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German engineering and technology firm Bosch has announced its intent to acquire US-based chipmaker TSI Semiconductors and invest $1.5 billion over the next few years to tap the rising demand for chips globally, especially in the automotive and electronics sector.

“With the acquisition of TSI Semiconductors, we are establishing manufacturing capacity for silicon carbide (SiC) chips in an important sales market while also increasing our semiconductor manufacturing, globally,” Stefan Hartung, chairman of the Bosch board of management, said in a statement.

Neither of the companies disclosed the cost of acquisition or the terms.

Silicon carbide semiconductors can operate at higher temperatures, voltages, and frequencies compared to other semiconductors, making them more efficient for use across solar-powered devices, electric vehicles, aerospace applications, and other applications such as 5G.

TSI Semiconductors, whose semiconductor plant is based in Roseville, California and employs about 250 people, mainly develops and produces large volumes of chips on 200-millimeter silicon wafers for applications in the mobility, telecommunications, energy, and life sciences industries, the companies said in a joint statement.

Post the acquisition, Bosch intends to invest more than $1.5 billion in the Roseville site to make it ready for producing SiC chips, the companies said, adding that the plant will start producing its first SiC chips in 2026, based on 200-millimeter wafers after a retooling phase.

“The existing cleanroom facilities and expert personnel in Roseville will allow us to manufacture SiC chips for electromobility on an even larger scale,” Hartung said, adding that Roseville offers roughly 10,000 square meters of cleanroom space.  REGISTER NOW for May 11, in-person event, FutureIT Washington, D.C.: Building the Digital Business with Cloud, AI and Security ]

Bosch eyeing demand for SiC chips in electric vehicles

Bosch itself has built up expertise in SiC chips production and has been churning them out at its Reutlingen location near Stuttgart, Germany.

“In the future, Reutlingen will also produce them on 20200-millimeter wafers. By the end of 2025, the company will have extended its cleanroom space in Reutlingen from roughly 35,000 to more than 44,000 square meters,” the companies said as part of the joint statement.

Bosch’s acquisition and investment plans are based on the massive usage of SiC chips in electric vehicles which are seeing huge adoption across the US and other markets, according to Markus Heyn, another member of the Bosch board of management.

By 2025, the company expects to have an average of 25 of its chips integrated in every new vehicle.

“The market for SiC chips is also continuing to grow fast – by 30 percent a year on average,” the companies said, adding that SiC chips in electric vehicles enable greater range and more efficient recharging, as they use up to 50 percent less energy.

The silicon carbide chips can ensure at least six percent greater range efficiency compared to other silicon chips built with other materials, the companies added.

US-China chip war rages on

Bosch’s decision to acquire the US chipmaker comes at a time when the US and China are locked in a battle of supremacy to dominate chip production and distribution globally.

Both the US and the European Union have signed specific Chips Acts into law, under which both the governing bodies commit funds to strengthen chip production in their geographic boundaries.

Bosch said the full scope of its $1.5 billion investment into TSI’s Roseville plant “will be heavily dependent on federal funding opportunities available via the CHIPS and Science Act as well as economic development opportunities within the State of California.”

The Biden administration has already initiated an application procedure with guidelines for proposals from semiconductor manufacturers that want to take advantage of incentives offered by the US CHIPS and Science Act.

Earlier this month, Taiwanese semiconductor giant TSMC, which is facing a sharp drop in revenue, sought assurances from the US about subsidies it will receive when it builds its new $40 billion manufacturing facilities in Arizona.

The EU, on the other hand, reached an agreement last week on a deal that will allow it to invest $3.6 billion in EU funds with the aim of attracting a further $43.7 billion in private investment to build out the continent’s semiconductor manufacturing capabilities.

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