BERLIN -- Infineon Technologies, Europe's biggest chipmaker by revenue, agreed to buy Cree's Wolfspeed Power unit for $850 million to expand in fast-growing markets such as electric cars and the Internet of Things.
The company is paying cash for Wolfspeed, which makes compound semiconductors and power-management chips, Infineon said in a statement today. The deal adds to Infineon's product portfolio, which includes chips for sensors, radars and security.
With the deal, Infineon is trying to become stronger in power semiconductors as more devices from cars to refrigerators become connected via wireless networks. The purchase is part of CEO Reinhard Ploss's bet on trends such as energy efficiency, connectivity and mobility, including autonomous-driving technology.
Wolfspeed, based in North Carolina, had pro-forma revenue of $173 million in the year ended March 2016 and Infineon expects it to immediately add to its adjusted earnings per share and margin. Infineon plans to complete the transaction by the end of 2016.
For Cree, the sale means it can better focus on its core business of LED lighting, which includes chips, bulbs and power-switching devices. The company said last year it was planning an initial public offering for Wolfspeed, but that never happened because Cree was approached by several parties interested in buying the unit, Cree said.
Infineon bought U.S.-based International Rectifier in 2014 to expand its existing carmaker customer base to commercial and agricultural vehicle-makers.
Liberum Capital added Infineon to a list of 10 conviction buys in Europe in April, calling it the biggest semiconductor beneficiary globally from accelerating electric-vehicle sales. The company's sales overtook those of Swiss competitor STMicroelectronics last year to become Europe's largest in the industry.
Infineon ranks No. 69 in the Automotive News list of the 100 largest global suppliers with estimated worldwide sales to automakers of $2.8 billion in 2015.