Changes in SiC market supply and demand and future trends
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Changes in SiC market supply and demand and future trends

Posted Date: 2024-01-25

SiC market, will oversupply be foreseen?

Preface

In recent years, with the rise of electric vehicles, 5G, new energy and other markets, carbon reduction, energy efficiency and electrification have become the slogans of today's era.

In this process, the demand for high-frequency, high-power devices and power electronics has grown rapidly, the physical performance bottleneck of silicon (Si)-based semiconductors has become prominent, and the potential of silicon materials has been gradually developed and improved.

So, how to minimize power conversion losses and how to limit the rapid expansion of volume, heat and cost while increasing power have become key issues in the industry.

Under this trend, the third generation of semiconductor materials represented by silicon carbide (SiC) has gradually moved from scientific research to industrialization, and has become a clear trend to replace some silicon-based power devices.

Compared with silicon, SiC materials have significant advantages:

High pressure:SiC materials have more than 10 times the breakdown field strength compared to Si materials, so they can achieve higher breakdown voltages through lower resistivity and thinner drift layers. Under the same withstand voltage value, SiC power modules conduct The on-resistance/size is only 1/10 of Si, and the power loss is greatly reduced;

High frequency resistance:SiC material does not have current tailing phenomenon and can increase the switching speed of components, which is 3-10 times that of Si, making it suitable for higher frequencies and faster switching speeds;

High temperature resistance:SiC material has 3 times the bandgap, 3-5 times the thermal conductivity, 2 times the ultimate operating temperature and more than 2 times the saturated electron drift rate. Therefore, SiC devices significantly increase the operating temperature while reducing current leakage.

It can be seen that when traditional silicon-based power devices cannot adapt to the changing needs of the rapid development of emerging markets, SiC has become a new choice for the power market with its excellent characteristics such as high frequency, high efficiency, high voltage resistance, and high temperature resistance.

Downstream markets and customers are also confident in the prospects of the SiC field. Many OEMs and Tier1 manufacturers hope to lock in reliable long-term supply as soon as possible, which also provides a solid impetus for the expansion of SiC manufacturers.

Driven by multiple factors,The upsurge in building factories and expanding production in the SiC market is intensifying. Countless long-established IDM companies, Fabless cutting-edge companies and start-ups are coming in droves.

Especially in the sluggish semiconductor market sentiment in 2022-2023, SiC does not seem to be affected. Large orders continue to be signed, production expansion plans are added, annual revenue continues to be revised upward, and SiC application cases continue to be enriched... , a series of actions indicate a bright future for the SiC industry.

We have just entered 2024, and the atmosphere of SiC industry expansion is still continuing.

More and more companies are eyeing the "fat meat" of SiC, and the pace of production expansion has driven the total global SiC production capacity to nearly triple in the past five years.

However, is things really going as planned?

Regarding the industry's aggressive expansion of production, some voices pointed out that how will the SiC market develop in the next few years? Will the production expansion speed and scale of SiC manufacturers bring the risk of oversupply in the future?

Behind supply and demand, where will the SiC market go?

Rushing to increase SiC production capacity:

Let’s look at the supply side first.

In the current booming global SiC power market, expanding production and volume is the focus of the industry. New and old players in the industry are rushing in to expand SiC production.

According to incomplete statistics from TrendForce Compound Semiconductor, nearly 20 SiC-related production expansion projects by foreign companies have been or will be implemented in 2023, with annual production capacity ranging from hundreds of thousands to millions of pieces.

In addition to original manufacturers and Tier1 companies continuing to increase investment and expansion in related products to consolidate their own industrial advantageous positions. Industry chain manufacturers are also expanding production in the SiC field around various links in the industry chain such as substrates and epitaxy.

In addition, many national and regional governments have also announced that they will invest large sums of money in power semiconductors.

It can be seen that the SiC gold rush is spreading rapidly around the world. The enthusiasm for track production expansion remains high and even shows signs of intensification. Not only are more manufacturers joining the ranks of SiC production expansion, but also giants have taken action many times. Production capacity construction has become a The focus of enterprises and industries.

Facing the huge market of SiC, not only international giants have joined in, but domestic companies are not willing to lag behind. They are deploying silicon carbide, expanding production capacity, trying to compete for market share with domestic substitution, and increasing the value or shipment volume of products.

According to incomplete statistics, nearly 40 SiC-related production expansion projects will be launched in China in 2023. Many of these projects involve large investments of billions or even tens of billions.

Domestic SiC companies are also making great efforts to expand production capacity. Judging from the amount of investment, according to statistics, a total of nearly 90 billion yuan will be invested in domestic SiC-related production expansion projects in 2023, a larger increase compared with 2022. It is an indisputable fact that the SiC track is becoming increasingly popular.

in summary,Production expansion dramas on the SiC track are happening frequently, and most international manufacturers are focusing on 8 inches. On the one hand, they are following the trend, and on the other hand, they are also trying to consolidate their leading advantages. Domestic manufacturers are increasingly choosing to continue to strengthen 6-inch production capacity in order to make steady progress. However, there is also a forward-looking layout, focusing on both 6-inch and 8-inch products, and a two-pronged approach to meet current and future needs.

According to TrendForce analysis, as domestic and foreign manufacturers have successively expanded production, and cooperation projects with automobile and new energy customers have become clear, the overall SiC power component market size will reach US$2.275 billion in 2023, with an annual growth of 41.4%. It is expected that SiC will reach 2.275 billion US dollars in 2023. The power component market size is expected to reach US$5.328 billion.

SiC demand opens up new space

The hot production expansion on the supply side is inseparable from the huge demand for SiC in the downstream market.

Most SiC manufacturers have received huge prepayment orders. This approach provides good cash flow support for SiC manufacturers to invest in production expansion, and also brings great impetus to their production expansion.

From the demand side, new energy vehicles are the most important application field of SiC and the largest driving market.

Looking back at the progress of SiC on the road, Toyota launched SiC MOSFET as early as 2014. However, due to the high cost and immaturity of the technology at that time, the early industrial development has been slow.

Until 2018,Tesla Model 3 is equipped with an inverter equipped with a full SiC MOSFET moduleits lightweight characteristics save the internal space of electric vehicles, its high-efficiency characteristics effectively reduce the cost of electric vehicle batteries, and its high-temperature resistance characteristics reduce the requirements for the cooling system and save cooling costs.It has become an industry promoter of SiC devices in the automotive field.which has opened up the imagination of SiC’s application progress and market space.

Especially driven by the rapid development of new energy vehicles and the continuous improvement of electric vehicle battery life and charging speed, SiC devices have become popular in the field of new energy vehicles due to their small size, superior performance, strong energy saving, and incidentally alleviating battery life problems. . SiC devices are beginning to be used in drive inverters, DC/DC conversion, on-board chargers OBC and fast charging piles.

Since then, many car companies have adopted SiC power devices as the preferred solution for future new energy vehicle motor drive systems, and have been widely accepted by the market.

From the perspective of industry trends, SiC is the general trend. Although Tesla stated at the investor conference in March 2023 that it would reduce the use of SiC by 75%, which once triggered speculation that the future development prospects of SiC were unclear, the subsequent automotive market and suppliers have expressed their support for SiC with practical actions. support.

As more and more car companies continue to introduce SiC technology, TrendForce predicts that the automotive SiC power device market will reach US$3.94 billion in 2026, accounting for as much as 74% of the market.

The explosion of demand for SiC in cars and its rapid penetration in the charging pile market have made its production capacity supply a key bottleneck.

800V architecture, the new “trend” in the SiC market

On the other hand, in order to further improve charging efficiency and shorten charging time, mainstream car companies choose high-voltage fast charging solutions, and the 800V high-voltage architecture is gradually entering the market.

Some industry experts predict that more new energy vehicles using 800V systems will appear in the next one to two years. This "upgrade revolution" of high-voltage platforms has put SiC devices in the spotlight.

Because the soul of building an 800V supercharging platform is the innovation of materials, 800V high-voltage fast charging will involve the entire strong current link from the power supply in the car to the charging outside the car. Silicon-based devices have reached the theoretical performance limit and are embarrassed to carry out this important task. SiC devices with advantages such as high voltage resistance, high temperature resistance, and high frequency are currently the best alternative.

The "onboarding" of 800V SiC power devices has brought huge improvements to the energy utilization efficiency, charging speed, motor power, etc. of electric vehicles, and has gradually become a hot spot in the new energy automobile industry.

In the future, 800V high-power systems with SiC as the core will usher in large-scale development in the fields of main inverters, motor drive systems, DC-DC, vehicle chargers, and charging piles, thereby accelerating the penetration of SiC devices. According to industry expectations, the penetration rate of 800V+SiC solutions will exceed 15% in 2025.

It can be seen that under the huge market potential and technological change trend, the SiC industry chain is facing multiple "windows".

Substrate, the key bottleneck of SiC production capacity

In addition, the shortage of SiC substrates will make the imbalance between supply and demand of SiC chips a long-term phenomenon.

As we all know, the substrate has always been a key bottleneck in SiC device production capacity.

In the past few years, many SiC device manufacturers relied on binding substrate giants to ensure SiC substrate production capacity. Today, the world's leading SiC device suppliers have successively acquired and invested in different high-quality SiC substrate suppliers, and began to establish internal substrate supply, vertical integration from SiC substrate to device manufacturing.

Although these manufacturers have established their own substrate supply through acquisitions, their production capacity is still far behind, and they adopt a two-line model in which some production capacity is self-sufficient and some production capacity is tied.

Industry insiders pointed out that the reason for this trend is mainly due to the extreme imbalance between SiC supply and demand. The demand for SiC substrates is very large. The industry believes that the industry has become a long-term sustainable trend. The production capacity of SiC substrates cannot be achieved due to yield issues. To meet the rapidly growing demand, device manufacturers have the urge to "stock up".

According to Trendforce's forecast, the demand for SiC substrates for new energy vehicles may reach 1.69 million pieces in 2025, far exceeding the current supply level.

It is foreseeable that before the industry can form stable and large-scale shipments of substrates with high yields, the entire industry will continue to be in short supply.

It is precisely for this reason that "gradually upgrading from 6 inches to 8 inches" has become a mainstream future trend for SiC substrate wafers. In order to further improve production efficiency, large size is an important development direction of silicon carbide substrate preparation technology. At the same time, the industry also regards this trend as an important way for SiC to reduce costs.

Beyond automobiles, the SiC market has vast space

In addition to new energy vehicles, industrial applications such as photovoltaics and energy storage are still in urgent demand for SiC, showing a trend of accelerating growth.

Taking the photovoltaic market as an example, the DC terminal voltage level of photovoltaic power stations has gradually increased from 1000V to 1500V, and is expected to increase to 2000V in the future. The performance advantages of SiC power devices in high voltage environments are highlighted.

With the rapid growth of photovoltaic inverter shipments and the increase in the penetration rate of SiC power devices, the photovoltaic SiC power device market will grow rapidly. According to CASA data, the penetration rate of third-generation power semiconductors in China's photovoltaic field will exceed 13% in 2021, and the market size will be approximately 478 million yuan, a year-on-year increase of 56%. The market space for third-generation semiconductors for photovoltaics is expected to be close to 2 billion yuan in 2026. The five-year CAGR exceeds 30%.

Traditional manufacturing industries are transforming and developing in the direction of "energy saving, carbon reduction, and high efficiency". The scenario blueprint of "home appliance giants creating a second growth curve + SiC application penetration" is also gradually opening up. The market space for SiC devices is vast.

As SiC production capacity and yield increase in the future, demand for automotive OBCs, high-power converters, etc. will also increase. Therefore, from the perspective of industrial supply and demand, it is still too early to worry about overcapacity.

Conclusion

Overall, with the growth of new energy vehicles, energy storage and other markets in recent years, the demand for SiC has shown a spurt of growth.

An industry research organization stated that in the 25 years since we have been tracking the global semiconductor manufacturing asset market, we have never seen any new technology develop so fast. Although the semiconductor industry is currently experiencing a downturn, we are witnessing strong growth in SiC.

With the help of SiC devices, global power semiconductor manufacturers have seen growth opportunities. Expanding production is also the only way for major SiC manufacturers to seize the market and compete for customers.

Even though production capacity expansion is growing rapidly, from the analysis of both supply and demand sides and the forecasts of industry organizations, the current demand-side gap is too huge, and SiC's large-scale production capacity expansion will not cause oversupply in the short term.

Therefore, in the face of technological evolution and market opportunities in the SiC industry, industry manufacturers are actively rushing in to push the SiC market to new heights in ambitious production expansion plans.

Review Editor: Huang Fei


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