For the last five years, the growth of the silicon carbide (SiC) market has relied heavily on Tesla, the first OEM to implement the material in an electric vehicle and the largest purchaser today. So when it recently announced it had found a way to use 75% less SiC in its future power modules, a flurry of panic gripped the industry, with the stock of major players suffering.
A 75% reduction sounds worrying, especially with little context, but there are many potential scenarios behind this announcement – and none of them point to dramatic reductions in demand for the material or the overall market.
Yole Group and its entities, Yole Intelligence and Yole SystemPlus helps to unpick Tesla’s statement and discusses its relation to major trends within the SiC automotive market, such as the transition from material to device and a demand for reduced cost.
This analysis is based on the following Yole Group’s products: Power SiC – Power Electronics for e-mobility – Power SiC/GaN CS Market Monitor – Automotive Teardown Track
See below an analysis of Yu Yang, Poshun Chiu and Ezgi Dogmus, Analysts at Yole Intelligence.
Scenario one: Less device count
Tesla’s 48-die inverter within its Model 3 is based on the most innovative technology available at the time of development (2017). However, as the SiC ecosystem has matured, there is opportunity to stretch the performance of the SiC substrate through more advanced system designs with higher levels of integration. While it is unlikely that a single technology could decrease SiC by 75%, a variety of advances in packaging, cooling (i.e. double sided and liquid cooling), and trench device structure could enable more compact, better-performing devices. Tesla will no doubt be exploring such opportunities, and the 75% figure could refer to a highly integrated inverter design that reduces its use of die from 48 to 12. However, if this were to be the case, it would not equate to such an aggressive reduction in SiC material as has been suggested, because each die would need to be larger in size to handle higher powers.
Meanwhile, other OEMs who are releasing 800V vehicles in 2023-24 will still rely on SiC, which is the best candidate in this space for high-power and high voltage-rating devices. Therefore, there will likely be no short-term impacts on SiC penetration for OEMs.
This scenario highlights the transition of focus from raw material to device and system integration within the SiC automotive market. The power module now plays a crucial part in improving the overall cost and performance, and all of the major players in SiC have power module businesses with their own in-house packaging capabilities – including onsemi, STMicroelectronics, and Infineon. Wolfspeed is now expanding from raw materials into the device market.
Scenario two: Smaller vehicles with less power requirements
Tesla has been working on a new entry-level car to make its vehicles more accessible. Model 2 or Model Q will be cheaper and more compact than its existing vehicles, and a smaller car with less features will not need as much SiC content to power it. However, its existing models will more than likely keep the same design and will still require high volume of SiC overall.
With all its benefits, SiC is an expensive material, with many OEMs expressing their desire for reductions in cost. Now that Tesla, the largest OEM in this space, has remarked on price, it will likely put pressure on IDMs to decrease costs. Could Tesla’s announcement have been a strategy to push for more cost-competitive solutions? It will be interesting to see how the industry reacts in the coming weeks/months…
IDMs are using different strategies to reduce costs, such as by multi-sourcing substrates from various suppliers, by increasing capacity to scale up in volume, and by moving to larger diameter wafers (6 and 8 inch). It’s likely that the increase in pressure will accelerate the learning curve of players across the supply chain in this space. In addition, the push on cost could make SiC more affordable not just for other automotive players, but for additional applications, which could drive up its adoption further.
Scenario three: Replacing of SiC by other materials
Yole Intelligence’s analysts are keeping a close eye on other technologies that could compete with SiC in electric vehicles. Trench SiC, for example, offers higher power densities – will we see it replace planar SiC in the future?
Si IGBT is being used in EV inverters as of 2023 and is well positioned within the industry in terms of capacity and cost. Manufacturers are still improving performance, and this substrate could show potential for the lower-power models mentioned in scenario two where it could enable easier high-volume scale up. Perhaps SiC will be reserved for Tesla’s more advanced and higher-power vehicles.
GaN-on-Si shows much potential within the automotive market, but analysts see this as more of a long-term consideration (more than 5 years in an inverter in a conventional world). While there is some industry discussion around GaN, Tesla’s demand for lower costs and high-volume scale up make it unlikely that it will switch to material that is much newer and a lot less established than SiC in the future. But could Tesla make a bold move in a bid to be the first to adopt this innovative material? Only time will tell.
Slight impact of wafer shipments, but new markets possible
While the push towards higher integration will result in minimal impact on the device market, there could be an impact on wafer shipments. Despite not being as dramatic as many initially thought, each scenario predicts a decrease in SiC demand, which could impact semiconductor companies.
However, this could increase the supply of material to other markets that have been growing alongside the automotive market in the last five years. The automotive market was and is the main driver of SiC and will retain its large market share going forwards (Yole Intelligence predicts the sector to reach $8 billion by 2028), but the industrial, energy (driven by renewables) and transport (high voltage) sectors are all expected to grow significantly in the next few years – which will all but be helped by lower costs and more access to supply of material.
Tesla’s announcement sent shockwaves through the industry, but on further reflection the outlook for SiC is still very promising. Which direction will we see Tesla go in next – and how will the industry react and adapt?
Watch this space…
About the authors
Yu Yang, Ph.D., is a Senior Technology and Market Analyst, Power Electronics at Yole Intelligence, part of Yole Group, within the Power & Wireless division. Based in Belgium, Yu is engaged in technology and market studies of power electronics applied to mobility electrification with a strong focus on the automotive industry. Yu is also involved in other studies of power and automotive electronics at Yole Intelligence.
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.
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.