In the early morning of March 2, Beijing time, Tesla in its investor day speech, talked about the most affecting semiconductor manufacturers, from Tesla's powertrain engineering head - Colin Campbell, he mentioned that in the next power system, silicon carbide transistors as an expensive key component, Tesla's new solution can reduce the use of 75% without affecting the performance or efficiency of the car.
As a leading manufacturer of silicon carbide substrates, the stock price of Wolfspeed fell 6.98%, the stock price of domestic manufacturer Tianyue Advanced reached a 10.13% decline on the day, and the stock price of power device manufacturer STMicroelectronics opened low and went high, and finally closed down 2.43 percentage points, while ON Semiconductor, which has bet on silicon carbide in the past two years, was slightly less affected, and its stock price fell 1.89%. Just last month, Infineon announced that it will invest 5 billion euros in Dresden, Germany, to build a factory for analog/mixed-signal technology and power semiconductors. At the same time, ON Semiconductor and STMicroelectronics also continue to make efforts in related sectors. Coupled with the wind of silicon carbide in the past two years, from large-area applications to large-scale mass production, it seems that it will soon come. All this seems to be the opposite of Tesla's long-term reduction in silicon carbide. Today, the author will take the recent trend of these companies as a reference to share their planning and layout in the direction of power devices, especially silicon carbide. Infineon is an established player in power devices; Although STMicroelectronics is a global leader in MCUs, it is not inferior in power devices; ON Semiconductor is a representative of the transformation in the field of power devices in the past two years, and the original low-end business has been rapidly transferred to high-margin products, which is a dark horse of silicon carbide. Wind up Tesla: Tesla's long-term reduction plan is a blow to the entire silicon carbide ecology. However, because Tesla did not disclose too many technical details about the new platform at the event, it was impossible to evaluate its specific technical route and plan. To be clear, Campbell mentioned two points, one is that silicon carbide transistors are key components, and the other is that they are expensive. Therefore, silicon carbide is still extremely critical on the subsequent road, and the price itself will be linked to many other factors, such as process improvement, yield improvement, and continuous expansion of supply-side production capacity, etc., which often lead to price decline. So the main point of divergence is focused on dosage. But don't forget, Tesla was among the first to eat crabs when it first applied silicon carbide to the Model 3 in 2018. But now, because silicon carbide is expensive, it will only be used in the future. However, the application of silicon carbide will not be immediately reduced until the specific scheme is applied. Even when the plan comes out, the supply and demand of silicon carbide may be a world apart. According to public information, a number of international leading manufacturers in the field of power semiconductors have recently expanded silicon carbide-related production capacity. Obviously, manufacturers must have done sufficient calculations and preparations before expanding production, and have done in-depth research and analysis on the importance, necessity and role of silicon carbide in downstream applications, so compared to Tesla's empty promise, the trends of these manufacturers are more worthy of being one of the vanes of silicon carbide. STMicroelectronics: As a global leader in 32-bit MCUs with ARM architecture, STMicroelectronics is not weak in power devices and silicon carbide. In 2022, ST generated revenues of $700 million in automotive and industrial silicon carbide and is expected to exceed $1 billion in 2023. At present, the company has 82 silicon carbide customers. At the same time, 25 related projects were added during the year, including 8 new customers, and nearly 60% of the projects were aimed at automotive customers. ST will increase production of fourth-generation transistors in the second half of 2023 as third-generation transistors continue to be produced in large quantities and silicon carbide continues to be consolidated. In terms of silicon carbide, ST requires a significant increase in front-end capacity, which will be 10 times that of 2017, and will also increase internal procurement of substrate requirements, reaching 40% by 2024. As a result, it highlights its own silicon carbide vertical integration strategy, covering a wider range of industrial links, the Catania plant currently under construction will increase the manufacturing capacity of silicon carbide substrates, which is expected to be mass-produced in 2023, the Singapore plant will increase the production of silicon carbide front-end equipment, and the Moroccan and Chinese factories will increase the back-end manufacturing capacity. In the future, ST will also facilitate its collaboration with Soitec to enable ST's SmartSiC technology to be used in ST's own 200mm substrate production. ON Semiconductor: Transforming and locking in $4.5 billion LTSA Silicon Carbide ON Semiconductor has expanded its silicon carbide production and supply capacity through the acquisition of GTAT in 2021, enabling it to quickly enter the circle of silicon carbide head players, and the growth rate is very amazing. In 2022, ON Semiconductor's revenue in the silicon carbide field exceeded $200 million, and it is expected that the revenue in this field will exceed $1 billion in 2023. The increase in revenue means the accumulation of customers, especially in the automotive sector: ON Semiconductor will provide silicon carbide modules for Volkswagen, the silicon carbide business for Tesla will continue to grow in 2023, and it will also provide silicon carbide for Jaguar Land Rover's next-generation platforms and solutions. It is worth mentioning that Hyundai will also use ON Semiconductor's Elite SiC series silicon carbide power modules to reduce power loss from DC and AC conversion, while improving efficiency, reducing weight and extending cruising range. ON Semiconductor's cooperation with Tier 1 manufacturers is also expanding. In addition, the growth potential of the industrial sector cannot be underestimated. ON Semiconductor recently announced a partnership with Ampt and will provide the latter with silicon carbide key power switch applications, and the related business will be further expanded as the installed capacity of photovoltaics accelerates. At present, ON Semiconductor's transformation is still ongoing, and 2023 is still a transition year for it. By exiting volatile and competitive low-margin businesses on the one hand, and moving to high-margin products and end markets, especially the silicon carbide business, on the other. At the end of 2022, ON Semiconductor signed $16.6 billion in LTSA across its portfolio (by 2025), a quarter of which was silicon carbide. The $4.5 billion silicon carbide LTSA locked in customer demand for nearly three years. In the transition, due to the climb of silicon carbide production capacity, its gross margin will be affected in the short term, but it will peak in Q2 and Q3 of 2023 and end at the end of the year. With the surge in silicon carbide orders, in terms of capacity expansion, unlike other manufacturers building new facilities, ON Semiconductor is more likely to increase production capacity by investing in projects to be redeveloped, so the pace of expansion is faster. On the front end, ON Semiconductor has continuously transferred IGBT technology to East Fshkill and converted it to 12 inches. The silicon carbide is then run using the existing power device fab. At the back end, it takes advantage of its original advantages to continue to lead in the fields of power semiconductors and module power supplies. By reorganizing the back-end factory to manufacture its advantageous module products. At the same time, ON Semiconductor can also combine the competitive advantages of wafer technology and packaging technology to continuously improve the capabilities of products, including power density, lightweight, cost-effectiveness and other dimensions. It has to be said that betting on silicon carbide and rapid transformation has brought ON Semiconductor's development into a new stage. Infineon: Power semiconductors are betting heavily on Infineon, as an established power device manufacturer, is constantly increasing its weight in the field of power devices. Its new €5 billion power semiconductor plant in Dresden, Germany, will also be the largest single investment in the company's history. Based on Infineon's long-term agreement with Resonac, its revenue in silicon carbide is expected to be 450 million to 500 million euros in 2023. The agreement will deepen their long-term cooperation on silicon carbide materials and gradually transition from 6-inch to 8-inch wafers. In addition, the new plant in Kulim will also start production next autumn and will continue to increase production capacity. Infineon's ATV division made a breakthrough in the silicon carbide business, winning orders for traction inverters for future platforms in Kia and Genesis (both from Hyundai); The IPC segment will also benefit from its leadership in silicon carbide applications and will continue to play in PV inverters, energy storage systems, and EV charging infrastructure. As a result, the volume and capacity of silicon carbide fabs are also growing as planned. From the full-year performance forecast, the revenue of these two divisions will also lead with an average annual growth rate of 9%. As the fragmentation of the semiconductor market continues, demand in areas such as automotive and renewable energy increases, while demand in the consumer market is weak, Infineon expects capital expenditure to shift to IGBT, silicon carbide and other related devices, mainly in the automotive and renewable energy sectors. MOSFETs in the PSS segment may shift some of their capacity to other power devices due to weak demand. Infineon also said that in addition to technological leadership, MOSFETs and silicon carbide devices need to use software to combine power switches with analog mixed-signal devices and microcontrollers to arrive at optimal solutions, which is its advantage and reflects its product-to-system thinking. Written at the end from the footsteps of the above several international manufacturers, with the increase of market demand, the overall tilt to the silicon carbide business is difficult to reverse, everyone has also seen the advantages of silicon carbide applications, through positive feedback, is still driving the increase of related production capacity. From the revenue, we can also see that the total demand and production capacity will continue to increase, and there is still a lot of space. The direction of development will also be different from one family to another. STMicroelectronics has included substrate manufacturing in four cities under its control, ON Semiconductor is on fire for $4.5 billion LTSA, and Infineon is more concerned about the moat built by combining hardware and software. Although it seems that Tesla is cutting the amount of silicon carbide used in the long-term plan, it looks more like a complaint, good things are too expensive, and it is better to be cheaper. That is, the amount of use is really relatively reduced, according to the current amount of silicon carbide, it is far from the time when the bubble bursts. Therefore, in the author's opinion, the market for silicon carbide has just begun.