Different from silicon chips that are relatively mature and have clear cycle characteristics, the silicon carbide (SiC) chip market, known as one of the "third-generation semiconductors", is in the early stage of development, so even if 2023 is a downward cycle of the semiconductor industry, related companies in this field have obvious product volume and technology competition.
For example, Tianyue Advanced, a major supplier of silicon carbide substrates, has been working in (688234. SH) achieved a significant increase in production in 2023, with 262,000 silicon carbide substrate production and sales of 226,000 pieces during the year, compared to 71,000 pieces and 64,000 units in 2022 and 67,000 pieces and 57,000 units in 2021. It can be seen that the high prosperity of the market.
Behind this is that more and more domestic silicon carbide suppliers have signed contracts with overseas silicon carbide device manufacturers and gained a firm foothold in the market share. The two major market demands of new energy vehicles and photovoltaics also strongly support the field to move forward.
In addition to the development of 6-inch technology, which has been relatively mature, driven by global giants, the competition for 8-inch technology is also continuing.
Gong Ruijiao, an analyst at TrendForce, told the 21st Century Business Herald that the overall domestic 8-inch silicon carbide is still in the R&D verification stage, among which the substrate material has made rapid progress and has been supplied in small batches, which is expected to be mass-produced within 2~3 years.
图片来源：IC photo
Accelerated production
In the silicon carbide industry chain, Tianyue Advanced's performance is more representative because its business comes from the supply of silicon carbide substrates. However, at present, the industrial chain companies are in the stage of active expansion, which will have a certain impact on the financial performance of related companies, such as profits.
In fiscal year 2023, Tianyue Advanced achieved a total operating income of 1.251 billion yuan, an increase of 199.90% year-on-year, a loss of 45.7205 million yuan attributable to the parent company, and a loss of 113 million yuan in non-net profit attributable to the parent company, narrowing the loss year-on-year.
The company said that thanks to the continuous increase in the production capacity and output of conductive products, the enhancement of product delivery capacity, and the increase in gross profit margin, it has maintained revenue growth for seven consecutive quarters, and has achieved single-quarter profitability in the third and fourth quarters of 2023.
Looking back on history, Tianyue Advanced has achieved profitability in 2021, but it will lose money in 2022. The company's announcement explained that it was due to the production capacity adjustment and the gradual increase in the production capacity of conductive substrates, which led to a temporary decline in production capacity and output, which affected product revenue and gross profit margin performance.
At present, silicon carbide products mainly include conductive and semi-insulating two types, the difference is that through the conductive silicon carbide substrate, silicon carbide homogeneous epitaxial wafers can be made, and the power devices that are further made are mostly used in new energy vehicles, high-power power transmission and transformation and other fields; In contrast, conductive products have a broader application market.
Tianyue Advanced said that in 2023, it will accelerate the production progress of the Shanghai Lingang plant, and the production capacity plan of 300,000 pieces of conductive substrates of the Lingang plant in 2026 will be realized ahead of schedule, and the second phase of capacity improvement planning will continue to be promoted. Driven by the terminal demand for electric vehicles, photovoltaic new energy, energy storage, charging piles, etc., the development of the industry has entered a period of strategic opportunities.
According to the Fuji Economic Report, an authoritative research institute in Japan, one of the top three companies in the global conductive silicon carbide substrate market share in 2023 will come from China, and Tianyue Advanced will surpass II-VI (Coherent) to rank second in the world.
Most of the other industry chain manufacturers have deployed silicon-based and silicon-carbide-based power semiconductor related products at the same time, among which in fiscal year 2023, large-scale mass production or commercial use of silicon carbide-related subdivisions has become the main trend.
Silanwei (600460.HK) SH) financial report shows that in 2023, the company's main business revenue will increase by 12.28% year-on-year, mainly due to the rapid growth of the company's operating income of IPM (intelligent power) modules, IGBT devices, PIM modules, fast recovery tubes, SiC devices, 32-bit MCUs and other products.
During the year, the company accelerated the construction of the "Silan Ming gallium SiC power device chip production line" project. Up to now, Silan Minggallium has formed a monthly production capacity of 6,000 pieces of 6-inch SiC MOS chips, and is expected to form a monthly production capacity of 12,000 pieces of 6-inch SiC MOS chips by the end of 2024.
The announcement pointed out that the electric vehicle main motor drive module based on the company's self-developed second-generation SiC-MOSFET chip has passed some customer tests, and mass production and delivery will begin in the first quarter of 2024, and the annual sales of silicon carbide PIM modules applied to the main drive of automobiles are expected to reach 1 billion yuan.
Xinlian Integration (688469. SH) announced that the company will invest in the R&D and capacity construction of SiC MOSFET chips and module packaging technologies from 2021. As of December 2023, the company's 6-inch SiC MOSFET production line has achieved a monthly output of more than 5,000 pieces, and in 2024, the company will also plan to build the first 8-inch SiC MOSFET experimental line in China.
Ping An Securities pointed out that as the head manufacturers of SiC have taken measures to expand production, as well as the continuous optimization and improvement of production processes and processes, the current SiC price has begun to continue to decline, and the speed of SiC on the car has accelerated significantly under the dual drive of volume increase + price reduction.
Application expansion
Due to the inherent advantages of silicon carbide such as high temperature resistance, high pressure resistance, and high thermal conductivity, it is being applied to new energy vehicles more and more. In particular, the 800V fast charging platform is becoming a mainstream solution, and the application of silicon carbide in the photovoltaic field is also expanding due to the green and low-carbon development trend.
One of the major challenges facing current silicon carbide applications is cost, which is believed to be a consideration after Tesla announced that it would significantly reduce the amount of silicon carbide used. However, some industry insiders analyzed to the 21st Century Business Herald reporter that it is currently in the early stage of industrial development, and its unit price is indeed high. However, the application of silicon carbide cannot be viewed from the perspective of a single component, but it will bring a significant reduction in system costs to the whole vehicle, including increased battery life and improved battery utilization.
Ping An Securities also believes that although the current cost of SiC-MOSFET is about 3 times that of Si-IGBT, according to Infineon's calculations, SiC-MOSFET can reduce power loss by 6%~10%, and the battery cost savings will exceed the increased cost of SiC devices, and the comprehensive system cost can be saved by up to 6%. At the same time, the advantages of SiC will be further amplified in the 800V platform, taking Xpeng G9 as an example, its 800V high-voltage SiC platform has a 5% increase in battery life compared with the 400V platform, and can achieve a range of more than 200km in 5 minutes.
This explains that many automakers are accelerating the adoption of silicon carbide devices in 2023, and even domestic suppliers have started a variety of cooperation with overseas manufacturers.
According to the financial report of Tianyue Advanced, the company has signed long-term supply agreements with Infineon and Bosch, and more than 50% of the world's top ten power semiconductor companies are corporate customers. The company will supply Infineon with 6-inch conductive substrates and ingots, which account for double-digit demand for Infineon, and will also support Infineon's transition to 8-inch products.
Star Semiconductor's announcement pointed out that in 2023, the company will make important progress in the overseas new energy vehicle market, adding a number of IGBT/SiC MOSFET main motor controller projects, and the overseas new energy vehicle market will show a rapid growth trend.
The photovoltaic field is also an important application market. Ping An Securities pointed out that cost reduction and efficiency increase have become the main driving force for SiC power devices in the photovoltaic field. In photovoltaic power generation applications, the use of SiC materials can improve the conversion efficiency from 96% to more than 99%, reduce energy loss by more than 50%, and increase the cycle life of equipment by 50 times. In 2021, the global photovoltaic silicon carbide power device market size was US$154 million, and it is expected to increase to US$423 million in 2027, with a compound growth rate of 18% from 2021 to 2027.
In terms of technology iteration, the world's leading manufacturers are also actively competing for the supply of silicon carbide products with larger size and better rate.
The global giant Wolfspeed was the first in the industry to achieve mass production of 8-inch silicon carbide products, and since then, Infineon and STMicroelectronics have also developed rapidly in this field. The industry generally believes that in terms of 6 inches, the gap between domestic and overseas is gradually narrowing. Of course, 6-inch and 8-inch silicon carbide products will coexist and develop for a long time.
Tianyue Advanced pointed out that the company has realized the batch supply of 8-inch conductive substrates, 6-inch conductive substrates, 6-inch semi-insulating substrates, 4-inch semi-insulating substrates and other products, and the main customers include domestic and foreign power electronic devices, 5G communications, automotive electronics and other fields.
Ping An Securities believes that from the perspective of technical parameters, the current domestic silicon carbide wafer factory has reached the international advanced level in the quality of 4-inch/6-inch silicon carbide substrates, but there is still a 5-8 year technical generation gap with international manufacturers as a whole, and the main gaps are: low yield, high cost, and relatively backward substrate expansion.
Huatai Securities said that there are two major trends in the silicon carbide industry: in 2024, the substrate will be applied from domestic to sea, and the 6-inch performance of the domestic head substrate factory will be comparable to that of overseas manufacturers, and the idea of exchanging price for volume is clear, and the proportion of domestic substrates in overseas manufacturers will increase;2024 or the first year of 8 inches, the current 8-inch defects and other aspects will be on par with 6 inches, and the yield, crystal growth time, consistency and other aspects need to be improved, and the equipment factory will also feedback that the rhythm of 8-inch ordering or delivery has been significantly accelerated, and it is expected that 8-inch will achieve a breakthrough from 1 to 10 this year.
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