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Bosch to acquire TSI Semiconductor with a view to EV chip fab retrofit

Of course the German conglomerate expects Yankee cash for its trouble

German manufacturing titan Bosch announced it will add California-based TSI Semiconductors to its arsenal, in a bid to bolster production of the silicon carbide (SiC) chips used in electric vehicles.

Founded in 1984, TSI Semiconductors employs about 250 workers and specializes in the production of application-specific integrated circuits (ASICs). While Bosch didn't disclose the terms of the deal, it said it would invest approximately $1.5 billion into TSI's Roseville, California site to retool the facility for production of SiC components on 200mm wafers, with production beginning in 2026.

"With the acquisition of TSI Semiconductors, we are establishing manufacturing capacity for SiC chips in an important sales market while also increasing our semiconductor manufacturing globally, Bosch chairman Stefan Hartung explained in a statement. "The existing clean-room facilities and expert personnel in Roseville will allow us to manufacture SiC for electromobility on an even larger scale."

Silicon carbide chips have become an important commodity as automakers move to electrify their fleets, and Bosch isn't the only chipmaker vying for a slice of the SiC action. Early last year, STMicroelectronics announced it was bringing its SiC supply chain in house to capitalize on growing EV demand.

Power circuits that use SiC are more efficient than traditional silicon circuits for these applications. According to Bosch, SiC components can boost an EV's range by an average of 6 percent compared to traditional silicon microelectronics.

Gaining a supply chain foothold in the US – the second-largest consumer of automobiles – could prove to be a boon for Bosch, which is banking on a rapid uptick in SiC chip demand over the next several years. The company predicts that the average vehicle will contain at least 25 of its chips by 2025, while it expects the broader market will grow by roughly 30 percent a year.

Bosch has been working with SiC components since 2021 using a proprietary process to mass produce 200mm wafers at its Reutlingen plant located outside Stuttgart, Germany.  The company expects to have expanded its clean room space from 35,000 square meters today to 44,000 by the end of 2025.

Like many chipmakers, Bosch is counting on the US government to offset the cost of the project. It said the full scope of the project will depend "heavily" on federal funding afforded under the US CHIPs and Science Act in addition to state and local incentives. We'll note the latter are required to obtain federal money under the terms of the CHIPs funding opportunity, detailed earlier this year.

Actually getting the cash will require jumping through quite a few hoops – many of which have been called into question by foundry operators in recent months. One of the requirements is a prohibition on Chinese investments, which could come back to haunt Bosch – the Middle Kingdom remains the largest market for automobiles.

According to Bosch, the initial $1.5 billion investment is only the beginning. If all goes to plan, the conglomerate will "significantly expand" its portfolio of SiC chips by the end of the decade.

However, there are many hoops to jump through – not least of which is a thumbs-up from regulators for the sale – before any of that can happen. ®

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