Silicon carbide projects are blooming everywhere, and 2022 may become a key turning point. One picture shows the distribution of the industrial chain

According to media reports, the first batch of construction units of the Changsha Sanan third-generation semiconductor project with an investment of 16 billion yuan has entered the main construction stage. The second batch of construction units will complete the foundation construction by the end of September, and all units will be capped before the Spring Festival.

According to previous reports, the project officially started on July 20. As one of Changsha's 17 landmark key manufacturing projects, it mainly builds a production base for substrates (silicon carbide), epitaxy, chips and packaging industries with independent intellectual property rights. After the project is completed and reaches full production, it will form an industrial scale of over 10 billion yuan, and drive the output value of upstream and downstream supporting industries to exceed 100 billion yuan.

According to the data, the third-generation semiconductors refer to semiconductor materials with a bandgap width of 2.3eV and above. Currently, the more mature ones include silicon carbide (SiC) and gallium nitride (GaN).

Among them, silicon carbide has overwhelming advantages over traditional semiconductor silicon materials in terms of high voltage resistance, high temperature resistance, and high frequency, and is a revolutionary breakthrough in the material sector. With the successful application of silicon carbide in high-end car markets such as Tesla Model 3, the automotive field is believed to be the main driving force for its growth in the future.

According to a report compiled by Founder Securities analyst Chen Hang on September 4, silicon carbide can also be used in data centers, smart grids, high-speed trains, charging piles, 5G, photovoltaics, wind power generation and other fields. It can be said that "everything can be silicon carbide". In the 5G field, silicon carbide is also considered to be the most ideal substrate for 5G communication chips. According to Yole's forecast, the compound annual growth rate of silicon carbide will reach 31% from 2017 to 2023, and its market size will be about US$1.5 billion by 2023.

Domestic companies are investing heavily in projects

According to incomplete statistics from the Science and Technology Innovation Board Daily, more than a dozen silicon carbide projects have been started or made positive progress across the country this year alone, which can be said to be blossoming everywhere:

In addition to the Sanan Optoelectronics project started in Changsha, there is a 10 billion yuan R&D and industrialization project of third-generation semiconductors such as silicon carbide invested by Luxshow Technology in Hefei, Anhui, including the R&D and production of silicon carbide crystal growth, substrate production, epitaxial growth, etc.

In Shaoxing, Zhejiang, there is a 700 million yuan silicon carbide substrate project also invested by Luxshare Technology;

In Ningbo, Zhejiang, Huada Semiconductor has invested 1.05 billion yuan in a wide bandgap project, planning to produce 80,000 4-6 inch silicon carbide substrates and epitaxial wafers, and silicon carbide-based gallium nitride epitaxial wafers annually;

The silicon carbide power semiconductor project in Xuzhou, Jiangsu Province, with a total investment of RMB 300 million, will produce about 700,000 silicon carbide modules annually after it goes into production, with an output value of about RMB 700 million.

In Qingdao, Shandong, there is an integrated circuit industrial park under Zhongke Steel Research Institute, which may be completed and put into production in September, which is expected to break the dependence on imports of silicon carbide crystal substrates;

In Shanghai, there is a laboratory jointly established by ROHM and Zhenqu Technology, which is dedicated to developing, testing and promoting power semiconductor technology based on silicon carbide;

Shanxi has the largest domestic silicon carbide material supply base under China Electronics Technology Group Corporation. The first phase of the project can form a production capacity of 75,000 silicon carbide wafers. It has achieved mass production of 4-inch wafers with a pass rate of 65%.

2022 will be a critical turning point. After the cost drops, domestic substitution may be achieved first.

From the perspective of competition, at present, American, European and Japanese manufacturers are relatively leading in the global silicon carbide industry, among which American manufacturers occupy a dominant position. Chen Hang of Founder Securities pointed out in a report on September 4 that in addition to the above-mentioned application fields, the important role of silicon carbide in materials and devices in the military and national defense fields is becoming more and more prominent, and silicon carbide epitaxial equipment is particularly important in promoting the localization of the industrial chain.

It should be noted that first-mover advantage is a characteristic of the semiconductor industry. Compared with the first and second generation semiconductors, domestic manufacturers started research on silicon carbide at about the same time as foreign manufacturers. Therefore, domestic manufacturers have hope of catching up with foreign manufacturers and completing domestic substitution.

At present, the domestic silicon carbide industry is mainly concentrated in the production of 4-inch and 6-inch silicon carbide substrates, and samples of 8-inch substrates have been shipped. According to the above report by Chen Hang, similar to traditional semiconductors, the silicon carbide industry chain is also divided into 7 parts: equipment, substrate, epitaxy, design, manufacturing, packaging and testing, and application. The layout of domestic related companies in each section of the industry chain is shown in the figure below:

Although most of the equipment for silicon carbide production is the same as that for traditional silicon production lines, Chen Hang emphasized that due to the characteristics of silicon carbide such as high hardness, some special production equipment is required, such as high-temperature ion implanters, carbon film sputtering equipment, mass-production high-temperature annealing furnaces, etc. Among them, whether a high-temperature ion implanter is available is an important criterion for measuring a silicon carbide production line.

In addition to technology, some organizations believe that the core reason currently restricting the large-scale application of silicon carbide power devices is still cost, which mainly stems from the inefficient crystal growth process.

According to reports, the value chain of silicon carbide devices can be divided into substrate-epitaxial-wafer-device, of which the substrate accounts for the highest cost of 50%. The main reason is that the single crystal grows slowly and the quality is not stable enough, which also makes the price of silicon carbide high and has not been widely promoted. However, with the continuous advancement of technology and the gradual increase in production, the prices of silicon carbide substrates and epitaxial wafers will fall in the future.

Haitong Securities analyst Wang Meng predicted in a report on March 15 that 2022 is expected to be a key turning point for the decline in silicon carbide prices, as mainstream luxury car brands begin mass production of models using silicon carbide solutions, which will significantly increase the capacity utilization of 8-inch lines of substrate manufacturers such as Cree. By 2025, the price of silicon carbide devices is expected to drop to 1/4-1/3 of the current level. Combined with battery cost savings, the economic and performance advantages of silicon carbide will be fully demonstrated.

In terms of application, Chen Hang believes that automotive electrification will form the largest downstream market for silicon carbide. Considering that electric vehicles will require longer driving range, shorter charging time and higher battery capacity in the future, silicon carbide MOSFET components will be the general trend, and the time node is around 2021. Silicon carbide is expected to increase the efficiency of silicon carbide inverters by 3%-5%, thereby reducing battery costs.