What happened
Bullish investors cohered around Coherent (COHR -3.41%) stock on Friday, following some quite encouraging news about a new partnership reported by the laser specialist. That crowd pushed the company's share price up a meaty 14% on the day, absolutely trouncing the otherwise solid performance of the S&P 500 index, which rose by 1.3%.
So what
Before market open, Coherent and storied Japanese conglomerate Mitsubishi (MSBHF 1.65%) jointly announced they have entered into a partnership. The two companies signed a memorandum of understanding and will team up on an initiative to scale the manufacture of silicon carbide (SiC) electronics.
The deal will push both companies further into the very promising market of electric vehicle (EV) component manufacturing.
As Coherent and Mitsubishi explained in their announcement,
The market for electric vehicles is expanding worldwide and is just one of several emerging applications driving the exponential growth in SiC power devices, which have lower energy losses, higher operating temperatures, and higher switching speeds compared with power devices based on silicon.
The efficiency gained with the use of SiC power solutions "is expected to be a significant contributor to global decarbonization and the green transformation," the two companies added.
Now what
Mitsubishi is the financial partner in this project; it will invest roughly 260 billion yen ($1.9 billion) in the program from now until March 2026. Around 100 billion yen ($716 million) of this will be utilized to build a dedicated SiC power devices factory; Coherent will act as the supplier of substrates for the program.
Coherent and Mitsubishi did not proffer any estimates as to how their partnership would affect their respective financial results.
