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:

• April 2023: Successfully completed the 8-inch SiC pilot line.
• June 2023: Achieved an average crystal growth yield of over 50% in the 8-inch SiC pilot line with crystal thickness exceeding 15mm.
• September 2023: Successfully launched the 8-inch SiC substrate processing workshop.

IV-Semitec:

• May 2023: Grew 8-inch n-type silicon carbide ingots with a thickness of 27 millimeters.
• September 2023: Signed a strategic cooperation agreement with Spectrum Semiconductor and Gietsic for the joint development of SiC-related products.
• October 2023: Commenced the construction of the pilot line for SiC substrates, with an annual production capacity of 600,000 pieces of 6-8 inch SiC substrates.

Summit Crystal:

• June 2023: Opened the Jinan’s Base with a planned production capacity of 500,000 pieces. It aims to reach full production by 2025, with an expected output value exceeding 5 billion RMB.
• August 2023: Cooperated with Shangdong University, successfully manufactured 8-inch SiC wafers the threading screw dislocation (TSD) density was 0.55 cm^-2, and the basal plane dislocation (BPD) density was 202 cm^-2.

Hoshine Silicon:

• May 2023: Successfully achieved the development and mass production of 8-inch silicon carbide substrates.
• October 2023: 20,000 SiC substrates passed acceptance inspection, demonstrating the capability for mass production.

Synlight:

• September 2021: Launched the single crystal silicon carbide growth project with plans to achieve an annual production capacity of 100,000 pieces upon reaching full production.
• April 2023: Successfully developed 8-inch silicon carbide crystal samples and plans to start small-scale production by the end of the year.

TankeBlue:

• January 2023: Successfully prepared 4H-SiC single crystals with a diameter of 209 mm using the physical vapor transport (PVT) method and produced standard 8-inch SiC single crystal substrates.
• May 2023: Signed a supply agreement with Infineon and started supplying silicon carbide materials.
• August 2023: Began construction of the second-phase expansion project, planning to increase capacity by 160,000 pieces.

JSG:

• June 2023: Successfully developed 8-inch single-wafer silicon carbide epitaxial growth equipment compatible with 6 and 8 inch silicon carbide epitaxial production.
• October 2023: Achieved independent development and commissioning of 8-inch single-wafer silicon carbide epitaxial growth equipment with thickness uniformity within 1.5% and dopant uniformity within 4%.

SanAn Optoelectronics:

• Established a joint venture with STMicroelectronics to build an 8-inch silicon carbide device manufacturing plant, which is expected to start production in the fourth quarter of 2025.
• September 2023: Announced the 8-inch silicon carbide substrate with a production capacity of 12,000 pieces per month, and silicon-based gallium nitride capacity of 2,000 pieces per month.
• October 2023: Started small-scale production and sampling of 8-inch silicon carbide substrates using low-cost technology with low defect density.

SICC:

• May 2023: Signed a new substrate and ingot supply agreement with Infineon, planning to transition to 8-inch silicon carbide wafers.
• June 2023: Successfully prepared low-defect 8-inch silicon carbide crystals with a thickness exceeding 60mm.

On October 17, 2023, the U.S. government unveiled an updated set of regulations for semiconductor exports, introducing stricter standards for advanced AI chips. Additionally, these regulations expand control over the export of exposure equipment and include Chinese GPU design startups on an Entity List.

TrendForce’s Insights: 

1. New regulations cover chips, manufacturing equipment, and related companies, signaling an effort to restrain China’s AI development.

In this latest set of regulations, the U.S. has relaxed the I/O bandwidth restrictions for AI chips and introduced three additional conditions beyond a total processing performance (TPP) of ≥ 4800 TOPS:

(1) Total processing performance ≥ 1600 TOPS and performance density (PD) ≥ 5.92

(2) Total processing performance ≥ 2400 TOPS but < 4800 TOPS and performance density ≥ 1.6 but < 5.92

(3) Total processing performance ≥ 1600 TOPS and performance density ≥ 3.2 but < 5.92

As a result of these new conditions, NVIDIA’s A800, H800 GPU, and the recent launched L40S GPU for the Chinese market are now included in the list of controlled exports, similar to the A100 and H100 GPUs that were added in September 2022.

Concerning manufacturing equipment, the control threshold for exposure equipment has shifted from single-machine (specified substrate) coverage precision of ≤ 1.5nm to > 1.5nm but ≤ 2.4nm. This change directly led to the inclusion of ASML’s 1980Di DUV lithography machines.

On the corporate front, Chinese domestic GPU design startups such as Birentech, Moore Threads, and high-speed DSP design company Superfusion Semiconductor, along with their related entities, have been placed on the Entity List by the U.S. Department of Commerce.

In summary, these new regulations encompass chips, manufacturing equipment, and related companies. The U.S. is not only controlling the current mainstream AI product lines and applications of DUV lithography machines for 28-7nm processes but is also making a clear effort to interfere Chinese domestic manufacturers’ development of AI computation chips, indicating a strong determination to restrict China’s growth in the AI sector.

2. Priority for Chinese Enterprises: Securing AI Computing Resources through Cloud Service Providers

In light of the impact of the new U.S. semiconductor control regulations, Chinese domestic companies will be limited to AI chip performance not exceeding that of NVIDIA L40 GPU. As leading companies like NVIDIA, AMD, Intel, and others continuously boost the performance of their AI chips, the gap between the AI computing resources established by Chinese companies and their international counterparts will continue to widen.

Looking at it from an angle of independent research and development, with the inclusion of 1980Di and more advanced DUV lithography machines in the control list and the U.S. Department of Commerce placing Chinese IC design companies on the Entity List, short-term mass production of high-performance server AI chips in China seems unlikely.

Faced with challenges in both outsourcing and in-house production, the primary path for Chinese domestic companies to develop AI technology and applications is to obtain high-performance AI computing resources from international cloud service providers (CSP). It is worth noting that the U.S. government is also exploring limitations on Chinese firms attempting to evade semiconductor control policies through CSP. For Chinese companies, establishing robust customer relationships and building extensive AI computing resources are pressing priorities before related policies are enacted.
(Image: Pixabay)

The US Department of Commerce issued new restrictions on AI chips on October 17, 2023, with a focus on controlling the export of chips to China, including NIVIDA’s A800, H800, L40S, and RTX4090, among others. Taiwanese manufacturers primarily serve cloud service providers and brand owners in North America, with relatively fewer shipments to Chinese servers. However, Chinese manufacturers, having already faced two chip restrictions imposed by the US, recognize the significance of AI chips in server applications and are expected to accelerate their in-house chip development processes.

TrendForce’s Insights:

1. Limited Impact on Taiwanese Manufacturers in Shipping AI Servers with H100 GPUs

Major Taiwanese server manufacturering companies, including Foxconn, Quanta, Inventec, GIGABYTE, and Wiwynn, provide AI servers equipped with H100 GPUs to cloud data centers and brand owners in Europe and the United States. These Taiwanese companies have established some AI server factories outside China, in countries such as the US, the Czech Republic, Mexico, Malaysia, and Thailand, focusing on producing L10 server units and L11 cabinets in proximity to end-users. This strategy aligns with the strategic needs of US cloud providers and brand owners for global server product deployment.

On the other hand, including MiTAC, Wistron, and Inventec, also provide server assembly services for Chinese brands such as Inspur and Lenovo. Although MiTAC has a significant share in assembling Inspur’s servers, it acquired Intel DSG (Data Center Solutions Group) business in July 2023. Therefore, the focus of AI servers remains on brand manufacturers using H100 GPUs, including Twitter, Dell, AWS, and European cloud service provider OVH. It is speculated that the production ratio of brand servers will be adjusted before the new restrictions are enforced.

Wistron is a major supplier for NVIDIA’s AI server modules, DGX A100, and HGX H100. Its primary shipments are to end-users in Europe and the United States. It is expected that there will be adjustments in the proportion of shipments to Chinese servers following the implementation of the restrictions.

Compal has fewer AI server orders compared to other Taiwanese manufacturers. It has not yet manifested any noticeable changes in Lenovo server assembly proportions. The full extent of the impact will only become more apparent after the enforcement of the ban.

During the transitional period before the implementation of the chip ban in the United States, the server supply chain can still adapt shipments based on local chip demand in China to address market impacts resulting from subsequent chip controls.

2. Chinese Manufacturers Focusing on Accelerating In-House Chip Development

Chinese cloud companies had already started developing their AI chips before the first U.S. chip restrictions in 2022. This included self-developed AI chips like Alibaba Cloud’s T-HEAD, a data center AI chip, and they expanded investments in areas such as DRAM, AI chips, and semiconductors with the aim of establishing a comprehensive IoT system from chips to the cloud.

Baidu Cloud, on the other hand, accelerated the development of its third-generation self-developed Kunlun chip, designed for cloud and edge computing, with plans for an early 2024 release.

Tencent introduced three self-developed chips in 2021, including an AI inference chip called Zixiao, used for Tencent’s meeting business; a video transcoding chip called Canghai, used in cloud gaming and live streaming applications; and a smart network card chip named Xuanling, applied in network storage and computing.

ByteDance made investments in cloud AI chips through its MooreThread initiative in 2022 for applications in AI servers. Huawei released the Ascend 900 chip in 2019 and is expected to introduce the Ascend 930B AI chip in the latter half of 2024. While this chip has the same computational power as the NVIDIA A100 chip, its performance still requires product validation, and it is speculated that it may not replace the current use of NVIDIA GPUs in Chinese AI servers.

Despite the acceleration of self-developed chip development among Chinese cloud server manufacturers, the high technological threshold, lengthy development cycles, and high costs associated with GPU development often delay the introduction of new server products. Therefore, Chinese cloud companies and brand manufacturers continue to purchase NVIDIA GPUs for the production of mid to high-end servers to align with their economic scale and production efficiency.

In response to the new U.S. restrictions, Chinese cloud companies have adopted short-term measures such as increasing imports of existing NVIDIA chips and building up stockpiles before the enforcement of the new restrictions. They are also focusing on medium to long-term strategies, including accelerating resource integration and shortening development timelines to expedite GPU chip manufacturing processes, thus reducing dependency on U.S. restrictions.

In response to persistently low sales and failure to meet production targets, Japanese automaker Mitsubishi Motors has announced its exit from local car production in China. The company has also revealed plans to invest up to 200 million euros in Renault’s EV venture, Ampere.

Mitsubishi Motors made this announcement in a press release following a board meeting on the 24th, which includes terminating production of Mitsubishi-branded vehicles in China.

The company cited the rapidly changing market of the Chinese automotive industry over the past 2-3 years, with a swift transition to EVs and significant shifts in consumer brand preferences. Despite launching a new model in December 2022 in an effort to boost sales, Mitsubishi struggled to meet its sales targets. Furthermore, the joint venture, GAC Mitsubishi Motors, has suspended operations at its Changsha plant in Hunan province since March 2023 to adjust inventory.

GAC Mitsubishi Motors is a company jointly established by Mitsubishi Motors, Mitsubishi Corporation, and Guangzhou Automobile Group (GAC Group), operates the Changsha plant, the sole new car production facility in China for Mitsubishi Motors. The company will transfer its entire shareholding in GAC Group, which ends Mitsubishi’s involvement in the local production of Mitsubishi-branded vehicles in China. Following this, GAC Mitsubishi Motors will become a wholly-owned subsidiary of the Guangzhou Automobile Group, and its EV brand, Aion, will continue to utilize the Changsha plant.

Mitsubishi Motors stated that it will maintain cooperation with Mitsubishi Corporation and the GAC Group to provide after-sales service to customers. As for the structural reform measures, the company anticipates recognizing a special loss of 24.3 billion yen in the fiscal year 2023 (April 2023 – March 2024) financial statements. However, this special loss has been partly factored into the previously announced financial forecast for the fiscal year and will not result in any changes at this stage.

Mitsubishi Motors currently estimates that its consolidated revenue for the fiscal year will increase by 13.1% year-on-year to 2.78 trillion yen, while its consolidated operating income will decrease by 10.8% to 170 billion yen and consolidated net income will decrease by 34.8% to 110 billion yen.

Furthermore, on the 24th, Mitsubishi Motors announced its investment in “Ampere,” the EV venture established by the Renault Group. The investment could reach a maximum of 200 million euros. Mitsubishi Motors intends to strengthen its EV research and development and expand its EV product lineup through this partnership. The company will procure EVs developed and produced by Ampere for sale under its Mitsubishi Motors brand, initially targeting the European market.

Ampere is a separate entity formed by Renault for its EV business, with plans to go public in 2024. Besides Mitsubishi Motors, Nissan has also committed to a maximum investment of 600 million euros in Ampere, and semiconductor giant Qualcomm has expressed its intention to invest as well.

Read more

• [News] Mitsubishi Motors Ceases Car Production in China, Possible Takeover by GAC Aion

(Image credit: GAC Mitsubishi Outlander 2022)

China’s Ministry of Commerce announced that as of December 1, the export of graphite products will require permits, citing national security concerns. Graphite is a vital anode material in lithium-ion batteries, making it crucial for industries like electric vehicles and energy storage. China is the world’s largest producer of graphite, supplying over 67% of global natural graphite and more than 90% of refined graphite.

This move indicates China’s efforts to control critical mineral supplies, which is part of a broader trend as foreign governments, such as the EU, consider tariffs on Chinese electric vehicles due to perceived unfair subsidies, and the US expands restrictions on Chinese companies acquiring advanced semiconductor technology.

Natural graphite is considered a critical raw material by the EU, Japan, Canada, and the US. China’s major graphite buyers include Japan, the US, India, and South Korea. The International Energy Agency predicts a 20-25 fold increase in graphite demand from 2020 to 2040.

In response to the restrictions, the South Korean Ministry of Trade has held meetings with battery and materials manufacturers to discuss strategies for mitigating potential disruptions in lithium-ion battery production. Japan has expressed its intention to inquire further and consider appropriate measures if China’s actions violate World Trade Organization rules.

Before implementing these graphite export controls, China had imposed restrictions on gallium and germanium, affecting global prices for critical metals, starting on August 1. According to Chinese mainland customs data for September, export restrictions on gallium and germanium continue to impede the supply. In September, the export quantity of rolled germanium was 1 kilogram, while in August, it was zero. For both August and September, the export of rolled gallium was zero.

Read more:

• [News] China’s Export Control Measures and Their Impact on Electric Vehicle Battery Production

(Photo credit: Pixabay)