The future competition landscape of SiC industry is beginning to emerge amid the wave of expansion and alliance

The industry is unanimously optimistic about the potential of SiC, and upstream and downstream of the industry chain have increased their investment in resources. In the case that many applications have not yet been fully implemented, fierce competition has already begun in advance, and the concentrated manifestation in 2021 is the expansion of production capacity and the launch of new projects. At the same time, in order to lock in production capacity in advance, downstream companies (mainly car companies) have tied up with upstream companies, which has also made industrial resources more concentrated on leading companies.

Overall, the SiC industry in 2021 continued the booming situation in recent years, and the competitive landscape in the next few years has begun to emerge.

International manufacturers are turning to 8-inch expansion 

In the SiC device industry chain, due to the difficulty of manufacturing process, the value of the industry chain is mainly concentrated in the upstream substrate link. For SiC MOSFET components, the SiC substrate itself alone determines the success or failure of 60% of SiC MOSFET components. 4 inches and 6 inches are the current mainstream size specifications of SiC substrates. Similar to Si materials, larger sizes are also its development direction.

International giants have begun to expand production in 2021 and gradually transition to 8-inch SiC. Wolfspeed and II-VI, which demonstrated 8-inch SiC substrate samples as early as 2019, have stepped up preparations for mass production in 2021. Among them, Wolfspeed is expected to be the first to achieve mass production of 8-inch SiC in the first half of 2022. II-VI also announced that its 6-inch wafer production capacity will expand 5-10 times within 5 years, while expanding its 8-inch wafer production capacity using differentiated material technology. In order to meet the needs of the Asian market, II-VI has also established a back-end processing line for conductive SiC substrates at its Asia headquarters in Fuzhou, China, which can perform edge grinding, chemical mechanical polishing, cleaning and inspection. The plant is also part of II-VI's announced five-year expansion plan.

Rohm plans to invest 85 billion yen by 2025 to increase its production capacity 16 times by 2025. In January 2021, Rohm's new plant in Fukuoka Chikugo was completed, and production equipment was installed. A production system that can meet the medium- and long-term growth demand for SiC power components was established, and it is expected to be put into production in 2022.

Rohm's SiC is mainly produced by its subsidiary SiCrystal. According to Managing Director Robert Eckstein, SiCrystal's SiC substrate production capacity was almost sold out in 2022, and its main customers are its parent company Rohm, Infineon, STMicroelectronics and many other companies.

STMicroelectronics acquired the ability to produce SiC substrates through the acquisition of Norstel. In 2021, it announced that its Norrköping plant in Sweden had produced the first batch of 8-inch SiC wafers, completing the production chain.

Bosch is also expanding its production in a big way. In 2021, it added a 1,000-square-meter clean room at its Reutlingen wafer factory. According to the plan, by the end of 2023, Bosch will also build a new 3,000-square-meter clean room and use its own manufacturing process to produce SiC semiconductors. At the same time, Bosch is working on the development of the second-generation SiC chip with higher power density, which is expected to be put into mass production in 2022.

GlobalWafers has a factory in Texas, USA, and is also expanding its SiC production capacity. According to Chairman Xu Xiulan, GlobalWafers' new production line is expected to be put into production in 2022. It is understood that GlobalWafers' current monthly production capacity of 6-inch SiC substrates is about 2,000 pieces, and some customers have begun shipping. Due to strong customer demand, it is expected to expand to 5,000 pieces, and there is also a chance to further increase to 8,000 pieces.

In September 2021, SK Group's US subsidiary SK Siltron CSS LLC plans to invest nearly $303 million to expand SiC wafer production in Michigan. SK Group plans to invest 700 billion won (about 3.822 billion yuan) in SiC semiconductor wafer business to become the world's leading edge materials market by 2025. SK Group plans to increase the production capacity of SiC wafers from the current 30,000 pieces to 600,000 pieces in 2025, and increase its global market share from 5% to 26%.

Seizing the commanding heights of production capacity has become a consensus among leading international companies.

Domestic construction and financing are busy

Although SiC is in its infancy in China, as the "14th Five-Year Plan" lists it as a development priority, the industry's development has entered an accelerated stage.

On January 18, 2021, the groundbreaking ceremony of the Bronze Sword third-generation semiconductor industrial base was held in Pingshan, Shenzhen. The project is listed in the list of major projects in Shenzhen in 2021 and is expected to be completed and put into production in April 2023, when the annual production capacity of SiC devices will reach 2 million.

In May, the main body of the second phase of Hantian Tiancheng SiC Industrial Park project was capped. The total investment of the project is 630 million yuan, covering an area of ​​29,002.015 square meters. The first phase of the project has been completed and put into production, with a construction area of ​​18,502.64 square meters, and the second phase is planned to have a construction area of ​​24,133.03 square meters. The project plans to build a 6-inch SiC epitaxial wafer production line project, with an estimated annual output value of 3 billion yuan after completion and production.

On June 23, the first phase of the Hunan Sanan Semiconductor Base project with a total investment of 16 billion yuan was officially put into production. It will create the first SiC vertically integrated industrial chain in China and the third in the world, with a monthly output of 30,000 6-inch SiC wafers.

In September, Shandong Tianyue Advanced Technology Co., Ltd. was approved for IPO, becoming the first domestic SiC stock. It will raise 2 billion yuan to build a SiC semiconductor material project in Shanghai, with a plan to start trial production in 2022 and reach 100% production in 2026.

In December, Luxshare Technology stated in an institutional survey that the company's current annual production capacity of substrate wafers is 25,000 pieces, and it will continue to expand production based on market orders. It is expected that by June 2022, the company will expand its annual production capacity to 100,000 pieces.

In addition, local governments have also identified SiC as a future development focus. For example, the 14th Five-Year Plan issued by the People's Government of Hunan Province points out that it is necessary to promote the research and development and industrialization of key core semiconductor equipment, accelerate the industrialization of 6-inch SiC materials and chips, medium and low voltage power semiconductors, etc., build the country's largest SiC full industry chain production base, and create a national semiconductor equipment manufacturing regional center.

In the capital market, SiC projects have also become one of the most sought-after tracks in 2021. At the end of 2021 alone, many companies announced financing.

On December 17, Huarui Micro completed a financing of 300 million yuan in the B and B+ rounds. This round of financing will help Huarui Micro actively promote the localization of power devices, increase research and development efforts in IGBT, SiC power devices, etc., and accelerate the expansion of production capacity.

On December 14, Senguoke announced the completion of a C round of financing worth 100 million yuan, and its two major series of SiC JBS, 650V and 1200V, have been shipped in large quantities.

On November 30, Shanghai Jetta Semiconductor completed a strategic financing of 8 billion yuan. This round of financing will greatly help the company leverage its advantages in automotive-grade chip manufacturing and increase its research and development efforts in manufacturing processes such as SiC power devices, automotive-grade power management chips, and IGBTs.

Seizing the opportunity of semiconductor technology iteration, the domestic SiC industry is building up momentum for the next stage of scale and industrialization.

Automakers are busy forming alliances to secure future entry tickets

Considering SiC as a valuable strategic resource, major companies downstream of the industrial chain have begun to cooperate or form alliances with SiC companies, which is particularly evident in the automotive industry.

According to TrendForce, the global SiC power device market will grow from US$680 million in 2020 to US$3.39 billion in 2025, with a compound annual growth rate of 38%. The main inverter, OBC (on-board charger), and DC/DC (power module) of new energy vehicles will become the main driving force, and may occupy 62% of the market share in 2025. It is estimated that by 2025, the demand for 6-inch SiC wafers in the electric vehicle market will reach 1.69 million pieces.

Moreover, the price of SiC has also been declining year by year. Taking a 6-inch SiC wafer as an example, the price was about $1,000 in 2021, and is expected to drop to $700 in 2023. In terms of SiC component prices, it is estimated that the price difference with Si-based components will reach a sweet spot of 2.5 times in 2023, which means that car manufacturers can still make a profit when introducing mid-range models.

On December 29, 2021, Great Wall Motors, as the lead investor, invested in Hebei Tongguang Co., Ltd. and officially entered the core industry of third-generation semiconductors. Hebei Tongguang Co., Ltd., relying on the Institute of Semiconductors of the Chinese Academy of Sciences, specializes in the research and development, preparation and sales of SiC single crystals. It is the largest high-tech enterprise in Hebei Province and the first in China to realize mass production of third-generation semiconductor material SiC single crystal substrates.