreed to buy key assets of California chip manufacturer TSI Semiconductors and invest $1.5 billion to expand U.S. production of silicon carbide chips for electric vehicles.
Bosch and TSI did not disclose a purchase price. Bosch said it plans to invest $1.5 billion to retool TSI's chip production facilities in Roseville, California to start producing silicon carbide chips by 2026.
The investment "will be heavily dependent on federal funding opportunities" through the CHIPS act as well as state subsidies, Bosch said in a statement.
Bosch said the TSI facility would become the "third pillar" of in-house semiconductor production, along with two sites in Germany.
Like other automotive manufacturers, Bosch was hit hard over the past two years by disruptions to semiconductor production in Asia, exacerbated by the COVID-19 pandemic. Those shortages have eased but not gone away. Bosch's automaker customers have continued to push for more secure, diversified sources of chips.
The silicon carbide chips Bosch said it will manufacture at the TSI Roseville site are increasingly in demand by electric vehicle manufacturers. The silicon carbide chemistry enables greater driving range and faster recharging, Bosch said.
Demand for silicon carbide semiconductors is growing by 30% annually, Bosch said.
That demand has led to a surge in investment in the chips. U.S-based Wolfspeed Inc is building new plants to make silicon carbide chips in New York State and in Germany. Onsemi Corp is also investing heavily in silicon carbide and has signed a strategic agreement with Volkswagen AG (OTC:VWAGY) to supply chips to the automaker.
The TSI site currently is a foundry for application-specific integrated circuits, or ASICs used in various industries, Bosch said.
Bosch plans to acquire the buildings, machines and infrastructure of TSI as well as well as its commercial semiconductor business. After re-tooling the factory, Bosch said it plans to start producing silicon carbide chips on 200-milimeter wafers - the discs of silicon that chips are produced upon - in 2026 in 10,000 feet of clean room space.
(This story has been refiled to correct the spelling of TSI Semiconductors in paragraph 10)