Driven by the booming demand for electric vehicles and the long-term goal of semiconductor self-sufficiency, China is committed to developing power electronics products based on silicon carbide (SiC). What is China's plan to surpass Western silicon carbide suppliers?
The question is: What are the "players" of silicon carbide in China? How much capital has China invested in emerging technologies and production facilities? Are Chinese suppliers developing different business strategies to conquer the SiC market? Each of these puzzles keeps global power electronics executives up all night.
Ezgi Dogmus, Chief Analyst of Yole Intelligence's Compound Semiconductor team, stated that Chinese SiC is a typical representative of the "decoupling era".
In today's complex situation, technology is developing along different paths. For example, the days when Western SiC suppliers could establish joint ventures in China to achieve unified global SiC research and production are gone forever. What we see in this era of decoupling is the parallel development of two independent SiC technologies, manufacturing, and supply chain infrastructure.
We will see how the competitive landscape forms, "Simon Keeton, Executive Vice President and General Manager of the Power Solutions Group at Onsemi, said in a recent interview with Ojo Yoshida Report. So far, I haven't seen any competition from China in the field of silicon carbide devices
In order to meet the power demand of electric vehicles, China still purchases SiC components from manufacturers in the United States, Europe, and Japan. This includes Onsemi, Infineon, STMicroelectronics, Wolfspeed, and Rohm. No one can guess how long China will be able to reverse its supply chain.
Currently, many Western SiC companies have downplayed China's role in the global market, mainly because Chinese investment is focused on SiC wafers rather than device level development such as SiC MOSFETs. Yole's Dogmus stated that device manufacturers that have established SiC production capacity and capability in China do not yet have the ability to compete with manufacturers in the European Union and the United States.
But the situation is starting to change. At last month's Munich Electronics Show, Jochen Hanebeck, CEO of Infineon Technologies, stated, "I see China planning to replace silicon power semiconductors with wide bandgap semiconductors, especially with silicon carbide
Given the growing demand in China, Hanebeck warns not to underestimate China: "I wouldn't be surprised if some Chinese chip manufacturers could soon provide SiC innovation. Statistically speaking, this is very likely
motivation
China regards power electronics as a springboard to enter the global semiconductor industry. China is waging a protracted war in the SiC field with the goal of ultimately surpassing Western manufacturers within the next decade.
plan
In the latest five-year plan (2021-2025) released in March 2021, Beijing identified SiC as one of the most promising technologies in the "third-generation semiconductors". Planners believe that silicon carbide is crucial for China's "new infrastructure". The rapid adoption of power semiconductor devices will accelerate China's development in fast charging of mobile phones, electric vehicles, and 5G communication. catalyzer
The development momentum of SiC in China stems from strong demand for electric vehicles. Since BYD launched the Han EV in 2020- China's first electric vehicle based on SiC main inverters, numerous Chinese electric vehicle OEMs from Nio to Xpeng are launching electric vehicle models based on SiC technology.
The advantages of SiC based devices include less energy dissipation. The switching efficiency of SiC devices at higher frequencies is also higher than that of standard chips. The result is higher operational efficiency, smaller size, and lighter weight, providing a smaller design while reducing the cooling requirements of electric vehicles.
Chinese electric vehicle companies are currently procuring SiC components from Western suppliers. The purpose is to reduce the dependence of its electric vehicle industry on foreign suppliers.
participant
Unlike Western SiC suppliers who handle the entire supply chain, Chinese companies have adopted a more segmented approach, focusing on certain parts of the SiC production process. This includes SiC ingots (or substrates), SiC epitaxy and chip processing, diode and transistor design, and module packaging. Players have emerged at every stage of the SiC supply chain.
Chinese SiC players come from very different backgrounds, ranging from wafer manufacturers to automotive manufacturers.
China's leading SiC substrate companies include TankeBlue and SICC. Yole's Dogmus added, "Sunlight and SEMISiC are also companies worth paying close attention to." Sanan Integrated Circuit Company adopts a hybrid business model, combining OEM and Integrated Device Manufacturing (IDM) businesses, while also engaging in substrate manufacturing.
Although lacking a leading IDM, China can compensate for its current shortcomings in SiC wafers, devices, and modules by utilizing its overall manufacturing capabilities. Dogmus said, "China is renowned for its success in consumer products, and has formed mature divisions of labor in areas such as contract manufacturing and packaging.
For example, Chinese companies have a good positioning in SiC substrates, epitaxial wafers, and packaging. SiC device manufacturing is considered a key step in the next round of competition, "she said. Dogmus expects major IDMs to establish large-scale device production capacity. This is a question of who holds a higher share in the value chain.
Yole asserts that Chinese device manufacturers may soon produce SiC diodes for automotive applications. Devices like SiC MOSFETs are another matter. For Chinese suppliers, it may take three years or more to achieve mass production. As of now, Sanan Integrated has released automotive grade MOSFETs, but mass production has not yet been achieved, "Yole reported.
Source: Yole Intelligence
investment
SiC manufacturers around the world are investing heavily in wafers.
Yole Compound Semiconductor Technology and Market Senior Analyst Poshun Chiu told us: "The substrate is a very large part of the cost of SiC devices... For participants, having their own internal supply is very important so that they can control the internal costs of their device development in the long run.
This also explains why Western SiC manufacturers have announced investments in SiC wafer production in recent months.
China's investment activities are also focused on SiC wafer production. TankeBlue, a leading n-type SiC supplier in China, has invested $1 billion to build 6-inch and 8-inch wafer production lines in Daxing and Beijing. Yole stated that the first phase of the project is expected to be completed this year, with an annual output of 100000 wafers, and plans to expand production capacity by 2025. TankeBlue also targets the field of manufacturing equipment.
SICC is another silicon carbide wafer company specializing in RF applications, listed on the Shanghai Stock Exchange in January, providing financing for a factory located in the Shanghai Lingang Free Trade Zone that produces n-type silicon carbide wafers. According to Yole, its production capacity goal is to reach 300000 6-inch n-type silicon carbide wafers per year by 2024.
Based on the LED (GaN/GaAs) field, Sanan Optoelectronics and Sanan Integrated Circuit are conducting compound semiconductor foundry business in Xiamen. Sanan has invested $2.3 billion in a factory in Hunan to support SiC crystal growth, wafer and epitaxial wafer production, as well as device manufacturing and packaging.
SMIC entered the SiC market by investing in Semiconductor Manufacturing Enterprise (SMEC) located in Shaoxing. SMEC was founded in 2018 and provides process platforms for MEMS, IGBT, and MOSFET. SMIC now provides foundry services and module packaging for wide bandgap semiconductors, including SiC.
BYD plans to spin off its semiconductor business and develop internal IGBT and SiC devices through a 6-inch wafer fab in Ningbo. By 2026, a $100 million capacity expansion will provide 20000 6-inch wafers per month.
compete
Western silicon carbide suppliers may have a buffer period of several years before facing Chinese silicon carbide competitors.
Hanebeck, CEO of Infineon, pointed out that in order to be at the forefront of SiC based power systems, manufacturers must go beyond "individual switches, understand applications and the entire system". Therefore, Infineon is not only researching the chipset of power switches, but also drivers, microcontrollers, and supporting software.
Wolfspeed CEO Gregg Lowe described SiC as "a tricky technology that currently doesn't have a truly vast amount of knowledge in the world
Lowe foresaw that the SiC industry still has a long way to go to drive technological innovation while reducing costs and increasing production, which requires great patience.
So far, no Western silicon carbide supplier has supplied silicon carbide ingots to China. Yole's Dogmus observed, "Generally speaking, wafer suppliers are more willing to have 'magic secrets' internally and keep them in growing countries/regions
Dogmus pointed out that given the technological competition between China and the United States, intellectual property protection is imperative. Wafer manufacturers must have their own formulas and intellectual property rights. Intellectual property will be an issue for all new entrants, including China and Europe. In the field of manufacturing equipment, China has multiple suppliers of furnaces and spare parts, which helps the development and entry of new Chinese enterprises.
Source: Yole Intelligence
epilogue
If silicon carbide is a long-term battle, then China can gain an advantage by cultivating its power electronics industry. The Yole report states that due to the lack of quarterly targets, China has ample time and resources, as well as millions of skilled employees, to achieve success in the SiC field. In the era of decoupling, the global SiC industry will present two dynamic parallel development SiC ecosystems.