Power SiC: What has motivated the flood of partnerships across the supply chain?

There has been a flurry of impactful collaborations announced in the last year within the power SiC market, and interestingly, not just at the wafer and material level as previously seen, but across the entire power SiC ecosystem.

Yole Intelligence’s compound semiconductor analysts, Poshun Chiu, Ezgi Dogmus and Taha Ayari investigate and deliver today a relevant analysis of the motivations behind these recent announcements. What is the real impact across the evolving supply chain? This analysis is part of the annual Power SiC 2023 market report.
Yole Intelligence is a Yole Group company.

The automotive market, mainly driven by inverters, along with onboard chargers and DC-DC converters in electric vehicles, represents 70% of the power SiC market share in 2022, which is set to grow to 74% by 2028, according to Yole Intelligence’s analyses.

Major SiC device manufacturers, STMicroelectoronics, Infineon Technologies, onsemi, Wolfspeed and Rohm, have been busy forming design-win partnerships with major OEMs, signifying the significant future revenue major OEMs and suppliers envision in the market. As of 2023, the majority of power electronics players have SiC activities, including all of the top 10 companies.

onsemi, in particular, has been very efficient in building partnerships with car manufacturers, and has signed several agreements in recent months, including with Hyundai (South Korea), Zeekr (China), Nio (China) and Volkswagen and BMW in Germany, with low volumes announced, in the near term.

But the recent announcements have not been related solely to design-wins. While traditionally most of the activity has been focused at the wafer level, the industry is now experiencing a greater number of partnerships across the entire ecosystem, including at the device and system level. With multiple announcements of capacity expansion, SiC wafer supply becomes less of a bottleneck in the coming years. Players across the entire supply chain are forming relationships to solidify their position within the maturing market. Motivations such as securing wafer supply, seeking investment to fund capacity expansions, and qualifying new technology or entering new markets all play a role.

The reshaping of the supply chain is evident through Yole SystemPlus’ recent analysis of 49 SiC transistors and 21 SiC diodes from the major SiC players. The latest reports, SiC Diode Comparison 2023 and SiC Transistor Comparison 2023, provide technology and cost analysis while investigating the supply chains and partnerships behind these products.

One major motivation behind partnerships within power SiC over the last decade has been securing supply of materials, and this is still very much      the case       as of 2023. In May, for example, Coherent extended its partnership with Mitsubishi Electric, which supplies the company with 6-inch wafers but is now building a 8-inch facility set to be finished in 2026.

In July, Renesas announced its intention to enter the power SiC market through a 10-year partnership with Wolfspeed. The deal includes a $2 billion deposit from Renasas to Wolfspeed to secure supply for both 150mm and 200mm silicon carbide wafers, and supports Wolfspeed’s capacity expansion plans.

Mitsubishi and Renasas are relative latecomers, but the recent moves represent a growth in Japanese players within the power SiC market, as device manufacturers react to Japanese OEMs such as Toyota and Honda recently announcing plans to adopt SiC in their electric vehicles.

Just as Renasas’ $2 billion investment in Wolfspeed will help its ambitious capacity expansion plans, other recent partnerships are seeing Tier 1s invest in device manufacturers to secure supply.

This is motivated by Tier 1s seeking to establish a future position in manufacturing as their position within the SiC supply chain evolves. The current business model, whereby OEMs consign both the design and the manufacturing to Tier 1s, is changing: More automotive players competing in the EV space means OEMs must innovate and qualify their designs quickly. Tesla has been the pioneer for establishing  centralised designs, where it is       more efficient for OEMs to take on the design themselves. Tier 1s are therefore eager to establish a strong future position in manufacturing for which they require a steady channel of supply. Device manufacturers also benefit from these relationships through financial support for their capacity expansions.

Wolfspeed has recently announced partnerships with two Tier 1s: In November 2022 with BorgWarner, which will invest $500 million in Wolfspeed to secure up to $650 million in annual capacity for SiC devices; and with ZF in February 2023, whereby ZF will invest hundreds of millions of dollars to support Wolfspeed’s 8-inch SiC fab in Europe.

Similarly, Tier 1 Vitesco announced a 10-year LTA with onsemi in May, worth $1.9 billion. This deal included a $250 million investment to onsemi for capacity expansion of SiC wafers and epi wafers. And Magna will also invest $40 million to onsemi, aside from the LTA announced in July.

Device suppliers are not just focused on expanding contacts and supply, but on developing new technology and entering new markets. In December 2022, STMicroelectronics announced a partnership with Soitec to qualify its SmartSiC technology on its future 8-inch substrate manufacturing. Through this partnership, STMicroelectronics plans to benefit from further diversifying its sourcing of SiC wafers, while Soitec can take advantage of working with a market leader to scale up production.

In June 2023, STMicroelectronics partnered with Sanan Optoelectronics to help grow its position in China. The two companies will establish a joint venture company in China focussed      on SiC device manufacturing. As of 2023, there’s a limitation of 8” SiC wafer supply on the market. Therefore, Sanan also announced plans to build a new 8” SiC wafer production facility to support the ramp up in the JV facility. In this way, STMicroelectronics can grow in China while only providing only part of the financial requirement, which mitigates the risk substantially. At the same time, Sanan can further accelerate their development of SiC manufacturing by working with the world’s leading SiC player.

The flood of partnerships, collaborations and acquisitions in recent months signifies a highly promising outlook for the future power SiC industry. But with major device players all making significant moves as they attempt to each take a significant market share, some will win more than others.

With competition from other materials such as silicon IGBT still ever present, and mammoth capacity expansion investments creating cash flow issues, there are definitely risks – but with high risk comes the potential for high reward. Will these risks pay off in this rapidly evolving market? Follow Yole Group to hear first!

Stay tuned on www.yolegroup.com

Poshun Chiu is a Technology & Market Senior Analyst specializing in Compound Semiconductor and Emerging Substrates at Yole Intelligence, part of Yole Group. As a member of the Power Electronics & Wireless division at Yole Intelligence, Poshun focuses on power, RF, and opto-electronics. He is engaged in the development of technology and market reports and is also involved in custom projects.

Before joining Yole, Poshun had 9 years’ experience in R&D and product management at Epistar (TW & CHN). He is the author or co-author of more than 10 patents in solid-state-lighting. Poshun was also engaged in the development and evaluation of novel applications of process technology and components based on relevant semiconductor material systems.

Poshun received an MSc degree in Microelectronics from National Cheng Kung University (TW) and an MBA from IESEG School of Management (FR).

Ezgi Dogmus, PhD. is Team Lead Analyst in Compound Semiconductor & Emerging Substrates activity within the Power & Wireless Division at Yole Intelligence, part of Yole Group. With an international team of technology & market analysts, she is managing the expansion of the technical expertise and the market know-how of the company. In addition, Ezgi actively assists and supports the development of dedicated collection of market & technology reports, monitor as well as custom consulting projects.

Prior to Yole, Ezgi worked as a process development engineer for GaN-based RF and power solutions at IEMN (Lille, France).

After graduating from University of Augsburg (Germany) and Grenoble Institute of Technology (France), Ezgi received her PhD. in Microelectronics at IEMN (France).

Taha Ayari, Ph.D., is a Technology & Market Analyst, Compound Semiconductor and Emerging Substrates, at Yole Intelligence, part of Yole Group. As a member of the Power Electronics & Wireless division at Yole Intelligence, Taha’s expertise is mainly dedicated to power, RF, and optoelectronics. He is fully engaged in the development of technology and market reports as well as custom projects.

Taha has 2 years’ experience as a Technology & Cost Analyst at Yole System Plus, part of Yole Group, where he focuses on the development of compound semiconductor reverse engineering & costing analyses.

Prior to Yole Intelligence, Taha was a research engineer at Georgia Tech Lorraine (Metz, France). He published numerous papers with a particular focus on III-N materials.

Taha holds an M.Sc. and a Ph.D. in Electrical and Computer Engineering from the Georgia Institute of Technology (Atlanta, USA).