Bosch to buy California microchip maker TSI Semiconductors, invest $1.5B

Robert Bosch plans to acquire a California microchip maker and invest around $1.5 billion in it to help meet growing demand for silicon carbide chips in electric vehicles, the world's largest parts supplier said Wednesday.

It will be Bosch's first U.S. chip plant. The move comes as the Biden administration tries to foster more microchip manufacturing here.

The supplier said it will acquire TSI Semiconductors in Roseville, California, near Sacramento, subject to regulatory approval. TSI employs about 250 people primarily in the production of chips on 200-millimeter silicon wafers for use in the automotive, communications, energy and life sciences industries, according to its website.

In a news release, Bosch said it planned to invest more than $1.5 billion in TSI's Roseville foundry to convert the 39-year-old building into a modern source of silicon carbide microchips for EVs by 2026.

Bosch did not disclose costs of the acquisition. It said the "full scope" of the investment is "heavily dependent on federal funding opportunities available via the CHIPS and Science Act, as well as economic development opportunities within the state of California."

The auto industry's demand for semiconductors is booming, despite a global chip shortage that has suppressed vehicle assembly since 2021.

Bosch also has semiconductor facilities in Reutlingen and Dresden in Germany, where it makes chips for autos and consumer electronics.

"With the acquisition of TSI Semiconductors, we are establishing manufacturing capacity for [silicon carbide] chips in an important sales market while also increasing our semiconductor manufacturing, globally," Bosch Chairman Stefan Hartung said in a statement. "The existing clean-room facilities and expert personnel in Roseville will allow us to manufacture SiC chips for electromobility on an even larger scale."

Bosch also produces silicon carbide chips in Reutlingen . Between the TSI acquisition and a planned expansion in Reutlingen, the company will have added about 200,000 square feet of clean-room space for silicon carbide chip production worldwide by 2026.

Bosch expects the market for automotive microchips to rise in the coming years — particularly for silicon carbide chips, which are more efficient than a typical silicon-based microchip. Silicon carbide chips can boost EV battery range by as much as 6 percent vs. a standard chip, according to Bosch.

It anticipates the market for silicon carbide chips to grow by about 30 percent annually over the coming years. By acquiring a location in the U.S., Bosch hopes to supply EV makers in the region.

"We are strengthening our local presence in an important electric vehicle market," Markus Heyn, chairman of Bosch's mobility solutions business, said in a statement.

Bosch has made significant investments in semiconductors in recent years. Last summer, it said it would invest more than $3 billion in its microchip capabilities in Europe, in addition to the roughly $2.7 billion it has invested in its German semiconductor facilities since 2010.

Those investments are some of the largest in Bosch's history.

The supplier's U.S. business took a hit as a result of the microchip shortage when Rivian Automotive moved to produce motors in-house for most configurations of its R1T pickup and R1S crossover. Rivian had been relying on motors supplied by Bosch, but a shortage of the power semiconductors they required held back Rivian's vehicle production, prompting the change, Automotive News reported this month.

Bosch ranks No. 1 on the Automotive News Europe list of the top 100 global suppliers, with worldwide parts sales to automakers of $49.14 billion in 2021.