In a statement Onsemi said, it would acquire GT Advanced Technologies in a $415 million cash deal.

GT Advanced Technologies manufactures silicon carbide – a key material used in chips for electric vehicles.

The move is a major push into electric vehicles for Onsemi, which already supplies other automotive chips including sensors in driver safety systems.

Automakers are turning to chips made from silicon carbide for the drivetrains and charging systems in electric vehicles because the material is more energy-efficient than chips made from standard silicon. Silicon carbide however requires new techniques to produce and to manufacture compared to standard silicon.

To produce silicon carbide chips, companies, including Onsemi, use raw discs called wafers. The silicon carbide versions of those wafers come from only a few key suppliers such as Cree Inc, which has shifted its strategy from LED chips used in lighting to focus on silicon carbide chips for electric vehicles.

Onsemi sells a range of silicon carbide chips and until the GTAT deal, it had sourced most of the raw wafers for those chips from outside suppliers. GTAT specializes in growing various kinds of crystalline materials, including silicon carbide.

In a statement Onsemi said, “the deal will help it secure and grow its supply of the material to make silicon carbide chips and give it greater control over the technology, which still remains less advanced than chips using older materials.”

“This transaction reflects our confidence and stated commitment to meaningfully invest in silicon carbide solutions,” said Hassane El-Khoury, president and chief executive officer of Onsemi.

Categories: Creativity, Entrepreneurship, HR & Organization, Strategy