In-Depth Analyses
Escalating demand in sectors like electric vehicles, 5G communications, photovoltaics, and memory storage is currently fueling the rapid growth of the silicon carbide (SiC) industry. Key players in China are intensifying their research and development efforts to overcome technological challenges and secure a substantial market share.
The arrival of 8-inch SiC substrates is crucial and marks a technological significant milestone that everyone desires, opening up new possibilities.
The Turning Point: 8-Inch SiC Substrates
As a third-generation semiconductor material, SiC boasts advantages like a wider bandgap, higher breakdown electric field, and exceptional thermal conductivity. Its stellar performance in high-temperature, high-pressure, and high-frequency applications positions it as a cornerstone in the realm of semiconductor materials.
Fueled by growing demand downstream, the SiC industry is in the midst of a high-speed expansion phase. TrendForce’s analysis forecasts the SiC power device market to reach US$2.28 billion in 2023, with an impressive annual growth rate of 41.4%. By 2026, this market is expected to expand further, reaching US$5.33 billion.
From an industry perspective, SiC devices’ cost structure encompasses substrates, epitaxy, tape out, and packaging processes, with substrates accounting for a substantial 45% of total production costs. To reduce per-device costs, the strategy revolves around enlarging SiC substrates and increasing the number of die per substrate. Notably, 8-inch SiC substrates offer distinct cost advantages over their 6-inch counterparts.
Data from Wolfspeed reveals that the transition from 6-inch to 8-inch substrates results in a modest increase in processing costs but yields an impressive 80-90% increase in the production of qualified chips. The greater thickness of 8-inch substrates helps maintain the shape during processing, reduces edge curvature, and minimizes defect density. Consequently, adopting 8-inch substrates can lead to a substantial 50% reduction in unit production costs.
According to TrendForce’s analysis, the SiC industry currently centers around 6-inch substrates, holding an impressive 80% market share, while 8-inch substrates account for only 1%. The transition to larger 8-inch wafers represents a crucial strategy to further reduce SiC device costs. As 8-inch wafers mature, their pricing is expected to be about 1.5 times that of 6-inch wafers, while producing approximately 1.8 times dies compare with 6-inch SiC wafers, greatly improving wafer utilization.
The industry is steadfastly progressing from 6-inch to 8-inch substrates, offering Chinese manufacturers a unique opportunity to surge ahead. TrendForce’s data suggests that the current market share of 8-inch products stands at less than 2%, with a projected growth to approximately 15% by 2026.
Seizing the Moment: Advancing 8-Inch SiC Substrates
Industry experts highlight the dual challenges of growing 8-inch SiC crystals: (1) the development of 8-inch seed crystals and (2) temperature field uniformity, gas-phase material distribution, transportation efficiency, and increased stress leading to crystal cracking.
As per industry insiders, 2023 is poised to become the “Year of 8-Inch SiC.” Throughout the year, global power semiconductor giants like Wolfspeed and STMicroelectronics have accelerated their efforts to develop 8-inch SiC. In China, significant breakthroughs have been achieved in SiC equipment, substrates, and epitaxy segments, with numerous industry leaders forming alliances with international power semiconductor giants.
TrendForce’s data from the Compound Semiconductor Market reveal that 10 enterprises and institutions in China are currently advancing the development of 8-inch silicon carbide (SiC) substrates. These include Semisic, JSG, SICC, Summit Crystal, Synlight, Institute of Physics Chinese Academy of Sciences, Shandong University, TankeBlue, KY Semiconductor, and IV-Semitec.
Here are the list of Chinese companies in the 8-inch SiC substrate field this year:
KY Semiconductor:
IV-Semitec:
Summit Crystal:
Hoshine Silicon:
Synlight:
TankeBlue:
JSG:
SanAn Optoelectronics:
SICC:
News
The Tokyo Motor Show, which recently opened in Japan, has garnered global attention from the automotive industry, particularly regarding EV technology, seen as the future of the automotive sector. Just like Toyota, a leader in the Japanese automotive industry, Nissan has showcased its ongoing development of Advanced Solid-State Battery (ASSB) technology at the event.
According to Nissan, the ASSB technology promises to provide double the energy density when compared to conventional liquid lithium-ion batteries, representing a significant milestone in battery innovation. Additionally, it is estimated that vehicles equipped with ASSB will experience a substantial reduction in charging times, taking only one-third of the current duration.
This development aims to address one of the fundamental challenges faced by EV users, making longer trips more convenient and practical while enhancing their overall confidence and enjoyment in electric vehicle ownership.
Kazuhiro Doi, Vice President of Nissan’s research division, believes that this technology could propel Nissan’s next generation of electric vehicles to a new level.
What’s particularly intriguing is that sports cars or supercars can utilize smaller and lighter battery packs, thereby improving handling, braking, and acceleration. Furthermore, according to Mydrivers, since ASSB batteries can operate normally in the range of room temperature to 100°C, they do not require a dedicated cooling system.
Currently, the ASSB technology is progressing according to Nissan’s previously announced plan. The first experimental production facility is still scheduled to commence operations next year, and the first mass-produced vehicle model utilizing ASSB technology is still expected to be launched in 2028.
(Photo credit: Nissan’s Facebook)
Insights
According to Bloomberg, Apple is quietly catching up with its competitors in the AI field. Observing Apple’s layout for the AI field, in addition to acquiring AI-related companies to gain relevant technology quickly, Apple is now developing its large language model (LLM).
TrendForce’s insights:
As the smartphone market matures, brands are not only focusing on hardware upgrades, particularly in camera modules, to stimulate device replacements, but they are also observing the emergence of numerous brands keen on introducing new AI functionalities in smartphones. This move is aimed at reigniting the growth potential of smartphones. Some Chinese brands have achieved notable progress in the AI field, especially in large language models.
For instance, Xiaomi introduced its large language model MiLM-6B, ranking tenth in the C-Eval list (a comprehensive evaluation benchmark for Chinese language models developed in collaboration with Tsinghua University, Shanghai Jiao Tong University, and the University of Edinburgh) and topping the list in its category in terms of parameters. Meanwhile, Vivo has launched the large model VivoLM, with its VivoLM-7B model securing the second position on the C-Eval ranking.
As for Apple, while it may appear to be in a mostly observatory role as other Silicon Valley companies like OpenAI release ChatGPT, and Google and Microsoft introduce AI versions of search engines, the reality is that since 2018, Apple has quietly acquired over 20 companies related to AI technology from the market. Apple’s approach is characterized by its extreme discretion, with only a few of these transactions publicly disclosing their final acquisition prices.
On another front, Apple has been discreetly developing its own large language model called Ajax. It commits daily expenditures of millions of dollars for training this model with the aim of making its performance even more robust compared to OpenAI’s ChatGPT 3.5 and Meta’s LLaMA.
Analyzing the current most common usage scenarios for smartphones among general consumers, these typically revolve around activities like taking photos, communication, and information retrieval. While there is potential to enhance user experiences with AI in some functionalities, these usage scenarios currently do not fall under the category of “essential AI features.”
However, if a killer application involving large language models were to emerge on smartphones in the future, Apple is poised to have an exclusive advantage in establishing such a service as a subscription-based model. This advantage is due to recent shifts in Apple’s revenue composition, notably the increasing contribution of “Service” revenue.
In August 2023, Apple CEO Tim Cook highlighted in Apple’s third-quarter financial report that Apple’s subscription services, which include Apple Arcade, Apple Music, iCloud, AppleCare, and others, had achieved record-breaking revenue and amassed over 1 billion paying subscribers.
In other words, compared to other smartphone brands, Apple is better positioned to monetize a large language model service through subscription due to its already substantial base of paying subscription users. Other smartphone brands may find it challenging to gain consumer favor for a paid subscription service involving large language models, as they lack a similarly extensive base of subscription users.
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Insights
Foxconn Technology Group held its Tech Day on October 18, 2023, focusing on three key areas: AI Smart Factories, CDMS (Contract Design and Manufacturing Services), and Model N.
TrendForce’s insights:
According to an intention survey by Gallup in April 2023, only 4% of respondents in the United States currently use electric vehicles, with an additional 12% considering a purchase. The majority of potential buyers in this category belong to households with an annual income exceeding $100,000. As per the salary survey by the New York Federal Reserve in July 2023, the average annual income for full-time employees in the United States stands at approximately $69,475.
Apart from concerns about driving range, the primary obstacle to the widespread adoption of electric vehicles is their relatively higher cost compared to traditional gasoline-powered vehicles. This pricing differential limits the consumer base for electric vehicles. The growth rate in electric vehicle adoption, which nearly doubled from 2020 to 2023, now faces a “30% plateau” challenge.
With the deadlines for banning gasoline cars in 2025 in Norway and 2035 in the European Union approaching, reducing manufacturing costs to reach a broader consumer demographic will be a critical factor in the successful transition of traditional automakers.
Take Volkswagen, the world’s second-largest automaker, for example. The investment in creating the MEB platform for their EVs amounted to approximately $7 billion. For many small or startup automakers, this figure is astronomical.
Furthermore, in recent years, automakers have made substantial investments to ensure the stability of crucial components like batteries and semiconductor chips. These costs are inevitably spread across the overall vehicle cost, which, in turn, affects the growth rate of electric vehicles.
The CDMS model leverages Foxconn’s Model series of complete vehicle platform production lines. It combines modular component assembly and supply chain resources to offer car manufacturers a comprehensive development service, reducing their upfront development time and costs. This enables manufacturers to concentrate on brand marketing.
Foxconn’s active push into CDMS may prompt many traditional automakers to reevaluate the core value of in-house manufacturing, reduce costs, and expand their customer base, offering a solution to the current challenges faced by the industry.
Despite the considerable costs associated with platform development, many automakers have already invested resources in creating their initial NEP (New Electric Platform). In the early stages of new energy vehicle development, it attracted various capital investments, with ample development funding and a relatively high fault tolerance.
Consequently, many automakers boldly invested in building their dedicated platforms. However, as market competition intensifies, automakers are likely to exercise greater caution in various investments.
For some automakers, the timing to reintroduce the CDMS model for the next-generation platform planning could be optimal for Foxconn to make its entry. However, outsourcing the production of new energy vehicles may entail sacrificing their uniqueness, which can influence the types and quantities of vehicles that automakers are willing to outsource.
Moreover, automakers tend to be more conservative compared to the electronics industry, and they might have concerns that outsourcing to Foxconn could inadvertently nurture potential competitors.
Furthermore, if automakers only view outsourcing as a financial adjustment or a temporary strategy, the sustainability of such orders becomes uncertain.
While the Luxgen N7, built on the Model C platform under the CDMS approach, has achieved promising results in its presale, marking a successful initial step, expanding the economies of scale for CDMS will require Foxconn to seize the right timing to secure more outsourcing orders from international automakers.
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News
On the 25th of October, the European Commission announced that, through a sampling method, it has selected three Chinese automakers: BYD, SAIC Motor, and Geely, to initiate an anti-subsidy investigation.
The EU had previously declared its intent to investigate electric vehicles originating from China earlier this month. However, due to the multitude of companies involved, the European Commission resorted to a sampling method to determine the specific targets of this inquiry.
This report was initially revealed by the trade publication “MLex,” which claimed that the EU seeks to establish a fair competitive environment for European electric vehicle manufacturers.
Furthermore, according to the South China Morning Post, despite Tesla shipping more electric cars from China to Europe compared to any other company, it is not among the companies being investigated by the European Union.
Additionally, if the EU’s investigation uncovers “subsidy evidence,” it will result in the calculation of corresponding “average anti-subsidy taxes,” which will apply to all electric vehicles imported from China, including prominent models produced in China such as Volkswagen, Tesla, BMW, and others. The three companies selected through the sampling method mentioned earlier will bear “individual responsibility” based on their respective subsidies.
BYD’s Executive Vice President, Stella Li, recently stated that despite the EU launching an anti-subsidy investigation into Chinese electric vehicles, BYD remains committed to driving strong growth for the company in Europe.
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(Photo credit: BYD)