The investment would alleviate the financial burden for Coherent, which has said it will invest $1 billion over the next 10 years to expand its production of silicon carbide wafers, which help boost the range of electric vehicles more than chips made with traditional silicon.
Denso Corp (6902.T), Hitachi Ltd (6501.T), Mitsubishi Electric Corp (6503.T) and Sumitomo Electric Industries Inc (5802.T) have held discussions about taking a minority stake in Coherent's silicon carbide business, the source said.
Coherent may accept more than one of these companies as investors in the silicon carbide division at a valuation of between $4 billion and $5 billion, the source added, requesting anonymity because the matter is confidential.
Coherent, which said in May it would explore options for its silicon carbide business, declined to comment.
Chips made with silicon carbide are used in applications that require huge amounts of power conversion, such as inverters and drivetrains in electric vehicles.
Persons:
Chips, Milana Vinn, Andrea Ricci
Organizations:
Denso Corp, Hitachi Ltd, Mitsubishi Electric Corp, Sumitomo Electric Industries Inc, Thomson
Locations:
U.S, Pittsburgh , Pennsylvania, China, New York