Infineon Technologies (OTC: IFNNF), Germany’s largest chipmaker, will acquire California-based International Rectifier (NYSE: IRF) for $40 per share in a $3 billion deal.

International Rectifier specializes in power-management semiconductors. Particularly attractive to Infineon is IRF’s expertise in gallium nitride on silicon (GaN) semiconductors. According to Bloomberg, the acquisition will solidify Infineon’s position in GaN discretes and GaN system solutions, and create a comprehensive provider in the market for silicon-, silicon-carbide- and gallium-nitride-based power devices.

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Technology based on these compounds, known as Wide Bandgap (WBG) materials, can improve the efficiency of power conversion, possibly reducing the cost of EV battery packs. A recent report from Lux Research says that WBG semiconductors can eliminate up to 90% of the power losses that occur during AC-to-DC and DC-to-AC conversion. Applied in an EV, WBG materials could cut electricity losses by 66% during battery recharging, according to the DOE.

Infineon CEO Reinhard Ploss expects rising demand for the type of chips used in car electronics and to manage battery power in mobile devices. He’s also happy to gain a presence in Silicon Valley. “It is very important for us to be in the US and close to the highly innovative region of California,” Ploss said on a conference call.

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Source: Green Car Congress, Bloomberg