As the third-generation semiconductor, SiC (Silicon Carbide) has significant advantages over traditional silicon in terms of high voltage endurance, power loss, and system efficiency. Leveraging these advantages, SiC has been making a significant impact in fields such as new energy vehicles, industry, and wind-solar energy storage. However, in the past, the slow crystal growth rate and low yield of SiC have led to high production costs, which have always limited the popularization of SiC.

Recently, according to media reports, industry insiders predict that the price of SiC chips will drop by up to 30% in the next two years. This is due to an increasing number of local manufacturers obtaining electric vehicle certification and expanding their manufacturing capabilities. SiC chips will change the past situation of heavy reliance on imports. Informed sources say that by 2025, SiC epitaxial wafers made in China will be sufficient to meet domestic demand.

The price of SiC is expected to drop by 30%.

SiC has a century-long history of material development. Since the accidental discovery of this substance by Swedish scientists in the laboratory in 1824, by 1987, Wolfspeed (formerly Cree) manufactured the world's first commercial SiC substrate, announcing the official commercialization of SiC and its application in the LED field.

As a wide bandgap semiconductor material, SiC has excellent characteristics such as high efficiency, high-temperature stability, high voltage and current capabilities, and high thermal conductivity. Compared to ordinary silicon, SiC's breakdown electric field strength is nearly 10 times that of silicon, its thermal conductivity is three times that of silicon materials, and its electron mobility is also higher. At the same time, it can work at higher temperatures, making SiC more suitable for fields such as new energy vehicles.

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What really brought SiC to the general public was in 2018 when Tesla announced that it would replace the Si-IGBT used in inverters with SiC-MOS. On the one hand, due to the very low on-resistance of SiC itself, under the same specifications, the total energy loss of SiC-MOS compared to Si-IGBT can be reduced by about 80%, and the device size is smaller.

Due to Tesla's position in new energy vehicles at the time, it also drove subsequent manufacturers such as BYD, Geely, XPeng, and Li Auto to follow suit, and SiC began to rapidly popularize.

However, Chinese manufacturers started late in the development of SiC, and SiC mass producers are still in the early stages. Coupled with the complex and high-cost process of SiC crystal growth, including the high energy consumption, time, and technical requirements during the crystal growth process, defects may occur during the manufacturing process, leading to a lower yield, which has made the SiC market show high prices and supply shortages in the past. For example, in terms of cost, SiC is about three times that of silicon devices, and the conversion rate from raw materials to wafers is only 50%.

The high technical barriers make the SiC market itself highly concentrated, with the top five SiC manufacturers accounting for about 70% of the market share, including ST, Infineon, Wolfspeed, ROHM, and ON Semiconductor.

Chinese related enterprises are catching up, such as Tianyue Advanced, Xilinx, Silan Microelectronics, Han's Photovoltaic, Shandong Tiancheng, San'an Optoelectronics, China Resources Microelectronics, Xingjie Energy, and Star Semiconductor. These companies are continuously improving product quality and production efficiency through the introduction of advanced foreign technologies or independent innovation, gradually occupying a place in the market.Sources have revealed that the development momentum of SiC in China is rapid. By 2025, SiC epitaxial wafers manufactured in China will be sufficient to meet domestic demand. In the first half of 2024, the cost of electric vehicles using SiC devices also decreased by 15%-20%, and the unit price of SiC has dropped to a level comparable to IGBTs.

The sources also indicated that the decline in SiC prices will accelerate its widespread adoption. By 2025, when the production capacity of 8-inch wafers increases, prices could potentially drop by as much as 30%.

Entering the SiC market, the market is accelerating its penetration

Driven by the new energy vehicle and photovoltaic industries, SiC is entering a stage of rapid development. According to research firm Yole, the SiC device market size was $1.97 billion in 2022, with the power device market reaching $1.8 billion, and it is expected to reach $8.9 billion by 2028, with a CAGR of 31%.

The vast market naturally attracts many companies to enter the SiC industry, but the entire process from production to application of SiC is relatively long. Taking the power devices of SiC as an example, it takes one month from single crystal growth to substrate formation, another 6-12 months from epitaxial growth to the completion of front and back end processing of wafers, and finally, about 1-2 years for vehicle validation. Therefore, for SiC power device IDM manufacturers, the cycle from production to revenue conversion is very long, and for the automotive industry, it generally takes about 4-5 years.

However, since Tesla started using SiC-MOS in 2018, many companies have begun to try to enter the SiC industry, and many domestic companies have started to layout the SiC market shortly after this stage.

The segments involved by companies in the SiC industry include substrates, epitaxy, design, manufacturing, packaging, testing, devices, modules, etc. The SiC substrate products that can be mass-produced are mainly 6-inch and 8-inch, and products with larger sizes also have higher competitiveness.

For example, as a SiC substrate supplier, Tianyue Advanced recently announced its financial forecast, expecting to achieve revenue of 880 million to 980 million yuan in the first half of 2024, with a year-on-year increase of 100.91% to 123.74%, and turning losses into profits, achieving a net profit of about 100 million yuan.

In terms of epitaxial wafers, companies like Tianyu Semiconductor plan to build a 6-inch/8-inch SiC epitaxial wafer production line, which is expected to be completed and put into production in 2025, achieving revenue of 870 million yuan, and by 2028, the full production capacity will reach 1 million pieces per year. In addition, many companies such as Handan Tiancheng, Puxing Electronics, China Electronic Compounds, and Nansha Wafer have achieved mass production of 6-inch SiC epitaxial materials.

Furthermore, as the leader of domestic IGBT modules, Star Power is also actively laying out in SiC and is planning to form an annual production capacity of 60,000 pieces of 6-inch SiC chips. Xingjie Energy is also continuously launching SiC and GaN related products, and has developed a series of 1200V 23mohm-62mohm SiC MOSFET products, and has developed a 650V SiC MOSFET process platform for new energy vehicle OBC, photovoltaic energy storage, industrial and automation industries. The related products have passed customer verification and have achieved small-scale sales.Silan Microelectronics' financial report published this year indicates that its subsidiary, Silan Mingga, is in the ramp-up phase for its 6-inch SiC power device chip production line. With a continuous increase in output, it is anticipated that the subsidiary's losses will gradually decrease in the second half of the year.

Jingsheng Shares, a leading domestic manufacturer of SiC crystal growth furnaces, has already integrated its products into the industrial lines of clients such as San'an Optoelectronics, BYD Semiconductor, Tianyue Advanced Materials, and Dongni Electronics.

Since the beginning of 2024, with the concentrated launch of several 800V SiC vehicle models like Xiaomi Automobile, Huawei Smart Selection S7, and AITO M9, it is expected that more models will be introduced in the second half of the year, leading to a doubling of SiC penetration in new energy vehicles in 2024. According to institutional forecasts, the domestic SiC substrate production is expected to reach 5 million pieces by 2026, which is 10 times the capacity of domestic SiC substrates in 2022.

Due to the lengthy cycle inherent in SiC, most domestic enterprises are still in the vehicle validation phase, and it is anticipated that mass adoption in vehicles will be achievable by 2025, at which point domestic SiC applications in new energy vehicles will become more visible.

In summary, SiC has long been dominated by foreign enterprises, with Chinese products primarily relying on imports. The complex production process and high barriers of SiC have led to high costs for related products. Additionally, the long cycle time of SiC production lines and the late start of Chinese enterprises have resulted in a shortage of SiC devices in China in recent years. However, with the accelerated production and technological advancements of Chinese companies, it is hopeful that by 2025, China will achieve large-scale mass production of SiC, which could significantly reduce the market prices of SiC.