Power semiconductors, the key of energy conversion and circuit control in electronic devices, find themselves at the heart of electronic circuit functions such as power conversion, amplification, switching, and rectification. They play a pivotal role in various sectors like automotive, industrial, rail transportation, and electricity. As the new energy industry, led by solar energy and electric vehicles, advances, power semiconductors like IGBT and MOSFET emerge as key players in the realm of green energy.

The power semiconductor market, previously driven by the surge in the new energy sector, particularly in new energy vehicles, solar power, and energy storage, has experienced robust overall demand. China, being the global leader in both new energy vehicles and solar energy production, has significantly contributed to the strong demand for power semiconductors. However, the current trend indicates a slowdown in the power semiconductor market.

According to TrendForce’s latest report, titled “Power Semiconductor Deceleration, Chinese Companies Breaking Through in 12-inch Wafers and IGBT,” it shared a comprehensive analysis of China’s role in the development of the power semiconductor industry. The following highlights summarize the key points of this report:

1. Slowdown in Chinese Foundries due to Downturn in Consumer Electronics and Communication Sectors

In the first half of 2023, prominent Chinese foundries—SMIC, Hua Hong Semiconductor, Nexchip, and SMEC—encountered a slowdown in revenue growth. Among them, only Hua Hong witnessed a marginal revenue increase, while SMIC, Nexchip, and SMEC experienced YoY revenue declines of 19.29%, 50.43%, and 24.08%, respectively. The overall performance of Chinese wafer fabs is entering a downward cycle due to a sluggish market in consumer electronics, PCs, and communication.

2. IGBT Emerges as the Growth Driver Amidst Deceleration in the Power Semiconductor Market

Despite a comparative growth with digital ICs, the overall growth in the power semiconductor market is decelerating. Hua Hong’s revenue from discrete devices increased by 33.04% YoY in the first half of 2023, yet the growth rate is lower than that of the same period in 2022. The number of top-ten listed power semiconductor companies with negative revenue growth has expanded from one in 2022 to four, and those with negative net profit growth increased from one to eight.

While the overall growth is slowing, IGBT remains the driving force for power semiconductors. Companies like Silan and CR Micro have initiated mass production of IGBT, experiencing a rapid growth rate in the IGBT business. Additionally, Wingtech is making its foray into the IGBT sector. Notably, between January and July 2023, 17 IGBT projects were initiated or signed, with a cumulative investment exceeding CNY 15 billion, indicating a swift expansion by Chinese companies in the IGBT domain.

3. China’s Power Semiconductor Giants Scale Up from 8-Inch to 12-Inch

Major Chinese power semiconductor players are transitioning from 8-inch to 12-inch wafers. Notably, Hua Hong has already implemented 12-inch capacity, and the expansion of the Wuxi Phase 2 project is underway. SMIC’s third-phase 12-inch special process wafer line produced its initial 10,000 wafers in June 2023. In the IDM sector, companies like Wingtech, Silan, and CR Micro are actively constructing 12-inch wafer fabs, with some of the capacity already in operation.

According to TechNews’ report, Apple, NVIDIA, AMD, Qualcomm, and MediaTek all utilize TSMC’s semiconductor processes for manufacturing their latest chips, with some potentially employing Samsung’s foundry, though typically not for flagship products.

With Samsung’s improved yield rates in recent months, the company is eager to secure a portion of the orders, particularly for the 3-nanometer GAA (Gate-All-Around) process.

Earlier market reports suggested that Qualcomm’s Snapdragon 8 Gen 4 might adopt a dual-foundry strategy, simultaneously utilizing TSMC’s N3E process technology and Samsung’s SF3E process technology.

However, both Qualcomm and MediaTek currently plan to employ TSMC’s second-generation 3-nanometer process technology (N3E) for manufacturing chips like the Snapdragon 8 Gen 4 and Dimensity 4, without pursuing a dual-foundry strategy at this time.

As of the end of June 2022, Samsung announced the commencement of production for 3-nanometer process chips at its Hwaseong Industrial Complex in South Korea. These chips incorporate a new GAA transistor architecture technology, rumored to be more energy-efficient compared to TSMC’s 3-nanometer FinFET technology. Despite this, in the realm of 3nm, Samsung has yet to secure substantial orders from major clients.

Interestingly, the company has seen more success in the 4nm domain. It is reported that Samsung has gradually addressed yield and various issues in the 4-nanometer process technology domain. The third generation of 4-nanometer process technology has seen improvements in performance, reduced power consumption, increased density, and achieved yields close to TSMC’s level. Market sources indicate that Samsung has gained recognition from companies like AMD and Tesla, securing new orders.

Currently, TSMC’s 3-nanometer process technology production capacity is ramping up, with an expected monthly capacity of 100,000 wafers by the end of 2024. The revenue contribution is projected to increase from the current 5% to 10%.

Meanwhile, Samsung plans to introduce the second generation of its 3-nanometer process technology, named SF3 (3GAP), in 2024. Building upon the existing SF3E, it aims for further optimization, and Samsung’s in-house Exynos 2500 is expected to be one of the first high-performance chips to adopt this new process technology.

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Tesla initiated a price war in the Chinese market this year, forcing local manufacturers to confront the challenge. However, after nearly a year of intense competition, Tesla unexpectedly called a truce, while Chinese manufacturers led by BYD thrived in the fierce price war, turning adversity into opportunity.

According to a tally by Tencent News-affiliated media “Deep Web,” in the first two days of November, three Chinese automakers have already announced price reduction and promotion policies: BYD offers discounts ranging from CNY 5,000 to RMD 18,000 on five models; Leapmotor provides a maximum discount of CNY  10,000 across all models; Lynk & Co, under the Geely umbrella, offers a subsidy of CNY 6,000 for its Lynk 08 model. Since October, more than 10 car manufacturers have implemented price reduction and promotion policies.

Tesla Bucks the Trend with Price Increase

While several Chinese car manufacturers are engaging in a price war, Tesla is moving against the current by increasing prices. On November 9th, Tesla officially announced a price hike for the Model 3 Long Range version by CNY 1,500, bringing the total price to CNY 297,400. The Model Y Long Range version also saw a price increase of CNY 2,500, bringing the total to CNY 302,400.

This marks Tesla’s second price hike in nearly a month. On October 27th, Tesla China raised the price of the Model Y Performance version by CNY 14,000, resulting in an adjusted selling price of CNY 363,900. Additionally, the North American Tesla Model Y Long Range version also experienced a price increase of USD 500.

The report further indicated the industry analysis, suggesting that the previous round of price increases has already eroded Tesla’s profitability. Tesla’s third-quarter financial report, released in mid-October, revealed earnings and delivery volumes below Wall Street expectations. The gross profit margin was particularly impacted by the price war, reaching a four-year low of 17.9%.

BYD Secures Sales Crown in Chinese Car Price War  

In contrast to Tesla’s unexpected withdrawal from the recent price war, Chinese manufacturers are not only surviving but maintaining their ability to continue the battle. BYD, sitting comfortably as the global leader in new energy vehicle sales, reported a third-quarter net profit of CNY 11.54 billion.

Meanwhile, AITO revived its fortunes with the new M7 model, and XPeng Motors successfully returning to growth in sales.

Data indicates that BYD emerged as the winner in the first half of the price war, maintaining the top position in sales. Despite a decrease in unit revenue amid the price war, quarterly net profit per unit increased. In contrast, Tesla’s per-unit net profit has declined each quarter this year, reaching a global per-unit net profit of only CNY 31,300.

The overall gross profit margin trend and per-unit net profit trend of BYD and Tesla align. In the third quarter of this year, BYD achieved a historic high gross profit margin of 22.1%, while Tesla’s gross profit margin hit a near three-year low at 17.89%.

However, the price war is inevitably taking a toll on the industry, with multiple research institutions and investment banks predicting an increase in mergers and acquisitions, as well as bankruptcy reorganizations among Chinese new energy vehicle manufacturers in the future.

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• [NEWS] BYD Outpaces Tesla in Production, Securing the Crown in EV Sector

(Photo credit: BYD)

Within the AR glasses industry, various enterprises have recently concluded the latest round of financing, encompassing AR glasses, AR display modules, and optical wave devices.

Chinese AR glasses firm Rokid secured USD 112 million fund

According to news on November 20th, Chinese AR glasses firm Rokid achieved a valuation of USD 1 billion and secured a financing of USD 112 million. The funds will be directed towards the expansion of Rokid’s presence in international markets.

Established in 2014 and headquartered in Hangzhou, China, Rokid introduced its latest AR smart glasses products, Rokid Max and Rokid Max Pro, in March and August of this year, respectively, featuring Micro OLED displays.

(Image: Rokid)

Presently, Rokid’s AR glasses are available in over 80 countries and regions worldwide. Rokid has planned to explore the application of AR glasses in the education sector, with an anticipation that its overseas revenue will surpass domestic revenue by 2024.

Notably, Rokid has successfully completed multiple rounds of financing in recent years, accumulating a total of nearly USD 2 billion, according to relevant media reports.

Japanese AR optical firm Cellid completes latest funding round.

Cellid announced that it received an investment from SMBC Nikko Securities in October, and combined with the undisclosed investor in September, the total financing for Cellid reached JPY 2.28 billion (approximately USD 15.25 million).

The funds from this financing round will be allocated for the establishment of mass production and quality control systems, expediting process development, and advancing the research and sales of software such as Model Builder.

(Image: Cellid )

Founded in 2016, Cellid focuses on the development and provision of AR display module hardware and spatial recognition technology software, Model Builder. The company aims to achieve higher-quality AR glasses by addressing both hardware and software components.

In 2021, Cellid initiated the supply of samples for AR glasses display modules, Cellid Waveguide 60, featuring a wider field of view optical (FOV) waveguide and a 1.2 cc size ultra-compact Micro LED projector.

In January this year, Cellid unveiled an optical module for AR glasses, equipped with a Micro LED projector, achieving a field of view of 60 degrees.

AR optical wave device company Raypai secures tens of millions in CNY Funding.

AR optical wave device company Raypai concluded a B-round financing of tens of millions of Chinese Yuan on November 21st. This round of financing was led by CVYE, VDL, and ABCI.

Raypai, known for its self-developed geometric optical waveguide technology and 2D pupil dilation technology, enables optical waveguide devices to maintain excellent optical performance while adopting a compact and lightweight form. This provides a foundation for deeply immersive, highly interactive, and highly integrated AR smart glasses.

(Image: Raypai)

Currently, Raypai has introduced over ten AR geometric optical waveguide display devices, applied in various AR smart terminal products, including QIDI ONE, RokidGLASS2, and Vision Enjoy G510.

Recently, Raypai unveiled its latest 2D geometric optical waveguide product, achieving a breakthrough in the field of view beyond 50 degrees and light efficiency exceeding 2000 nit/lm. The company has collaborated with well-known Chinese enterprises to develop consumer AR geometric optical waveguide devices for new products.

In terms of production, Raypai has completed the construction of a super-precision optical device production base in Kunshan, Jiangsu, achieving full operational status and mass delivery of the entire product line, with an annual production capacity of 120,000 sets of optical waveguide devices. Presently, based on customer demand and market trends, Raypai is planning more extensive production capacity reserves.
(Image: Rokid)

On November 23, YICAI reported that Huawei is set to divest its Smart Car Solutions Business Unit (referred to as “Car BU”), with the business subsequently being acquired by the Chongqing State-owned Assets Supervision and Administration Commission, making it the largest shareholder.

However, to this report, the head of Changan Automobile’s strategic planning department further indicated on November 24 that the information is inconsistent with the facts.

In terms of Changan Automobile’s cooperation with Huawei, even before the establishment of Huawei’s Car BU, both parties had already formed a certain level of collaboration. In 2019, Changan Automobile, in collaboration with Huawei and battery company CATL (Contemporary Amperex Technology Co. Ltd.), jointly created Avatr Technology.

Huawei provided advanced assisted driving features and Harmony OS smart cockpit technology to Avatr Technology. When Huawei officially announced its commitment to “helping automakers build good cars,” the collaboration between the two became even closer.

In 2021, Changan Automobile, in partnership with Huawei, began developing the Avatr brand based on the Huawei Inside mode. Following the launch of Avatr 11, the Avatr 12 was recently introduced to the market. Additionally, in August of this year, Changan’s sub-brand, Shenlan (BluePark), signed a framework cooperation agreement with Huawei.

Shenlan Automotive stated that the collaboration will focus on the field of automotive intelligence, jointly advancing the research and application of new technologies in the smart electric vehicle domain.

According to Changan Automobile’s data, Changan Automobile has sold 241,028 vehicles in October, representing a year-on-year increase of 7.21%. The cumulative sales for this year reached 2,110,636 vehicles, reflecting a year-on-year growth of 10.76%. Specifically, the sales of new energy vehicles under the independent brand in October were 57,399, marking a significant year-on-year increase of 57.1%. For the cumulative sales from January to October, the figure reached 364,081 vehicles, indicating a substantial year-on-year growth of 88.76%.

(Photo credit: Flickr)