The penetration rate of third-generation semiconductors used in power components in various fields continues to rise. The rapid development of green energy, 800V automotive electric drive systems, high-voltage fast charging piles, consumer electronics adapters, data centers and communication base station power supplies has boosted the market demand for silicon carbide (SiC)/gallium nitride (GaN) power semiconductors.
Data from the Third Generation Semiconductor Industry Technology Innovation Strategic Alliance show that in 2023, the global SiC/GaN power electronics market will be approximately US$3.07 billion, with pure electric and hybrid vehicles (EV/HEV) accounting for approximately 70% of the market, which is the core market driver. Yole predicts that driven by consumer electronics, data centers and new energy vehicles, the global GaN market capacity will reach US$2.2 billion in 2029, with a compound growth rate of 29% in the next five years; and driven by industrial and automotive applications, the market size of SiC will reach US$10 billion in 2029.
In the chip and device manufacturing links, the performance of international leading companies has achieved rapid growth. The SiC device performance of STMicroelectronics (ST), Infineon, Wolfspeed, Onsemi, and ROHM increased by more than 50% year-on-year. The five companies maintained rapid expansion, and the performance goals set were to achieve a 30%-40% market share of SiC power electronics in 2030. According to the 2023 corporate financial reports, the total market share of the five leading companies reached 82%, and the industry links were highly concentrated.
In the Chinese market, according to statistics from CASA Research (the Third Generation Semiconductor Industry Technology Innovation Strategic Alliance Third Generation Semiconductor Industry Research Institute), the market size of China's SiC/GaN power device modules in 2023 was approximately RMB 15.32 billion, a year-on-year increase of 45%. The penetration rate of third-generation semiconductors in the field of power electronics exceeds 12%, and it has begun to enter a stage of rapid growth. Among them, new energy vehicles (including charging infrastructure) are the largest application areas of third-generation semiconductor power electronics, accounting for 70.67% of the overall market, followed by consumer power supplies and PFC (power factor correction), accounting for 11.16% and 5.78% respectively.
01 SiC production capacity continues to rise
Silicon carbide (SiC) has excellent performance as a semiconductor material, especially for power components used in power conversion and control. However, SiC is very rare in the natural environment. People first found a small amount of this material in meteorites 4.6 billion years ago when the solar system was just born, so it is also called "a semiconductor material that has experienced a 4.6 billion-year journey".
SiC's initial application scenarios were mainly concentrated in photovoltaic energy storage inverters, data center server UPS power supplies (uninterruptible power supplies) and smart grid charging stations, which require high conversion efficiency. But people soon discovered that the electrical, mechanical and thermal properties of silicon carbide are also very suitable for manufacturing many high-power automotive electronic devices, such as on-board chargers, buck converters and main drive inverters.
After Tesla adopted SiC devices for its Model 3/Model Y main drive inverter, the demonstration effect of SiC was rapidly amplified, and the xEV automotive market soon became the source of excitement in the SiC market. In 2020, BYD's high-end model "Han" was also equipped with SiC devices. It is expected that in 2024, BYD will achieve the full replacement of SiC devices for silicon-based IGBT devices in its electric vehicles, so that the performance of the whole vehicle will be improved by 10% on the existing basis.
However, in the past two or three years, the shortage of wafer supply has been one of the major bottlenecks restricting the development of the SiC industry. Faced with growing market demand, many heavyweight players, including wafer fabs, have realized that they must expand investment to support supply chain construction.
Take ON Semiconductor as an example. As early as November 2021, ON Semiconductor announced the acquisition of SiC wafer substrate supplier GTAT to enhance its own SiC supply capabilities. Earlier in 2019, ON Semiconductor also signed a multi-year supply agreement for SiC wafers with CREE. In addition, with the support of investment and expansion policies, in August 2022, ON Semiconductor's SiC plant in Hudson, New Hampshire, USA was completed. This base will increase ON Semiconductor's SiC wafer production capacity fivefold year-on-year by the end of 2022; in September, ON Semiconductor announced the expansion of its SiC plant in Roznov, Czech Republic. It is expected that in the next two years, this expansion will increase the SiC production capacity of the base by 16 times.
Thanks to this, in the past two years, ON Semiconductor has achieved 10 times, 12 times, 4 times and 3 times growth in the four key areas of SiC substrate production capacity, bare chip production capacity, packaging capacity, and new product releases, respectively.
According to the news from Infineon, in September 2021, Infineon announced the official start of operation of the 300mm thin wafer power semiconductor chip factory in Villach, Austria; in February 2022, it announced that it would invest more than 2 billion euros to build a third plant in Kulim, Malaysia for the production of silicon carbide and gallium nitride power semiconductor products. In February 2023, it signed a new SiC multi-year supply and cooperation agreement with Resonac Corporation (formerly Showa Denko). The agreement shows that Resonac will supply about a double-digit share of Infineon's SiC materials used to produce SiC semiconductors in the next ten years.
In June this year, STMicroelectronics announced that it would build a large-scale integrated manufacturing base in Catania, Italy, integrating 8-inch SiC power devices and module manufacturing, packaging, and testing. The total investment of the project is about 5 billion euros. It is expected to be put into operation in 2026 and reach full production capacity by 2033. After full completion, the wafer output can reach 15,000 pieces/week.
Rohm has also formulated an active capacity expansion plan, preparing to invest 170-220 billion yen in SiC business from 2021 to 2025. The realization of this plan will rely on the commissioning of Rohm's two bases in Miyazaki and the new plant of Chikugo Factory. Compared with 2021, Rohm's SiC production capacity is expected to increase by 6 times by 2025 and 25 times by 2030.
The above is just a microcosm of the global SiC industry's enthusiasm for investment and expansion. According to incomplete statistics, there will be 121 SiC-related expansion projects disclosed globally in 2023, with a total investment of up to US$26 billion. Among them, there are 97 expansion projects from China, including: Tianyue Advanced will expand the production scale of 6-inch SiC substrates in the Shanghai Lingang factory to 960,000 pieces per year; in addition to its joint venture with ST and investing US$3.2 billion (approximately RMB 22 billion) in Chongqing to build an 8-inch SiC epitaxial and chip foundry, Sanan Optoelectronics will also invest RMB 7 billion separately to build an 8-inch SiC substrate factory in Chongqing.
02 Fully steered to 8 inches
The price of SiC power devices is currently about 4 times that of Si power devices of the same specification, and the substrate accounts for about 40% of the total cost of the device. Considering the competitive cost and stable supply, it is the key to the large-scale application of SiC power electronics. It is not surprising that the industry uses 8 inches as the main means of implementation. According to Yole data, although more than 11 companies in the world have announced plans to expand 8-inch SiC materials in 2023, from the actual shipments, 8-inch SiC substrates only account for 2%, and large-scale mass production is still progressing slowly, and industrialization is not as expected.
The industry production is still dominated by 6 inches. The difficulties of SiC transitioning from 6 inches to 8 inches mainly come from the process level, including diameter expansion growth, temperature field control, crystal cutting and polishing, and wafer processing consistency, stability, yield and other challenges. However, with the gradual breakthrough of the above problems, 8-inch mass production will help SiC power electronic devices to rapidly reduce the cost and form a strong impetus for the expansion of the application market.
The compound semiconductor market under TrendForce has previously counted the progress of 8-inch substrates of mainstream SiC companies in China. Currently, there are 10 companies and institutions in China that are developing 8-inch substrates, including Shuoke Crystal, Jingsheng Electromechanical, Tianyue Advanced, Nansha Wafer, Tongguang Co., Ltd., Institute of Physics, Chinese Academy of Sciences, Shandong University, Tianke Heda, Keyou Semiconductor, Qianjing Semiconductor, etc. Judging from the situation in other countries, international silicon carbide manufacturers such as Wolfspeed, ROHM, Infineon, and ST have already entered the 8-inch stage, and the mass production nodes of these manufacturers have also been advanced to this year.
The market momentum for SiC to shift to 8 inches also comes from increasingly fierce market competition, and major companies around the world have been expanding their production capacity in silicon carbide substrate epitaxy, leading to industry concerns about overcapacity. According to CASA Research, by 2027, China's announced SiC substrate production capacity will account for more than 40% of global production capacity. In the past, China's 6-inch silicon carbide substrates were usually only about 5% lower than the quotations of international suppliers, but recently the price difference has widened to 30%.
On the other hand, with the weakening demand in the global electric vehicle market, the demand for silicon carbide has shrunk, and suppliers are also constantly lowering prices in order to grab orders. In the financial reports released by many leading companies such as STMicroelectronics, Infineon, Rohm, Wolfspeed, ON Semiconductor and X-fab, we also saw that some companies lowered their revenue growth targets for silicon carbide.
03 Automotive power devices are still the main "battlefield"
From the perspective of physical properties, the electron mobility of SiC and silicon materials is not much different, but its band gap, breakdown voltage, thermal conductivity and electron migration speed are 3 times, 8 times, 4 times and 2 times that of silicon materials respectively. times. At the same time, the Mohs hardness of up to 9.5 is also 50% higher than silicon material. This means that power semiconductors based on silicon carbide materials have excellent characteristics such as high withstand voltage, low on-resistance, and small parasitic parameters, and are very suitable for manufacturing many high-power automotive electronic devices, such as on-board chargers (OBC), buck converters and Main drive inverter.
This is indeed the case. Whether on a low-voltage 400V platform or a high-voltage 800V platform, silicon carbide devices can bring significant efficiency improvements to electric vehicles. However, although silicon carbide devices can operate at higher junction temperatures, have faster switching speeds and withstand voltage capabilities, these characteristics pose special challenges to chip design, driver optimization, circuit protection, module packaging and system integration. . In addition, there are still considerable technical difficulties in the evaluation and certification of long-term reliability of end products using silicon carbide materials.
An obvious trend currently seen is that as automakers pursue higher energy efficiency and battery life, OEMs will release more models equipped with 800V platforms in the next two to three years. The demand for SiC power devices Demand will increase further. According to incomplete statistics, nearly 35 car companies around the world have launched more than 50 models supporting 800V high-voltage platforms in 2023, with mainstream prices ranging from 200,000 to 300,000 yuan per vehicle, and "800V+SiC" has basically become the standard for high-end electric vehicles. match.
In parallel with the rapid development of the new energy vehicle market, charging infrastructure is also developing. Especially in the Chinese market, the ratio of new energy vehicles to charging piles has reached 2.5:1, which is much higher than the 8:1 ratio in Europe and the United States. According to data from the China Charging Alliance, China's third-generation power electronics market for charging infrastructure will be approximately RMB 420 million in 2023 and is expected to reach RMB 2.18 billion by 2027. Among them, high-voltage DC fast charging creates the greatest market opportunity for SiC power electronics. After all, as high-end electric models upgrade from the 400V voltage platform to 800V, the voltage of DC fast charging piles also needs to be increased to 800V-1,000V, and the withstand voltage of the power devices used needs to be increased to 1,200V.
Interestingly, since 2020, more and more vehicle companies have begun to deploy third-generation semiconductor power electronics business. Internationally, vehicle companies and semiconductor suppliers basically rely on strategic cooperation. Chinese car companies combine the research and development needs and strategic needs of each chip, and adopt self-research, establishment of joint ventures or joint research and development, and strategic investment in power semiconductors. Three models of business.
04 Opening the door to new opportunities for GaN
As a member of the wide bandgap semiconductor family, gallium nitride (GaN) power devices have received more attention than before in the past two years, and are gradually becoming the most dazzling new star in the third-generation semiconductor materials.
According to Yole's forecast, by 2028, the value of the GaN power device market will grow from US$126 million in 2021 to US$2.04 billion, with an annual compound growth rate of 49%. It is favored by applications such as consumer electronics, automobiles, telecommunications, and data communications. At the same time, a large number of manufacturers are also striving to achieve technological and production capacity breakthroughs in GaN to seize the market opportunity. Fierce competition is rapidly promoting GaN to become one of the key technologies for cost reduction, efficiency improvement and sustainable green development.
The advantages of GaN mainly lie in fast switching speed, high frequency and high power density, so it has great advantages in the fields of charging heads, server power supplies, photovoltaic micro-inversion, etc. When applying GaN, customers often consider high-frequency operation from the system, reduce the size of transformers, inductors and systems, and maximize the advantages of GaN.
In the most representative fast charging market, with the help of GaN, smartphone manufacturers can manufacture chargers with smaller shell sizes and higher cost performance. Although the unit price of GaN-based devices is more expensive than silicon, higher frequencies and higher power density values make the dollar per watt lower. According to Yole's forecast, the power GaN market is expected to account for more than 6% of the power electronics market by 2028. Among them, consumer fast chargers and adapters are still the main driving force for Power GaN, and new trends include higher power (up to 300W) and "all-GaN" chargers, resulting in higher GaN content per charger.
For renewable energy power generation systems such as solar and wind power, GaN-based inverters can be used on both the low-voltage side and the high-voltage side, as well as operate at higher frequencies, thereby achieving smaller and lighter systems. Data shows that due to low switching losses, the GaN solution can be 0.5%-1% more efficient than the silicon device solution, which brings two advantages: one is higher power generation; the other is that in the same volume, the GaN solution has the opportunity to achieve more than double the power, thereby reducing the cost of the system. As the battery system evolves to 800V, supporting high-voltage fast charging, greater main drive power improvement and high power density design have become new goals, requiring the on-board power supply to find a balance between power density, manufacturability, high reliability and low cost, but this is not an easy task. The reason why OEMs are increasingly inclined to value GaN devices is nothing more than that GaN has advantages in high-frequency applications, which can ensure product performance while achieving lightweight and miniaturization of products, which is the most concerned by vehicle manufacturers.
The increasing power density and conversion efficiency of data center power supplies are the fundamental reason why third-generation semiconductors are favored. At present, the power level of server power supplies has increased from 800W to 1.3kW, or even 4kW, so very high requirements are placed on power density and efficiency. The turn-on and turn-off losses of GaN are reduced by more than 50% compared with silicon carbide and silicon devices, and there is no reverse recovery loss, which can easily meet the titanium-level efficiency requirements, so it is increasingly used in data center server power supplies.
From the perspective of capacity layout, according to CASA Research, the GaN power electronics market will expand slowly in 2023, and companies will lack the motivation to expand production. The new investment in 2023 will be less than 10 billion yuan. Among the 22 publicly disclosed GaN power electronics expansion projects, China plans to build 11 new projects with a disclosed investment amount of 5.38 billion yuan. Among the new projects, device module projects account for a large proportion, accounting for 58.7% of the amount.
Among the leading companies, Innoscience from China accounts for more than 53% of the global and more than 90% of China's production capacity. In 2022, it will become the world's largest gallium nitride company by sales and shipments. According to the plan, Innoscience will reach a monthly production capacity of 70,000 8-inch gallium nitride pieces in 2026, which can basically meet the needs of future market applications.
05 Establishing the "SiC+GaN" dual business engine
At present, the main companies that adopt this dual business engine are international leading companies, and the purpose is also very simple, mainly to seize the market opportunity and ensure the security of the supply chain. For example, in August 2022, Navitas Semiconductor officially acquired GeneSiC and built a third-generation power semiconductor "dual engine" strategy represented by GaNFast+GeneSiC; in March 2023, Infineon announced that it would spend $800 million to acquire GaN Systems, etc.; in addition, ST acquired Exagan, Renesas acquired Transphorm, Qorvo acquired UnitedSiC, etc.
Expanding the product portfolio and covering a wider range of application scenarios are obvious advantages brought by this business model. They can flexibly deploy gallium nitride, silicon carbide or silicon according to market needs; they can use the accumulation and precipitation of one technology to help the development of another technology; they can also adopt a system-level approach, combine the right technology for specific applications, create first-class performance solutions, and reduce system costs, bringing double advantages to customers and making their final products unique.
In contrast, China's third-generation semiconductor power electronics industry is still in its growth stage, with a relatively small scale of enterprises and has not yet entered the stage of integration and mergers and acquisitions. Their important strategic initiatives are mainly reflected in three aspects: first, accelerating capacity expansion and continuously investing in new projects in order to occupy a place in the upcoming market; second, the enthusiasm for financing and IPO is high, and the capital market is relatively active; third, actively promoting international strategic cooperation.
06 How to create differentiated competitive advantages
If we compare Chinese companies with international giants, we will find that the former are still mainly based on the Fabless model, with more emphasis on application innovation; while the latter generally adopt the IDM model, aiming to build a full range of strategic competitive advantages from technology, cost, shipment volume, to manufacturing, packaging, and application.
Some industry insiders have previously stated that in order to catch up with international giants as soon as possible and ultimately win this battle, Chinese companies must at least do the following three things:
First, be more diligent than European and American companies;
second, concentrate resources to polish more competitive products, shorten tape-out time, and accelerate product iteration;
third, give companies more opportunities on the application side, which is a win-win outcome, so the industry chain must work together to keep warm.
It is difficult for scattered small companies to form effective R&D capabilities, let alone the ability to compete directly with international leading companies.
From the perspective of the supply chain, at present, international chip giants are more willing to lock in customers through quality and cost through strong cooperation. In addition, more and more vehicle manufacturers are also very concerned about the supply capacity, R&D capacity and financial status of supply chain companies. If they do not meet the standards, they will be eliminated. For Chinese companies, gradually tending to the head effect, locking in upstream and downstream cooperation to bring stronger cost advantages and supply capabilities will also become a necessary path.
As for whether it is necessary to take the IDM path, there are still different opinions in the industry. Supporters believe that after a power semiconductor company reaches a certain stage, if it wants to continue to grow and become stronger and form its own patent barriers, the IDM path must be taken. After all, power semiconductor patents are closely linked to equipment, factories, and processes. It is difficult to rely on other factories for a long time, although this road is more difficult.
At present, although China's wide bandgap power semiconductor devices are still at least one generation behind the international leading level in terms of process level, there is no problem with the packaging level of its products, and the service response speed is faster than that of international manufacturers. Some experts pointed out that Chinese companies should strive to enhance their differentiated advantages in the process of active development, combine them with actual market demand, and avoid blind expansion of production capacity in the mid- and low-end fields, which will lead to overcapacity.
Considering that 2024 is the year of stress testing for the wide bandgap semiconductor supply chain, for Chinese design companies, it is not only necessary to design products with excellent electrical performance, but also to strengthen the construction of quality management system to supply chain management system. This is a systematic project that requires great efforts. Only in this way can products be supplied with better performance and reliability, and a more stable life cycle, and win the confidence of users.
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