Driven by booming demand for electric vehicles and a long-term goal of self-sufficiency in semiconductors, China is committed to developing power electronics based on silicon carbide (SiC). What is China's plan to overtake Western suppliers of silicon carbide?

The question is: Who are China's silicon carbide players? How much money is China investing in emerging technologies and production facilities? Are Chinese suppliers developing different business strategies to conquer the SiC market? Each of these puzzles keeps power electronics executives around the world awake at night.

Ezgi Dogmus, principal analyst at Yole Intelligence's compound Semiconductor team, said Chinese SiC is a poster child for the "decoupling era."

In today's complex landscape, technology evolves along different paths. For example, the days when Western SiC suppliers might set up joint ventures in China to enable unified global SiC research and development and production are long gone. What we are seeing in this era of decoupling is the parallel development of two separate SiC technologies, manufacturing and supply chain infrastructures.

"We will see how the competitive landscape develops," Simon Keeton, executive vice president and general manager of Onsemi's Power Solutions Group, noted in a recent interview with the Ojo-Yoshida Report. "So far, I don't see any competition from China in silicon carbide devices."

To meet the power needs of electric vehicles, China still sources SiC components from manufacturers in the United States, Europe and Japan. These include Onsemi, Infineon, STMicroelectronics, Wolfspeed and Rohm. No one can guess how soon China will be able to turn around its supply chain.

Currently, many SiC companies in the West downplay 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 said device makers that have built up SiC capacity and capabilities in China are not yet able to compete with European Union and U.S. manufacturers.

But things are starting to change. At the Munich Electronics Show last month, Infineon Technologies CEO Jochen Hanebeck said, "I see China looking to replace silicon power semiconductors with wide-band gap semiconductors, particularly silicon carbide."

Given the growth in Chinese demand, Hanebeck warned against underestimating China: "I wouldn't be surprised if some Chinese chipmakers were able to offer SiC innovations soon. Statistically, it's very likely."

motivation

China sees power electronics as a stepping stone into the global semiconductor industry. China is playing a long game in SiC, aiming to eventually overtake western manufacturers within the next decade.

plan

In its latest five-year plan (2021-2025) released in March 2021, Beijing identified SiC as one of the most promising technologies in the "third generation semiconductor". Planners see silicon carbide as crucial to 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 communications. catalyst

SiC's growth momentum in China is driven by strong demand for electric vehicles. Since BYD launched the Han EV in 2020, China's first SiC main inverter-based EV, a number of Chinese EV Oems, from Nio to Xpeng, are launching SiC based EV models.

Advantages of SIC-based devices include less energy dissipation. SiC devices also switch more efficiently at higher frequencies than standard chips. The result is more efficient operation, smaller size and lighter weight, which provides a smaller design while reducing the cooling requirements of electric vehicles.

Chinese electric car companies are now sourcing SiC components from Western suppliers. The aim is to reduce the industry's dependence on foreign suppliers.

participant

Unlike Western SiC suppliers, which deal with the entire supply chain, Chinese companies have taken a more fragmented approach, focusing on certain parts of the SiC production process. These include SiC ingot (or substrate), SiC epitaxial and chip processing, diode and transistor design, and module packaging. "Players" appear at every link in the SiC supply chain.

China's SiC "players" come from very different backgrounds, ranging from wafer makers to car manufacturers.

Leading SiC substrate companies in China include TankeBlue and SICC. "Sunlight and SEMISiC are also companies to watch closely, "added Yole's Dogmus. SAN 'an Integrated Circuit uses a hybrid business model, combining contract manufacturing and integrated device manufacturing (IDM) businesses, while also engaging in substrate manufacturing.

While lacking a leading IDM, China can make up for its current deficiencies in SiC wafers, devices and modules by leveraging its overall manufacturing capacity. "China is known for its success in consumer products and has developed a mature division of labor in terms of outsourcing, packaging and so on," Dogmus said.

For example, "Chinese companies are well positioned in SiC substrates, epitaxial wafers and packaging". SiC device manufacturing "is considered a critical step in the next round of competition," she said. Dogmus expects major IDMs to build large-scale device capacity. It's a question of who gets a higher share of the value chain."

Yole asserted that Chinese device manufacturers may soon be producing SiC diodes for automotive applications. Devices like SiC MosFETs are a different matter. "It could take three years or more [for Chinese suppliers] to reach mass production. So far, SAN 'an Integrated has released vehicle scale MosFeTs, but has not yet realized mass production." "Yole reported.

Source: Yole Intelligence

investment

SiC vendors around the world are investing heavily in wafers.

Yole Compound Semiconductor Technology and Market Senior Analyst Poshun Chiu told us: "Substrate is a very large part of the cost of SiC devices.... . It is important for participants to have their own in-house supply so that they can control the internal costs of their device development over the long term."

This explains why Western SiC manufacturers have announced investments in SiC wafer production in recent months.

Chinese investment activity is also focused on SiC wafer production. TankeBlue Co, 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. The first phase of the project is expected to be completed this year and produce 100,000 wafers a year, with plans to expand capacity in 2025, Yole said. TankeBlue is also targeting manufacturing equipment.

SICC, another silicon carbide wafer company focusing on radio frequency applications, listed on the Shanghai Stock Exchange in January to finance a plant to produce N-type silicon carbide wafers in Shanghai's Lingang Free Trade Zone. According to Yole, the goal is to reach 300,000 6-inch N-type SIC wafers per year by 2024.

Based on LED (GaN/GaAs) field, SAN 'an Optoelectronics and SAN 'an Integrated Circuit carry out compound semiconductor contract manufacturing business in Xiamen. SAN 'an is investing $2.3 billion in a plant in Hunan province to support SiC crystal growth, wafer and epitaxial wafer production, and device manufacturing and packaging.

SMIC entered the SiC market by investing in a Shaoxing based Medium core Integration (SMEC). SMEC was founded in 2018 to provide process platforms for MEMS, IGBTs and MOSFETs. Smic now provides foundry services and module packaging for wide-band gap semiconductors, including SiC.

Byd plans to spin off its semiconductor business and develop in-house IGBT and SiC devices through a six-inch wafer plant in Ningbo. A $100 million capacity expansion will provide 20,000 6-inch wafers per month by 2026.

competition

Western suppliers of silicon carbide may have a few years' buffer before facing Chinese competitors.

Hanebeck, CEO of Infineon, said that in order to lead in SIC-based power systems, manufacturers must go beyond "individual switches to understand the application and the entire system." So Infineon is working on not just the chipset for the power switch, but also the drive, microcontroller and accompanying software.

Wolfspeed CEO Gregg Lowe described SiC as "a tricky technology and there's not really a huge amount of knowledge in the world right now."

Lowe foresees a long way to go for the SiC industry to drive technological innovation while cutting costs and ramping up production, which will require a lot of patience.

So far, no Western silicon carbide supplier has supplied silicon carbide ingot to China. "Generally speaking, wafer suppliers prefer to have the 'secret sauce' in-house and keep it in growing countries/regions," Yole's Dogmus observed.

Dogmus pointed out that intellectual property protection is imperative given the technological competition between China and the US. Wafer makers must own their own formulas and intellectual property. Intellectual property will be an issue for all new entrants, including China and Europe. In the manufacturing equipment sector, China has several furnaces and spare parts suppliers, which facilitates the development and entry of new Chinese companies.

Source: Yole Intelligence

conclusion

If silicon carbide is a long game, China can get a head start by nurturing its power electronics industry. Yole reports that with no quarterly targets, China has plenty of time and money and millions of skilled employees to succeed in SiC. In the age of decoupling, the global SiC industry will present two dynamic and parallel SiC ecospheres.