This action may change the landscape for U.S. GaN.
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In early February (2017), the pending acquisition of Wolfspeed by Infineon Tcehnologies was blocked by CFIUS (the US Committee on Foreign Investment in the United States) as a potential threat to national security. GaN (gallium nitride) is considered to be a sensitive and important technology for RF power applications, and the government has been loath to open up to foreign investors and potential buyers regarding it. Ostensibly, most of this was directed towards China, but it was rather surprising that a fervent U.S. ally such as Germany was thwarted, as well.
How Will Cree/Wolfspeed Move Forward?
Recently, Cree announced that the Wolfspeed group will now become a separate segment of Cree’s operations. It is unclear at this point how the names will be sorted out (Cree, Wolfspeed, or both) but that is a detail that will certainly be resolved in the near future.
This makes Wolfspeed’s positioning within Cree similar to how things were before the acquisition—when Wolfspeed was an integral part of the company—was announced last year. Infineon Technologies has an independent GaN development program in place, which should now continue; however, Infineon Technologies was not as far along with GaN technology as Cree/Wolfspeed is now.
Beyond the specifics of this attempted acquisition, a larger question emerges. While GaN, as mentioned earlier, is a sensitive technology area for RF power and switching power supply use, the U.S. government has been somewhat reactive in nature. Now, it is important to develop some general guidelines for situations that involve national security, such as this acquisition, moving forward.
While a chilling message sent to potential foreign investors in critical high technology in the U.S., especially when roadblocks are put in place with a close U.S. ally, how we proceed in the future becomes critical.
Cree is a very competent U.S. high technology company that is forced to grow its business organically, due to the recent roadblock the U.S. put in place. ABI Research is confident that this will occur, but other paths, such as foreign merger and acquisition, no longer appear to be an option. Cree ceratinly knows the value of its GaN technology, and in lieu of a buyer, Cree may now actually prefer the organic route unless a very attractive offer from a U.S.-based company comes forward.
Various technology regulators also need to be more aware of the world-wide dynamics of the GaN market, and need to realize while not quite yet ubiquitous, the technology is spreading worldwide, including in China.
If GaN, or any sensitive technology, business, and market issues are constrained by national security, then the companies that developed and productized these technologies need to be compensated to some degree at the federal level. The implications are wide ranging and include all modern military radars, electronic warfare, and communications systems, including commercial wireless infrastructure.
Pandora’s box for GaN could indeed have been cracked open a bit due to the CFIUS and its decision to say no to Wolfspeed and Infineon Technologies, and similar actions where the orderly commercial development has been impeded. This is not to say that the regulators’ decision was incorrect in any way; however, the point being that there is a cost to the development of important technologies that need to be shared if commercial restrictions are implemented.