Why is Ideal Auto so interested in entering the silicon carbide chip market?

In April 2022, China's new energy vehicles were the only bright spot in the entire auto market, with year-on-year growth of more than 78%, which makes people full of expectations for the future of China's new energy vehicle industry.

It is worth noting that most of these achievements were made by the domestic new energy vehicle industry. Compared with the era of fuel vehicles, domestic automobile manufacturers have made rapid progress in both sales and technology.

According to media reports, Ideal Auto's silicon carbide chip and power semiconductor R&D and production base has been officially settled in Suzhou. The project is one of Ideal Auto's strategic layouts, focusing on the R&D and production of third-generation semiconductor silicon carbide automotive chips.

So far, domestic new energy manufacturers have achieved complete independence in batteries, motors, and electronic controls, but there are still significant shortcomings in areas such as chips.

What is a silicon carbide chip?

When it comes to chips, many people first think of the brutal sanctions imposed on Chinese high-tech companies such as Huawei by the United States. In fact, Huawei was sanctioned mainly because the domestic chip industry was seriously lagging behind in process.

The automotive-grade chips used in smart cars do not have as high requirements for nano-processing as smart phones. Instead, they have higher requirements for materials. This is an important reason why Ideal Auto is deploying silicon carbide chips.

Silicon carbide materials are currently the main development direction of the power semiconductor industry and are mainly used to manufacture power devices. This semiconductor material has important applications in many emerging industries. When used in new energy vehicles, it can significantly improve the utilization rate of electric energy, making the system efficiency of the vehicle higher and reducing energy loss.

At the same time, due to its higher efficiency, silicon carbide chips can also significantly reduce the number of parts, making the vehicle body lighter and the entire body structure more compact, which can not only save costs but also improve the cruising range to a certain extent.

Tesla is the company that has made the most mature application of silicon carbide chips in the industry, and domestic leading manufacturers such as BYD and NIO have also announced the adoption of silicon carbide solutions. It is said that BYD has also purchased 6 silicon mines.

This is an important reason why Ideal Auto is planning to develop silicon carbide chips. In addition, as more and more automakers adopt silicon carbide chips, silicon carbide chips will experience explosive growth.

Authoritative organizations predict that the global demand for silicon carbide chips will expand from the current 300,000 pieces to 4.2 million pieces by 2025. For Ideal Auto, this is an industry commanding height that must be mastered.

Why develop silicon carbide chips?

In the era of fuel vehicles, domestic automakers have also made many efforts in the field of technology, but objectively speaking, the results are not obvious. In the fields of engines, gearboxes, chassis, etc., the gap between domestic manufacturers and foreign brands is obvious.

However, in the new energy era, domestic and foreign manufacturers are on the same starting line. In addition to the advantages of silicon carbide chips themselves, there is another important reason for Ideal Auto's layout, which is to insist on self-developed core components.

The automotive industry has been hit hard in the past year or so, partly because of rising raw material prices and partly because of chip shortages. Even giants like Mercedes-Benz, Volkswagen, and BMW are not immune to the crisis.

Although Ideal Auto has achieved good results, its overall sales volume is relatively small, and its ability to control the industrial chain is poor, so its ability to resist risks is naturally weak. It is also a precaution to lay out core components such as silicon carbide chips.

On the other hand, there is a ready-made example for new car-making forces like Ideal, which is BYD. In April 2022, BYD was the only mainstream car manufacturer that did not encounter a serious impact.

The reason is simple: BYD has its own batteries, motors, and electronic controls, which ensures the normal operation of the supply chain even in a crisis. The core components must be in its own hands.

Even if it cannot be controlled by itself, it cannot be controlled by foreign brands. This is a path BYD has explored over a long period of time, which is worth learning from for other domestic automobile manufacturers.

In addition, there is another important reason why Ideal Auto is developing silicon carbide chips. That is, although the new energy vehicle industry seems to be making progress, it has actually reached its limit in many functions and configurations, and it is necessary to find new growth points.

Take the range of electric vehicles for example. The increase from 300 kilometers to 600 kilometers is a revolutionary progress, but the increase from 600 kilometers to 700 kilometers becomes dispensable, and consumers will not feel it so strongly.

Therefore, as the technology gradually matures, the market will enter a stage of internal competition in the next few years. In this case, manufacturers who do not master core technologies will be eliminated.

Compared with traditional automobile giants, new car-making forces like Ideal Auto cannot match them in scale, but they often stand at the forefront of technology, have a high sensitivity to technological trends, and have great ambitions to master core technologies.

The experience of the fuel vehicle era proves that if you have food in your hands, you will not be in a hurry. If the domestic automobile industry wants to get rid of the fate of working for foreign capital in the fuel vehicle era, it must master the core equipment such as silicon carbide chips.