German chip giant Infineon Technologies has reached a deal to buy pioneering Canadian semiconductor company GaN Systems.

The two firms announced a definitive agreement on March 2 that will see Infineon pay $830 million USD in cash for Ottawa-based GaN Systems. The acquisition remains subject to customary closing conditions and regulatory approval.

Infineon CEO Jochen Hanebeck said in a statement that the firm’s acquisition of GaN systems will “significantly accelerate” Infineon’s GaN roadmap and strengthen its leadership in power systems.

The deal represents a major Canadian tech exit and big news for Canada’s chip sector.

For GaN Systems, combining the company’s foundry corridors with Infineon’s in-house manufacturing capacity will help it “serve the accelerating adoption of GaN in a wide range of [its] target markets.” In a statement, Gan Systems CEO Jim Witham said, “as an integrated device manufacturer with a broad technology capability, Infineon enables us to unleash our full potential.”

The GaN Systems-Infineon deal represents a major Canadian tech exit and big news for the country’s semiconductor industry. At the same time, given GaN Systems’ promise, at least one expert believes the company’s sale before reaching its full potential marks a “disappointing” outcome, according to The Globe and Mail.

Founded in 2008 by John Roberts and Girvan Patterson, GaN Systems is a global leader in gallium nitride (GaN) power semiconductors. GaN Systems produces semiconductor components that are smaller, lighter, faster, and more energy efficient than silicon-only chips. Per The Globe, Infineon is a long-time partner of GaN Systems.

GaN Systems has raised more than $220 million USD to date. This total includes a $150 million funding round in late 2021. Fidelity, Cycle Capital, BDC Capital, Vitesco Technologies, BMW i Ventures, and Chrysalix VC are among the company’s backers.

RELATED: Canadian semiconductor pioneer John Roberts passes away at 77

GaN Systems’ tech is currently used in smartphone chargers, laptop and smart speaker adapters, and street lighting with customers that include Dell, Samsung, Siemens, and Philips. But the market is still developing, with big potential applications and market opportunities in cleantech and electric vehicles (EVs) on the horizon.

As Haneback noted, “GaN technology is paving the way for more energy-efficient and CO2-saving solutions that support decarbonization.” For his part, the CEO argued that GaN adoption for EV-related use-cases remains “at the tipping point.”

Roberts, a Canadian semiconductor pioneer through both GaN Systems and prior ventures, passed away in 2021. In a Twitter thread charting GaN Systems’ non-linear journey, Roberts’ son, Canadian venture capital investor Matt Roberts said, “John was and would continue to be very proud of what [GaN Systems] and his colleagues accomplished.”

RELATED: GaN Systems nails $150 million to drive semiconductor innovation

The acquisition comes at a time when Canada and other countries have sought to bolster domestic semiconductor design and production capabilities amid pandemic-fuelled chip shortages, the Russia-Ukraine war, and rising United States-China tensions.

As Council of Canadian Innovators president Ben Bergen noted on Twitter, “There is a global shift underway, with trillions of dollars of economic value at stake, as semiconductor value chains are reshoring to North America. This trend has major national security and economic implications for every country—including Canada.”

Bergen believes Canada needs a national semiconductor action plan that “fortifies and builds upon our homegrown Canadian companies,” adding that, “without a clear roadmap which mobilizes Canadian industry, we risk winding up with yet another branch plant industry where profits and economic benefits accrue primarily to foreign multinationals.”

Feature image courtesy GaN Systems.

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